Grabar Law Office In The News: Stitch Fix Faces Stockholder Suit Over Direct Sale Losses

A shareholder of online fashion retailer Stitch Fix Inc. has sued the company in Delaware’s Court of Chancery, alleging that from December 2020 through March 2022, the company misled the public about the effect that a direct-buy option was having on its subscription business.

In a verified stockholder derivative complaint filed March 17 and unsealed late Wednesday, shareholder Keith Horton alleges that for almost a year and a half, the company’s officers and directors made “false and misleading statements and material omissions” about the company’s “Freestyle” program, which allowed customers to buy directly from the website instead of through its subscription service.

The defendants “breached their fiduciary duties by personally making and/or causing Stitch Fix to make to the investing public a series of materially false and misleading statements and omissions about the Freestyle direct buy, including its cannibalization of the company’s legacy Fix business,” the complaint says.

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