According to the Complaint, Stitch Fix, Inc. sells a range of apparel, shoes, and accessories through its website and mobile application.

Traditionally, Stitch Fix sold products as a “Fix,” through which the customer would receive a monthly box of items chosen by a personal stylist. The customer would not know specifically which items they were receiving but would have the option to return whichever items it did not want. The customer paid a $20 “styling fee” per Fix, and that fee would be applied to any of the items the customer chose to buy.

Prior to the Class Period, in 2019, Stitch Fix announced a new direct-buy retail component, eventually named “Freestyle.” The Freestyle program allowed customers to shop the site for specific products, giving the customer more control over what items they received, but also removing the curation element that differentiated Stitch Fix from other e-retailers. The Freestyle program was first made available to a subset of existing Stitch Fix customers in 2020, and incrementally rolled out to all existing customers in early 2021. In September 2021, the Freestyle program was formally launched to new customers.

The Complaint alleges that, throughout the Class Period, Stitch Fix made numerous false and misleading statements to investors concerning the synergy between the Company’s Fix and Freestyle programs, and repeatedly denied claims that the Freestyle program could cannibalize the Company’s legacy Fix business. Specifically, the Complaint alleges Stitch Fix repeatedly assured investors that the Company’s Freestyle business was “an additive experience” and “complimentary” to the Fix business, that “the combination of those two things will allow us to address many more types of clients,” and that “we see solid growth in both sides of the business.” In truth, the allegations continue, Stitch Fix concealed the fact that these programs were not complementary or additive, knew that the Freestyle program would be much preferred to the Company’s original Fix model, and that the Freestyle program would inevitably cannibalize the Company’s legacy Fix business.

On May 22, 2023, the Court issued an Order appointing Lead Plaintiff and Counsel. Lead Plaintiff filed an amended Complaint on August 15. Defendants filed a Motion to Dismiss the amended Complaint on November 1.

On July 16, 2024, the Court issued an Order granting Defendants' Motion to Dismiss. Plaintiff was given leave to amend the Complaint.