- After less than a year and a half in the position
- Praise, thanks and good wishes for Spaulding
- Katrina Lake taking over temporarily
- Search for a successor
- Spaulding spoke at length and said 143 words
(exechange) — San Francisco, California, January 5, 2023 — Elizabeth Spaulding, chief executive of Stitch Fix, leaves. As announced by Stitch Fix Inc. in a news release and in a regulatory filing published on Thursday, January 5, 2023, Elizabeth Spaulding, chief executive officer, leaves the apparel company, after less than a year and a half in the role, effective immediately.
The average tenure of CEOs who announced their departure over the past 12 months was 8.3 years. Around 12% of CEOs left their posts within two years. This is according to data collected by CEO-exit research firm exechange.
exechange tracks CEO departures at the 3,000 largest publicly traded companies in the U.S., examines the reasons CEOs leave and determines the Push‑out Score™, a measure of pressure on departing chief executives on a scale of 0 to 10.
Stitch Fix will undertake a search for a successor.
Elizabeth Spaulding’s duties as CEO will be taken over temporarily by Katrina Lake, a former Chief Executive Officer at Stitch Fix Inc., as Interim Chief Executive Officer.
“It is now time”
Stitch Fix did not give an explicit reason for Elizabeth Spaulding’s departure from the CEO post. Spaulding said: “It is now time for a new leader to help support the next phase.”
The top three reasons cited in corporate announcements for CEO departures over the past 12 months are performance issues (26.6% of cases), implementation of a planned succession (16.1%) and the statement that the time was right for a change (8.4%), according to exechange data. Other motives given for leadership changes included the outgoing CEO’s wish to pursue other opportunities (6% of cases), personal reasons (3%) and conduct issues (2.4%). Rather rarely stated reasons are health problems (2.1% of cases), career change (2.1%), the desire for more time with family (0.9%), death (0.9%) and disagreement (0.6%). Sometimes, more than one reason was given. In 31% of cases, no reason was given.
Precise information regarding Elizabeth Spaulding’s future plans was not immediately available.
“Step down”
Stitch Fix said: “Elizabeth Spaulding will step down as Chief Executive Officer and as a member of the Board of Directors, effective January 5, 2023.”
“Not the result of any disagreement”
Stitch Fix stated, regarding the change: “Ms. Spaulding’s resignation from the Board of Directors is not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.”
Share price decline since August 2021
The announcement follows a decline in Stitch Fix Inc.’s share price of 94% since August 2021. August 2021 is the month in which Spaulding’s tenure as CEO began.
In the position of CEO since 2021
Elizabeth Spaulding became CEO of the Company in 2021.
Spaulding has served as the Company’s Chief Executive Officer and a member of the Company’s Board since August 2021.
She served as the Company’s President from January 2020 to August 2021.
Previously, she was at Bain & Company, a global consulting firm, serving as a Partner from June 2010 to December 2019 and as a member of Bain’s Board of Directors from January 2018 to December 2019.
From June 2013 to December 2019, Spaulding served as Global Head of Bain’s Digital practice, where she focused on expanding Bain’s capabilities in software development and engineering, innovation services, as well as corporate development for new technology.
She also founded and led the Bain Innovation Exchange as part of her role. Spaulding joined Bain in 1998.
Spaulding holds a B.A.S. in Management and Decision Sciences, as well as in French, from Stanford University and an M.B.A. from Stanford University.
At the time of Elizabeth Spaulding’s appointment as Chief Executive Officer at Stitch Fix, Lake had said: “In founding Stitch Fix, I was inspired by a very human problem, to help people look and feel their best by finding clothes they love. Ten years into this journey, I’m even more inspired by this simple mission, proud of the way we’ve delivered against it, and incredibly optimistic about our future. The impact Elizabeth has already had, combined with the compelling future vision she’s mapped out and is leading us toward, make this the right time for a leadership transition that will usher in the next generation for Stitch Fix, for our business, our people and our clients.”
At the time of Elizabeth Spaulding’s appointment as Chief Executive Officer at Stitch Fix, Spaulding had said: “I am so grateful to Katrina and the Board for the opportunity to take Stitch Fix on the next phase of its journey. The opportunity that we have ahead of us at Stitch Fix is extraordinary, and grounded in Katrina’s vision and last 10 years of building personalization at scale. We are creating experiences that will change the way people shop for generations to come. Given the seismic shift of apparel moving online, Stitch Fix is incredibly well positioned to become one of the most innovative and most transformative companies in the world. And, we can do it all with a deep commitment to bringing joy, inspiration and convenience to all of our clients around the world.”
143 words by Elizabeth Spaulding
In the news release announcing her departure as CEO of Stitch Fix Inc., Elizabeth Spaulding received praise, thanks and good wishes.
In the announcement of the leadership change, Elizabeth Spaulding spoke at length and said 143 words.
“Difficult decision”
Elizabeth Spaulding stated: “Stitch Fix continues to embark on an ambitious transformation and in the immediate term, the focus for the team is squarely on creating a leaner, more nimble organization to set the company up for a return to profitability. First as president and then as CEO, it has been a privilege to lead in an unprecedented time, and to chart the course for the future with the Stitch Fix team. It is now time for a new leader to help support the next phase. With that context, the Board and I have made the difficult decision that I will step down as CEO. I am proud of the new leadership team we have built, the evolution in culture we’ve created, and the products we’ve shipped. More than anything, it is a privilege to serve our clients and create many delightful moments in their lives.”
Over the past 12 months, 26% of all outgoing CEOs remained silent in the departure announcement, according to data compiled by exechange. Departing CEOs who did make a statement said an average of 108 words. The longest statement was 382 words. The shortest statement was 23 words. Leadership transitions in which departing CEOs provide conspicuously short, excessively long or no explanations for their move are statistically associated with elevated pressure and show an increased incidence of Push-out Scores above the critical threshold of 5.
33% of CEOs are forced out or fired
When CEO departures are announced, exechange determines the Push-out Score on a scale of 0 to 10 to assess how likely it is that the chief executive was pushed out or felt pressure to leave the position, with 0 being most likely a voluntary move and 10 being most likely a forced exit. Anything over a 5 indicates that there are valid reasons to believe an executive may have been pushed out.
Of the 335 CEO departures in the Russell 3000 Index evaluated over the past 12 months (January 5, 2022, to January 4, 2023), the average Push-out Score was 5.6, according to exechange data. References to conduct issues, disagreements and irregularities lead to the highest Push-out Scores. When time with family, performance issues or other opportunities were cited as departure reasons, the average Push-out Scores were also significantly elevated.
Around 33% of the CEO departure events from the past 12 months received Push-out Scores of 8 or higher.
In other words, in the past 12 months, three in 10 departing CEOs were forced out or fired.
Pressure in the consumer discretionary sector well above the critical threshold
Some industries are under generally higher pressure than others, and CEOs are feeling the strain. In the past 12 months, the communication, consumer staples and health care sectors showed the highest average Push-out Scores. By contrast, pressure on CEOs was lowest in the real estate, financials and utilities sectors, as measured by average Push-out Scores.
In the consumer discretionary sector, which includes Stitch Fix Inc., the average Push-out Score over the past 12 months was 6.2, which is well above the critical threshold of 5.
In the consumer discretionary sector, 20 exiting CEOs received Push-out Scores of 8 or higher over the past 12 months, indicating that they were most likely forced out or faced strong pressure to step down.
Closer look at female CEOs
Female CEOs in the U.S. have been found to be more likely to be pushed out than male CEOs. Over the past 12 months, outgoing female CEOs have received an average Push-out Score of 6.1, considerably above the average Push-out Score of 5.6 for outgoing male CEOs.
Female CEOs have a 33% shorter tenure. Women in the role step down after an average tenure of 5.7 years, compared with 8.5 years for men, the exechange data shows, which covers 23 departing female CEOs and 312 departing male CEOs.
On a five-year view, departing female CEOs received an average Push-out Score of 5.8, which was significantly higher than the average Push-out Score of 5.3 for departing male CEOs. This suggests that women were more likely to be pushed out than men, even when using a longer observation period. This is evident from exechange data covering 1,403 CEO departures (84 of them women and 1,319 men) from 2017 to 2021. Female CEOs who announced their departure from 2017 to 2021 had a 26% shorter tenure, exiting after an average of 6.6 years, compared with 8.9 years for men, the exechange data shows.
Push-out Score for Elizabeth Spaulding’s move determined
The Push-out Score regarding Elizabeth Spaulding’s move is explained point by point in the exechange report.
exechange reached out to Stitch Fix and offered the company the opportunity to comment on the score.
Read the full story in the exechange report 2.2023 ($).