Advertisement
U.S. markets closed
  • S&P Futures

    5,209.25
    -5.50 (-0.11%)
     
  • Dow Futures

    39,212.00
    -11.00 (-0.03%)
     
  • Nasdaq Futures

    18,190.75
    -40.75 (-0.22%)
     
  • Russell 2000 Futures

    2,048.90
    -0.90 (-0.04%)
     
  • Crude Oil

    82.63
    -0.09 (-0.11%)
     
  • Gold

    2,165.90
    +1.60 (+0.07%)
     
  • Silver

    25.35
    +0.09 (+0.34%)
     
  • EUR/USD

    1.0875
    -0.0001 (-0.01%)
     
  • 10-Yr Bond

    4.3400
    +0.0360 (+0.84%)
     
  • Vix

    14.33
    -0.08 (-0.56%)
     
  • GBP/USD

    1.2726
    -0.0002 (-0.02%)
     
  • USD/JPY

    149.2600
    +0.1620 (+0.11%)
     
  • Bitcoin USD

    66,320.55
    -1,247.02 (-1.85%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,722.55
    -4.87 (-0.06%)
     
  • Nikkei 225

    39,500.59
    -239.85 (-0.60%)
     

Stitch Fix to lay of 1,400 employees in California, 18% of overall headcount

Stitch Fix is reportedly laying off 1,400 employees to hire in other states for a lower cost. Yahoo Finance’s Final Round panel breaks down the details

Video Transcript

MYLES UDLAND: All right, let's call this one the reverse Melody Hahm trade. Stitch fix today announcing that they'd laid off 1,400 of their stylists through the end of September. But the company said it plans to hire 2,000 stylists across the US. It's just that you can't live out in San Francisco, out in California where the company is based. They want to hire folks in lower cost of living areas of the country. And Melody Hahm is someone who, it's not like you move to a cheaper part of the country, went from New York to LA.

But I think it's as we talked so much about future of work, distributed workforce. For the company to explicitly tell its workforce, you're going to have to move somewhere else, and then we're going to pay you a little bit less, but you can have your job. It's a very interesting way I think to exert some leverage, if you believe you do have that leverage, over your workforce and kind of force the change you want to see in how you're structured quite abruptly.

MELODY HAHM: Yeah. Call it domestic outsourcing of sorts. And you know, even a couple of months ago, the conversation we were having around employment was specifically how tight the labor force was, right? You have to offer incentives. If you are in Los Angeles, if you are in San Francisco, here are all the goodies that we're bringing to you. Now it's like, hey, if you want a job, be in Pittsburgh. Be in Cleveland. Come to Austin.

And so the it's so interesting with the Stitch Fix model too, the whole point is that it's algo-driven styling. So basically, for those of you who don't know, it's a subscription box. You only pay for what you keep. And the whole kind of business model is around the idea that it's very stylish people who are paid to help curate based on your questionnaire that you answered online.

My anticipation, and just based on this announcement alone, is that they will get rid of many more of those stylists to come. Yes, sure, they're hiring 2,000 new folks and these kind of second, third tier cities. But at the same time, I don't anticipate that this kind of continued demand will exist. As we know, Stitch Fix announced their last quarter results right before the pandemic hit and right before they had to close their two factories in Pennsylvania as well as in Cleveland.

So just thinking about the supply chain-- and I think this is when it's very clear, even if you're a publicly traded company, that doesn't mean you're a conglomerate, right? That doesn't mean that you have a lot of kind of hedging that you're able to do based on production. And Stitch Fix, a lot of the revenue that they have been generating over the last few quarters has been from their internal brands, from their private label brands that they were able to manufacture in-house because the margins, of course, are that much better.

I anticipate that a lot of those, maybe they'll have to slash the pricing in order to entice new customers. But it's not a good sign for the company right now.

MYLES UDLAND: Well, and I think also, you know, Melody kind of brings up the broader question of how we form our, you know, relationship with our employer and what that means more broadly. And Sundar Pichai talked about this a couple of weeks ago, where he made the astute observation we're all acting right now on plans that were put in place at the beginning of the year. What does planning for the next year look like? What is the next phase of your business when no one works in the same spot really looks like?

And you know, we chatted about this in our group meeting this morning. And I guess I would ask you, I mean, OK, so you chose to move to LA. And you were able to keep this job. But you know, what if we were all told, you got to move to Cleveland, you have to move to Kansas City if you want to keep your job, would-- would you feel confident enough to do that? Because if you lose that job, well, then you're in a new city with new faces, trying to figure out a new life. And I don't know. It's quite a trade-off.

MELODY HAHM: Yeah. And I think the pulse-- pulse of that question changes kind of on a weekly basis, at least in my mind. There's one moment where I'm like, you know what, it's OK. I have enough savings. I'll be able to survive. But that's so theoretical, right? But in practice, in actuality, would I actually make that decision? Probably not.

I think at the end of the day, I'm too risk-averse in many degrees. And it's something that I don't like about myself, where even this Los Angeles move was seen as a big decision, when in reality, yeah I, was able to transfer internally. I was able to take paid time off. You know, there were very few hitches along the way. So for that I feel very grateful. But overall, I anticipate you know, just thinking more on a macro level with a lot of these folks who are desperate for jobs.

And if they are in a career or a calling that they feel very passionate about-- like, styling is not something you necessarily stumble into, right? You are deliberately choosing this path for your life. So maybe there could be more mobility there, as we've seen anecdotal evidence and tangible evidence that people are leaving and fleeing big cities like Los Angeles, like New York City.

So I think coupled with the coronavirus kind of suburban movement, I anticipate that, yeah, there might be some interest. But I don't think that kind of, you know, washes way that the overarching problems that Katrina Lake, the CEO pointed.

DAN ROBERTS: And guys, you know, the larger conversation here that the Stitch Fix conversation, you know, brings up is all these New York or SF, I guess, companies that are looking at a future now of remote work. And you wonder a couple of things. First of all, is it really the same experience for all the remote workers? I'm sure Melody would have opinions on that too and whether she still feels is as connected as before. I hope so.

But you know, just to use an anecdote of a friend who works for a tech company in New York. And I won't name the company for now because I'm not sure if this is public. But this friend told me that his company is not renewing 70% of its New York City office space come August. And this friend, along with many of his colleagues has been told, you are now a remote employee for good. And in some ways, there might be some people who hear that, and they say, oh, hooray. It's so much more convenient. But it changes a lot.

It changes the experience. I mean, especially for us as journalists. Personally, I love the feel of when we're in the newsroom and we bat ideas back and forth and we talk about news just out loud with each other. That is gone during this time. Now, of course, part is for safety measures, totally understood or wholly it's for safety measures. But if a time comes when offices could have people come back but just choose not to because this new remote landscape looks like the future, it does change the work experience.

And then of course, another thing people have to think about. Well, OK, if I'm a remote worker now, maybe I can go move to Ohio. But then are some companies-- and I have to imagine yes-- going to pay employees less because obviously there's a lower cost of living in certain cities they might move to. And I do-- I do regret, Dan, that our viewers cannot get the full experience of your anger mid-story when something has gone wrong, typing, yelling, ranting and raving in the newsroom. Always a pleasant-- always a pleasant afternoon interaction for everyone's workflow.

Advertisement