Johnson Fistel Files Class Action Suit Against Stitch Fix, Inc.
SAN DIEGO- PRNewswire —November 13, 2018
Johnson Fistel, LLP announced that a class action has been commenced on behalf of purchasers of Stitch Fix, Inc. (NASDAQ: SFIX) common stock during the period between June 8, 2018 and October 1, 2018 (the “Class Period”).
If you wish to serve as lead plaintiff, you must move the Court no later December 10, 2018. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact Jim Baker at ([email protected]) at 619-814-4471.
The complaint charges Stitch Fix and certain of its officers with violations of the Securities Exchange Act of 1934. Founded in 2011, Stitch Fix is an online retail fashion subscription service. For subscription businesses like Stitch Fix, an important business metric for investors is the number and growth rate of its “active clients.” During 2017 and 2018, Stitch Fix’s active client base had grown dramatically, reaching 2.7 million by the end of the third quarter of 2018. This growth was due, in large part, to the Company’s prolific television advertising campaign, which it had launched in 2017.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information about Stitch Fix’s business and prospects, including that its active client growth had slowed dramatically and that defendants had shut down Stitch Fix’s television advertising campaign for much of the fourth quarter of 2018. As a result of defendants’ false statements and/or omissions, the price of Stitch Fix common stock was artificially inflated to as high as $51.19 per share during the Class Period.
Then on October 1, 2018, after the close of trading, Stitch Fix reported its fourth quarter 2018 financial results, which fell short of projected active client growth expectations. In the Company’s press release, it reported 2.7 million active clients, disclosing that its new active client growth had stalled throughout the fourth quarter. During the conference call held with investors later that evening, 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. Also during the call, defendants disclosed that Stitch Fix had “temporarily ceased [its] national TV campaign for 10 weeks” during the 13 weeks of the 2018 fourth quarter, purportedly to “measure channel efficacy,” conceding that the decision had had a negative impact on new client growth during the quarter. On this news, the price of Stitch Fix stock declined $15.69 per share, or more than 35%.
Plaintiff seeks to recover damages on behalf of all purchasers of Stitch Fix common stock during the Class Period (the “Class”).
About Johnson Fistel, LLP:
Johnson Fistel, LLP is a nationally recognized shareholder rights law firm with offices in California, New York, and Georgia. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits. For more information about the firm and its attorneys, please visit https://www.johnsonfistel.com. Attorney advertising. Past results do not guarantee future outcomes.