Stitch Fix, the personal styling service and online retailer, has Filed Publicly for an IPO in an offering that will be closely watched in the e-commerce and retail worlds.
The San Francisco-based company registered $977 million in revenue in its most recent fiscal year, which ended this summer. It lost $594,000 for the year, after two years of strong profits.
Stitch Fix Filed to raise $100 million in an IPO on Nasdaq, though that number is typically a placeholder. Reuters previously reported that the company would seek a valuation of $3 billion to $4 billion.
The 6-year-old online retailer, founded and run by 34-year-old CEO Katrina Lake, struck a chord with women who are too busy to shop for clothing regularly, and those who simply prefer an affordable stylist service.
Customers fill out a survey about their style, and pay a $20 styling fee upfront. Stitch Fix then sends them five items — a mix of clothing and accessories — that aims to match each customer’s taste.
Shoppers keep what they like and send back what they don’t. The $20 styling fee can be used toward any item kept, and a 25 percent discount is given to those that purchase everything in the box.
Stitch Fix runs a large data-science operation, which the company says helps it make more accurate styling choices for customers, and also helps it create its own clothing that matches up with current trends. You can be sure that the company will pitch this to investors, and will make an argument that it should be valued higher than a typical retail company as a result.
“Our data science capabilities fuel our business,” Stitch Fix says in the filing. “These capabilities consist of our rich and growing set of detailed client and merchandise data and our proprietary algorithms.”
The company got its start selling women’s clothing exclusively, with a mix of its own private-label brands as well as those from other companies. Last year, it launched a men’s offering, and recently added more inventory from higher-end women’s brands.
For an e-commerce company of this size, Stitch Fix raised relatively little money — less than $50 million from a group of venture firms that included Benchmark and Baseline. They will be big winners when the company goes public.
While the company grew to nearly $1 billion in revenue at a fast clip, its growth is slowing. Revenue grew 33 percent year over year between its 2016 and 2017 fiscal years, down from 113 percent between 2015 and 2016.
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