NEW YORK, Oct. 12, 2018 — Gainey McKenna & Egleston announces that a class action lawsuit has been filed against Stitch Fix, Inc. (“Stitch Fix” or the “Company”) (Nasdaq: SFIX) in the United States District Court for the Northern District of California on behalf of a class consisting of investors who purchased or otherwise acquired Stitch Fix securities between June 8, 2018 through October 1, 2018, both dates inclusive (the “Class Period”), seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder.
According to the Complaint, defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that: (1) Stitch Fix’s sales growth prospects were not as positive as stated because active client growth had dramatically slowed; (2) defendants had ceased running a television advertising campaign for much of the fourth quarter of 2018; and (3) as a result, defendants’ statements were materially false and misleading and/or lacked a reasonable basis at all relevant times.
The Complaint also alleges that on October 1, 2018, after the close of trading, Stitch Fix reported its 4Q18 financial results, which fell short of projected active client growth expectations, disclosing that the Company had signed up far fewer than expected new active clients during 4Q18, which had ended more than two months earlier, on July 28, 2018. The Complaint alleges that the Company shocked the market by disclosing that Stitch Fix’s active client count was virtually flat, coming in at 2.7 million. Indeed, the Complaint alleges that the Company’s active client growth had plummeted by 70% quarter-over-quarter, falling from 180,000 new additions in 3Q18 to just 54,000 in 4Q18 – lower than any prior reported quarterly growth since it had first launched its television advertising campaigns in 2017 – and well below the 120,000 active clients added during 4Q17.
On Tuesday, October 2, 2018, the Complaint alleges that the price of Stitch Fix stock declined $15.69 per share – more than 35% – on unusually high volume of more than 39.9 million shares traded, or more than 9.5 times the average daily volume over the preceding ten trading days. By the close of trading that day, the Complaint also alleges that more than $600 million in market capitalization had been lost.
Investors who purchased or otherwise acquired shares during the Class Period should contact the Firm prior to the December 10, 2018 lead plaintiff motion deadline. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. If you wish to discuss your rights or interests regarding this class action, please contact Thomas J. McKenna, Esq. or Gregory M. Egleston, Esq. of Gainey McKenna & Egleston at (212) 983-1300, or via e-mail at [email protected] or [email protected].
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