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Stitch Fix has filed confidentially for an IPO

It will be one of the most closely watched e-commerce IPOs in years.

Stitch Fix founder and CEO Katrina Lake being interviewed onstage at Recode’s 2017 Las Vegas Code Commerce event.
Stitch Fix founder and CEO Katrina Lake at a 2017 Code Commerce event
Recode/Becca Farsace
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

Stitch Fix, the fast-growing online fashion retailer and personal styling service, has filed confidentially to go public, according to a person familiar with the filing.

The company could be looking for a valuation of $3 billion to $4 billion in the offering, Reuters reported earlier this year. TechCrunch first reported the news of the confidential filing on Friday, following a Recode report from earlier this week that said the company could submit the paperwork within days.

The five-year-old company, founded by CEO Katrina Lake, sends boxes of clothing and accessories to customers personalized to their tastes. Stitch Fix says it uses a combination of algorithms and stylists to choose what it sends to each customer. Customers pay an initial $20 styling fee that can be used toward the purchase of clothing they keep, and receive a 25 percent discount if they purchase every item.

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Confidential filings like this one were introduced in the 2012 JOBS Act. They were designed to allow “emerging growth” companies to file a draft S-1 with the SEC in order to get initial feedback from the commission without the public scrutiny of investors, competitors and the media that comes with a public filing.

Stitch Fix has been a hit in middle America among busy professional women and those who don’t have easy access to a wide variety of shopping options. The company also launched a men’s service last year.

Stitch Fix previously announced that it generated revenue of $730 million, profitably, in its 2016 fiscal year that ended last July. Second Measure, a startup that analyzes anonymized credit and debit card data, estimates that Stitch Fix’s revenue has grown around 33 percent in the first 11-plus months of its current fiscal year. That would make its 2017 revenue nearly $1 billion.

A Stitch Fix spokesperson declined to comment on the estimate and the filing.

If Stitch Fix goes through with the offering, it would mark the most closely watched e-commerce IPO since Etsy’s public debut in early 2015. Unlike Etsy, Stitch Fix both stores and ships its own inventory, which consists of third-party fashion brands as well as a stable of its own private labels. The company says that the data it has on its customers’ preferences helps it turn over its inventory more quickly than traditional retailers.

Stitch Fix has raised $42 million in venture capital from investors including Benchmark, Baseline Ventures and Lightspeed Venture Partners. But the company hasn’t taken on new capital since a $25 million round in 2014 that valued it at around $300 million.

The filing comes less than two months after the company hired a new chief financial officer, which is an unusually short span between hire and filing. But in the half-year or so that its CFO role was vacant, the GM of its men’s business, Mike Smith, acted as a de facto head of finance, sources say.

Stitch Fix may have had an incentive to get a filing out by the end of July, which is the end of its fiscal year. Up until very recently when it changed the rules, the SEC only allowed companies with less than $1 billion in revenue in their most recent fiscal year to file their initial IPO paperwork confidentially.

That means if Stitch Fix thought it would hit revenue of $1 billion in this fiscal year, it would need to file by the end of the July in order to qualify for a confidential filing using last year’s lower figure.

Stitch Fix’s filing comes a week after the company made the surprising announcement that its No. 2 exec, COO Julie Bornstein, would be leaving the company. Recode has since learned that the company’s vice president of brand and creative, Cristina Angeli, announced last week that she was leaving Stitch Fix, too.

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