30%+ Collective Loss | SFIX Stock | Stitch Fix Inc Securities Class Action Lawsuit #SFIX
30%+ Collective Loss | SFIX Stock | Stitch Fix Inc Securities Class Action Lawsuit #SFIX
Stitch Fix Admitted “short term cannibalization” from new customers
Stitch Fix admitted that there was a « short term cannibalization » from new customers who chose to use the new direct-buy Freestyle option rather than the traditional Fix option. This decision by customers led to some challenges for the company.
Q1 2021 Loss Announcement
Stitch Fix announced a Q1 2021 loss which will cut its full-year revenue projections. This news impacted investors who had purchased Stitch Fix Class A common stock between December 8, 2020, and March 8, 2022.
Allegations of False and Misleading Statements
According to a filed complaint, Stitch Fix made numerous false and misleading statements to investors regarding the synergy between the Company’s Fix and Freestyle programs. The company denied claims that the Freestyle program could cannibalize the Company’s legacy Fix business.
Concealment of Information
Stitch Fix concealed the fact that the Fix and Freestyle programs were not as complementary or additive as they claimed. The company knew that the Freestyle program would be much preferred to the original Fix model and that it would inevitably cannibalize the legacy Fix business.
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