Retail Wholesale Department Store Union Local 338 Retirement Fund v. Stitch Fix, Inc.

This is a securities class action brought on behalf of investors in Stitch Fix, Inc. (“Stitch Fix” or the “Company”), which is pending in the Northern District of California before the Honorable P. Casey Pitts. The action alleges violations of the Securities Exchange Act of 1934 against Stitch Fix and its founder, Executive Chairperson, and former CEO Defendant Katrina Lake and former CEO and board member Defendant Elizabeth Spaulding (collectively, “Defendants”) on behalf of purchasers of Stitch Fix common stock from June 9, 2020, through June 9, 2022, inclusive (the “Class Period”).

Lead Plaintiffs Have Reached a Proposed Settlement of the Action for $32 Million

Lead Plaintiffs Retail Wholesale Department Store Union Local 338 Retirement Fund, Retail Wholesale Department Store Union Local 338 Health & Welfare Fund, Retail Wholesale Department Store Union Local 338 General Fund, and Retail Wholesale Department Store Union Local 338 Benefits Trust Fund (the “Local 338 Funds” or “Lead Plaintiffs”), on behalf of themselves and the Settlement Class, have reached a proposed settlement of the Action for $32,000,000 in cash that, if approved, will resolve the Action (the “Settlement”).

If you are a member of the Settlement Class, your rights will be affected and you may be eligible for a payment from the Settlement. The Settlement Class consists of:

all persons and entities who purchased or acquired Stitch Fix common stock from June 9, 2020 through June 9, 2022, inclusive, and were damaged thereby.

Certain persons and entities are excluded from the Settlement Class by definition (see paragraph 32 of the Notice) or may request exclusion from the Settlement Class pursuant to the instructions set forth in the Notice (see paragraph 57 of the Notice).

Please read the Notice to fully understand your rights and options. Copies of the Notice and Claim Form can be found in the Case Documents list on the right of this page. You may also visit the case website, www.StitchFixSecuritiesLitigation.com, for more information about the Settlement.

To be eligible to receive a payment under the proposed Settlement, you must submit a Claim Form postmarked (if mailed) or submitted on-line by no later than October 7, 2026.

Payments to eligible claimants will be made only if the Court approves the Settlement and a plan of allocation, and only after any appeals are resolved, and after the completion of all claims processing.  Please be patient, as this process will take some time to complete.

IMPORTANT DATES AND DEADLINES

October 7, 2026	Claim Filing Deadline.  Claim Forms must be postmarked (if mailed) or submitted on-line no later than October 7, 2026.
August 27, 2026	Exclusion Deadline.  To exclude yourself from the Settlement Class, you must submit a written request for exclusion so that it is received no later than August 27, 2026, in accordance with the instructions in the Notice.
August 27, 2026	Objection Deadline.  Any objection to the proposed Settlement, the proposed Plan of Allocation, or the motion for attorneys’ fees and expenses, must be submitted so it is filed or postmarked no later than August 27, 2026, in accordance with the instructions in the Notice.
September 24, 2026 at 10:00 a.m. Pacific time	Settlement Hearing.  The Settlement Hearing will be held on September 24, 2026 at 10:00 a.m. Pacific time, before the Honorable P. Casey Pitts of the United States District Court for the Northern District of California, either in person at Courtroom 8, 4th Floor of the Robert F. Peckham Federal Building & United States Courthouse, 280 South First Street, San Jose, CA 95113,, or by telephone or videoconference (in the discretion of the Court). The Settlement Hearing will be held by the Court to consider, among other things, whether the proposed Settlement is fair, reasonable, and adequate and should be approved; whether the proposed Plan of Allocation is fair and reasonable and should be approved; and whether Lead Counsel’s motion for attorneys’ fees and expenses should be approved.

Background and History of the Litigation

This case arises from alleged misstatements and omissions by the senior executives of Stitch Fix about a new business line called “Direct Buy,” later renamed to Freestyle, that Defendants and analysts celebrated as the “pivotal transformation” of the Company. Led by its new CEO, Defendant Elizabeth Spaulding, Stitch Fix assured investors that Direct Buy was “additive,” “incremental” and “complementary” to its core product, the “Fix.” In fact, Lead Plaintiffs allege, the opposite was true because Defendants knew from extensive internal test results that Direct Buy was cannibalizing the Fix business. When the truth was revealed to investors through multiple partial disclosures, Lead Plaintiffs and the Settlement Class suffered significant losses as the Company’s market capitalization declined by over $6 billion, or approximately 90%.

The market learned the truth through four partial disclosures, beginning on March 8, 2021, when Stitch Fix announced that the launch of Direct Buy would be delayed as the Company attempted to “evolv[e] our client onboarding process and user interface.” The delayed launch also resulted in a reduction in financial guidance. In response to this disclosure, the price of Stitch Fix stock declined 28%. Then, on December 7, 2021, Defendant Spaulding revealed that as a result of the “expansion into Freestyle,” the Company “may experience short-term impacts of cannibalization.” In response to this disclosure, the price of Stitch Fix stock declined 24%. But Defendants continued to assure investors that Direct Buy and Fix were “complementary” and “additive.” Analysts accordingly were both surprised by Defendants’ revelations and reassured that the Company would be able to resolve the potential cannibalization issue in the short term.

Then, on March 8, 2022, Defendant Spaulding shocked investors when she disclosed that the Company was continuing to experience cannibalization that had not been resolved in the short term. Defendant Spaulding revealed that the Company had created a “friction” between Fix and Freestyle customers because Defendants chose to direct customers who came to the Company website to buy a Fix to Freestyle instead. These would-be clients ended up buying nothing and as Defendant Spaulding acknowledged, “conversion of new visitors for Fix and Freestyle is not where we want it to be.” Lead Plaintiffs allege that, as a result of these disclosures, the price of Stitch Fix stock declined by 6%.

Lead Plaintiffs allege that the full truth was revealed on June 9 and 10, 2022, when Defendant Spaulding announced significant layoffs and disclosed with respect to Freestyle that “the conversion of new visitors was not where we wanted it to be in the second quarter[.]” Defendant Spaulding explained that Stitch Fix had modified the Company website’s onboarding path to address the reality that Freestyle was cannibalizing Fix, but even so, the Company is “still not yet at our desired conversion level.” Accordingly, the Company issued new downward revisions to guidance. As a result of these disclosures, the price of Stitch Fix stock declined 27%.

In the aftermath, Defendant Spaulding was forced to resign from her position as CEO and Stitch Fix has effectively abandoned Freestyle as a business strategy. On January 5, 2023, the Company issued a press release announcing that Defendant Spaulding was not the right person to lead the Company’s “ambitious transformation.” Further, Defendant Lake, as interim CEO, announced on March 7, 2023 that the Company would “refocus” on the Fix, and that Stitch Fix would no longer think of Freestyle as a “separate business unit” because it “was less effective” as a “customer acquisition vehicle.”

On May 22, 2023, the Court appointed the Local 338 Funds as Lead Plaintiffs and approved BLB&G as lead counsel. On May 26, 2023, the Court entered a schedule under which Lead Plaintiffs’ amended complaint was filed on August 15, 2023. Defendants filed their motion to dismiss on November 1, 2023. Lead Plaintiffs filed a brief opposing the motion to dismiss on December 22, 2023, and Defendants filed a reply brief on February 6, 2024. A hearing on Defendants’ motion to dismiss was held on April 18, 2024.

On July 16, 2024, the Court granted Defendants’ motion to dismiss the amended complaint with leave to amend.

On September 13, 2024, Lead Plaintiffs filed the Second Amended Class Action Complaint (the “Complaint”). The Complaint alleged that Defendants made materially false and misleading statements or omissions concerning Stitch Fix’s new business line called “Direct Buy” and whether Direct Buy was “additive,” “incremental” and “complementary” to the Fix.

On November 8, 2024, Defendants moved to dismiss the Complaint asserting (among other things) that Lead Plaintiffs failed to sufficiently allege any actionable misrepresentation or omission or an inference of scienter.

On July 9, 2025, the Court granted in part and denied in part Defendants’ motion to dismiss the Complaint. The Court sustained Lead Plaintiffs’ Section 10(b) claims with respect to four statements that Defendants made from December 2020 through September 2021 and dismissed all other alleged misstatements and dismissed Lead Plaintiffs’ Section 20(a) claims.

Discovery in the Action commenced following the Court’s July 9, 2025 denial of Defendants’ motion to dismiss the Complaint.

The Parties began exploring the possibility of a settlement in the summer of 2025. The Parties agreed to engage in private mediation and retained Michelle Yoshida of Phillips ADR to act as mediator in the Action. On November 13, 2025, counsel for the Parties participated in a full-day mediation session before the Ms. Yoshida. In advance of that session, the Parties negotiated and Defendants produced over 6,000 pages of internal Company documents to Lead Plaintiffs for the purpose of facilitating the mediation, and the Parties exchanged and submitted detailed mediation statements.

At the conclusion of the mediation, Ms. Yoshida made a mediator’s recommendation that the Parties settle the Action for $32,000,000, which the Parties accepted. The agreement’s terms were memorialized in a term sheet executed on November 20, 2025. After additional negotiations regarding the terms of their agreement, the Parties entered into the Stipulation and Agreement of Settlement on February 6, 2026.

On May 18, 2026, the Court preliminarily approved the Settlement, authorized notice of the Settlement to be provided to potential Settlement Class Members, and scheduled the Settlement Hearing to consider whether to grant final approval of the Settlement for September 24, 2026.  On May 19, 2026, the Court entered an amended version of its preliminary approval order.