What does Katrina Lake’s resignation mean for Stitch Fix investors?

After more than a decade at the helm, Stitch Fix CEO Katrina Lake is stepping down, but what does this mean for investors?

It’s the end of an era as Stitch Fix (NASDAQ: SFIX) founder and CEO Katrina Lake announced yesterday that she would be stepping down effective August 1 later this year.

But with the online styling service appointing current president, Elizabeth Spaulding, as chief executive, and Lake staying on the board, what does this mean for investors?

Don’t panic!

Stitch Fix has come a long way since its market debut in 2017. It boasts about 4 million clients and roughly 8,000 employees, while its stock price has risen to $47 from its IPO price of $16.90, giving it a valuation of roughly $5 billion. 

COVID-19 has caused problems though. Shipping delays and a 7% reduction in consumer spending last year have hurt the business and caused layoffs. . Surely Lake’s retirement during this tough time is bad for business? 

Not necessarily!

Investors are jumpy folk, and CEO turnover can spook them easily. But the best companies have succession plans, which is what appears to be happening here. Lake is stepping down voluntarily and has appointed a worthy successor in Spaulding. 

It is a fitting time for the change anyway as, in Lake’s own words:

“Apparel retail is undergoing a reinvention, and Stitch Fix is exceedingly well-positioned to lead through it. This moment of transformation in our business and our industry makes it the right time to think about the next generation of leadership at our company.”

The leader a business starts with isn’t necessarily the leader it needs to see it reach the next step. To reach the next level of its growth, perhaps Spaulding is required, not Lake.

If you invested in Stitch Fix because of Katrina Lake, then rest assured she knows what she’s doing in her succession. If you want to learn more about Lake’s impact, read our short blog post here.

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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here