Incoming Stitch Fix CEO Elizabeth Spaulding told CNBC on Thursday the company is confident in the timing of its executive shakeup, explaining that the coronavirus pandemic “accelerated everything” for the online styling service.
Spaulding, who currently serves as president, is set to take over the reins from founder and CEO Katrina Lake on Aug. 1. Lake, who started Stitch Fix in 2011 and took it public six years later, will then transition to executive chairperson of the company’s board.
While it’s not unusual for start-up founders to step down as CEO as their company matures, Stitch Fix’s announcement Tuesday nevertheless caught some industry observers and analysts by surprise. The company’s stock fell following the news.
“Really, the timing felt right,” Spaulding said Thursday in an interview on “Closing Bell.” “Covid has accelerated everything for us as a business, and over the course of the last year, we’ve really been able to invest in our future.”
More consumers turned to online shopping during the pandemic, especially for apparel, which plays into Stitch Fix’s core identity, Spaulding noted. The company is seeing the benefits now as the economy recovers from the Covid slowdown and consumers resume activities they shied away from.
“In the last two quarters, we added more clients in those quarters than we did in all of fiscal ,” said Spaulding, who joined San Francisco-based Stitch Fix in January 2020 after more than two decades at Bain & Company.
Stitch Fix is known for sending its clients a box of items, which employees individually select for the customer based on their preferences. Clients only pay for what they keep, and a styling fee also is applied.
Outside of clothing shipments to clients on a regular basis, Stitch Fix has added a direct-buy option in recent years.
When Spaulding’s hire was announced in late 2019, a press release said part of her focus would be on “driving the next phase of Stitch Fix’s growth,” which includes the direct-buy offering.
In addition to pushing forward online clothing sales, the pandemic “accelerated the roles for us as a leadership team,” Spaulding told CNBC.
“It deepens the relationship of any executives going through a crisis,” she said. But the pandemic “also really allowed Katrina and I to divide and conquer and for me to play a role of shaping this next chapter and future of the business, to focus on the innovation within our model and really the table with our future team.”
Spaulding noted that Lake will remain an employee of Stitch Fix, along with her role as executive chairperson of the board. “We kind of joke around we’ll be each other’s bosses,” Spaulding said.
“[Lake] will be focused very heavily around social impact, both on sustainability and the role we can play in the apparel supply chain; diversity, equity and inclusion; and things around brand partnerships and things that are really areas that are her strength,” Spaulding said. “So, we kind of feel like we’re getting the best of both with each of us continuing to play a big role within the business.”