Stitch Fix, a popular online clothing style service, made its stock market debut Friday, November 17th. Shares for the company jumped 14% during the day, although the company sold fewer shares than expected at a lower price, according to Associated Press.
In its IPO, Stitch Fix sold 8 million shares at $15 each, though previously the company had said it wanted to sell 10 million shares for between $18 and $20 each. The shares rose as high as $18.53 in the late morning, but fell to $15.15 as the market closed, just a fraction above its opening price.
This is the first tech IPO led by a woman this year, according to an article in The Washington Post.
Still, the investor interest in its debut shows promise for the company in a relatively new industry. Stitch Fix provides an online subscription service, delivering clothes hand-picked by stylists to its customers on a monthly basis so they don’t have to shop themselves. Stitch Fix allows customers to set up online style profiles, including images from Pinterest and other social media for more personalization. The company mails the clothes directly to the consumer, who can keep what they like and return the rest, minus a $20 styling fee.
The service launched six years ago, and now has about 2.2 million active users. In their annual report in June this year, the company announced revenue of $977.1 million, up 34 percent from the year before.
Stitch Fix is the latest online subscription delivery service to try and raise money through an IPO. Meal kit delivery service Blue Apron, and most recently competitor Hello Fresh also made their stock market debuts.
Amazon is the wild card, and may turn out to be a fierce competitor in the online clothing subscription business as well as the meal kit delivery industry. Amazon recently announced its own online clothing styling service called Prime Wardrobe, and prior to Blue Apron’s IPO, announced its own meal kit delivery service.
Traditional retailers are also getting in the online styling service game, including Nordstrom’s Trunk Club. With Trunk Club, customers can complete an online styling profile, chat with a stylist, and get a digital preview of the clothing the stylist chooses. Trunk Club then mails the clothes and less a $25 styling fee, you can return what you don’t want. (Nordstrom recently opened physical locations for its online subscription service, too, where you can meet with a stylist, try on clothes, and take them home the same day.)
Stitch Fix’s initial valuation was $1.63 billion, placing it ahead of such brick-and-mortar clothing retailers as Abercrombie & Fitch at $1.07 billion and J.C. Penney at $1.01 billion.