INVESTOR ALERT: Edelson Lechtzin LLP is Investigating Securities Fraud Claims on Behalf of Stich Fix, Inc. (NASDAQ: SFIX) Shareholders
NEWTOWN, PA, September 20, 2022 — The law firm of Edelson Lechtzin LLP is investigating securities fraud claims on behalf of purchasers of Stich Fix, Inc. (“Stich Fix” or the “Company”) (NASDAQ: SFIX) common stock between December 8, 2020, and March 8, 2022, inclusive (the “Class Period”).
Investors who purchased Stich Fix common stock during the Class Period may move the U.S. District Court for the Northern District of California to appoint them as lead plaintiff, no later than October 25, 2022. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. Investors who wish to discuss the lead plaintiff selection process should contact Edelson Lechtzin LLP, toll free at 1-844-696-7492, or by e-mail at [email protected].
Background on the Stich Fix Securities Class Action
Stich Fix is an online personal styling service in the United States and United Kingdom that uses recommendation algorithms to personalize clothes based on price, size, and style. Traditionally Stich Fix sold products as a “Fix” box, through which the costumer would receive a monthly box of varying items picked by a personal stylist. The customer would then have the option to return the items they did not want out of the box. However, on December 8, 2020, Stich Fix launched its new “Freestyle” program, which allowed customers to choose from the outset the items they wish to purchase. Although this gave customers more control over the items they received, it undermined the uniqueness of Stich Fix from other online retailers.
Stich Fix repeatedly denied claims that the “Freestyle” program could cannibalize its legacy Fix business. Specifically, they told investors that their new Freestyle service was merely an addition to the original Fix model, and it would work collaboratively with the Fix model to serve as catalyst to attract new clients. However, the two models were not complimentary.
On December 7, 2021, Stich Fix belatedly admitted that they had downplayed the magnitude of the Company’s transition from the subscription-based Fix model to the retail-based Freestyle model. Additionally, Stich Fix admitted that the Company experienced some “short term cannibalization” from new customers who chose the new direct-buy Freestyle option rather than the traditional Fix option. They also announced a loss for its first quarter of 2021 and cut its full-year revenue projections. As a result of these disclosures, the price of Stich Fix stock declined by 5.97% per share, or 24%, from $24.97 per share to $19.00 per share.
Stich Fix continued to assure investors that this was a short-term problem. Then, on March 8, 2022, Stich Fix admitted there was incompatibility friction between the Freestyle program and the Fix program. Explaining that when customers visited Stich Fix’s website, it directed them to the Freestyle experience first, and this inadvertently created friction for “potential customers interested in ordering fix.” On this news, the price of Stich Fix shares plummeted $0.67 per share, or 6%, from $11.01 per share to close at $10.34 per share.
For more information, please contact:
Marc H. Edelson, Esq.
Eric Lechtzin, Esq.
EDELSON LECHTZIN LLP
411 S. State Street, Suite N-300
Newtown, PA 18940
Phone: 844-696-7492 or 215-867-2399 ext. 1
Email: [email protected]
About Edelson Lechtzin LLP
Edelson Lechtzin LLP is a national class action law firm with offices in Pennsylvania and California. In addition to cases involving securities and investment fraud, our lawyers focus on class and collective litigation in cases alleging violations of the federal antitrust laws, employee benefit plans under ERISA, wage theft and unpaid overtime, consumer fraud, and dangerous and defective drugs and medical devices.