Stitch Fix says clients are 'still being cautious' amid expectations of falling sales

Shares of Stitch Fix fell after hours on Monday after the online styling service said it expects falling sales through the months ahead and plans to exit its business in the U.K., as a still-cautious customer pulls back on wardrobe experimentation.

“Our current business results are not indicative of what I believe this company can deliver, and I am committed to realizing the full potential of Stitch Fix and driving long-term, profitable growth,” Matt Baer, the company’s new chief executive, said in a statement.Stitch Fix said it expects fiscal first-quarter U.S. net sales of $355 million to $365 million, an 18% to 20% drop. For its full fiscal 2024, it said it expects U.S. net sales to have a similar percentage drop to a range of $1.

The company announced the results as it tries to cut costs and focus on its core U.S. styling business, where its stylists send clothes to customers based on their preferences, and customers can keep or return those items. It also allows customers to buy clothing directly. Along with the appointment of Baer, a Macy’s Inc. M, -3.68% veteran, in June, the company has also shaken up its leadership team and announced layoffs this year.

In June, management said they would close a distribution center in Dallas and let the lease on another expire. At that time, the company said it would “explore exiting” the U.K., where Stitch Fix set up shop four years ago. On Monday, Stitch Fix said it made the decision to exit that business on Aug. 24, and said it expects that the U.K. business “will be reported as a discontinued operation in the first quarter of fiscal 2024.

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