US-based online subscription and personal shopping service company Stitch Fix has landed itself in hot water as the firm is facing a number of lawsuits from its shareholders over alleged claims of false/ misleading information about its growth prospects. The company shareholders are questioning the accuracy of its third quarter performance report and also its future growth capabilities.
The US $ 2 billion company which enables consumers to submit size, budget and style preferences before receiving a box of five personally-styled apparel and accessories items that can either be purchased or returned, released its Q3 results in June this year citing a 30 percent increase in the size of its active client-base, equating to a total subscriber count of 2.7 million. This has wowed the investors and the firm was being seen as running ahead of others in the segment.
It was also reiterated in October when it used this increase to justify the expenses associated with re-booting its TV advertising campaign.
According to the complaints filed, ‘Stitch Fix conceded that, despite having reported on June 7, 2018, which was already a third of the way through the 2018 fourth quarter, that it had grown active clients by 180,000 quarter-over-quarter to 2.7 million, its active client growth rate had declined dramatically during the fourth quarter and remained virtually flat.’
Earlier, Stitch fix had made it to the headlines in November 2017 when it was listed on the NASDAQ.
