Stitch Fix CEO turns to retail basics in turnaround push

Stitch Fix CEO Matt Baer is trying to rebuild the online styling company by putting more weight on merchandising, private-label apparel and customer flexibility, Fortune reported. The shift matters because a business once prized as a tech-driven retail disruptor has lost much of its pandemic-era scale and market value.

Baer, who joined Stitch Fix in 2023 after e-commerce roles at Walmart and Macy’s, told Fortune that the company’s turnaround requires patience and a focus on profitable growth. His approach recasts Stitch Fix less as a technology company that happens to sell clothes and more as an apparel retailer that uses technology to improve service.

From fast growth to a sharp reset

Stitch Fix was founded in 2011 by Katrina Lake, a retail consultant who remains chair of the company’s board, according to Fortune. The company built its service around data and remote stylists, sending customers boxes of clothing selected for their preferences.

Fortune reported that the model initially drew shoppers who disliked shopping or wanted help assembling outfits. Revenue tripled between 2016 and 2021 to $2.1 billion, helped by the rise in at-home shopping during the pandemic, and Stitch Fix’s market capitalization reached $11 billion that year.

The company then lost momentum as customers returned to stores, rivals entered subscription styling and large retailers such as Walmart and Target improved their apparel assortments, Fortune reported. Stitch Fix also struggled with customer retention and high spending to attract new users, losing 400,000 users in the first year after its COVID boom.

From 2021 to 2025, revenue fell 40% to $1.27 billion, according to Fortune. Baer told the publication that signing up large numbers of clients does not by itself create a healthy business.

Retail levers, with tech in support

Baer has pushed Stitch Fix toward basic retail fixes, Fortune reported. Its in-house brands now generate about 40% of sales and carry higher margins, giving the company more control over assortment and profitability.

The company has also expanded into activewear, footwear and accessories including handbags and eyewear, according to Fortune. Baer told the publication that Stitch Fix had been leaving a billion-dollar market opportunity unused in those categories.

Stitch Fix has added more choice in how customers assemble a “fix,” including the cadence of deliveries and some item selection, Fortune reported. The company has also introduced AI tools that let shoppers place a garment over a photo of themselves and that help identify trends, cutting private-label design timelines to weeks from months.

Signs of stabilization

Fortune reported that Stitch Fix’s latest quarter marked its fifth consecutive three-month period of year-over-year revenue growth, with sales rising 4.7%. The company also posted record revenue per active client of $578, while active clients rose for several quarters to 2.39 million at the end of the latest quarter.

The recovery follows $500 million in cost reductions, including changes that ended full-time employment for stylists, according to Fortune. Despite the improvement, Stitch Fix’s market capitalization is about $500 million, roughly 5% of its peak five years earlier.

Baer told Fortune the company is trying to build on what first made Stitch Fix distinct while using newer technology. He also said company data indicates 90% of the U.S. population is not excited about shopping for apparel in stores, leaving a market for help with style and trends.

This story draws on original reporting from Fortune.