May 31 Stitch Fix Inc has hired investment banks
for an initial public offering (IPO) that could value the U.S.
personalized fashion internet retailer at between $3 billion and
$4 billion, including debt, according to people familiar with
The IPO would be the first by a U.S. e-commerce company in
two years, as stock market investors have been wary of betting
on companies in the sector that, unlike Stitch Fix, are not
San Francisco-based Stitch Fix has hired investment banks
Goldman Sachs Group Inc and JPMorgan Chase & Co
to lead the IPO, four people said this week, asking not to be
identified because the matter is confidential.
Stitch Fix, Goldman Sachs and JPMorgan declined to comment.
Founded in 2011 by Harvard Business School graduate Katrina
Lake, Stitch Fix has over 5,700 employees. It had $730 million
in sales in its fiscal year for 2016, its third year of
Stitch Fix sends its customers five personalized apparel and
accessories items based on size, budget and style. Customers
fill out a survey of their preferences, which the company then
uses to select items for them with the aid of a personal
stylist. Customers can return what they do not like in the
company's prepaid packaging.
Stitch Fix works with more than 250 women's fashion brands,
including Joie and Citizens for Humanity, and more than 30 men's
brands including Scotch & Soda.
Stitch Fix is a variant on the popular e-commerce
"subscription box" model, in which customers pay to have regular
- often monthly - shipments of goods. Stitch Fix offers
subscriptions, but does not require customers to subscribe to
use their service.
Subscription businesses such as cosmetics supplier Birchbox
and athleisure brand Fabletics have proliferated in recent
years, offering retailers more predictable revenue streams,
albeit at the expense of putting off some customers who do not
like the commitment of a subscription.
The reach of subscription businesses has attracted corporate
acquirers in recent years. Subscription shave business Dollar
Shave Club, for example, agreed last year to be sold to consumer
goods company Unilever Plc for $1 billion.
(Reporting by Lauren Hirsch in New York and Liana Baker in San
Francisco; Editing by Lisa Shumaker)