NEW YORK (AP) — Stitch Fix, an online clothing styling service, had a lackluster first day on the stock market Friday.
Its shares rose as much as 24 percent after their debut, but ended the day at $15.15, a 1 percent gain from where they started. On top of that, the company sold fewer shares and at a lower price than it previously expected, a sign of weak demand for its initial public offering.
The San Francisco-based company, which has nearly 2.2 million active users, ships shoppers clothing to try on at home before they buy. Customers pay $20 to receive five items and they can ship back whatever they don't like. They're charged for anything they keep, minus the $20 fee.
It was founded six years ago, as an alternative to spending hours at the mall or sifting through several online retailers for an outfit.
"I knew there had to be another way," said CEO and founder Katrina Lake, in the company's IPO filing.
It started out selling women's clothes but has expanded to men's clothing and added options like plus sizes. The company said it uses human stylists and data it collects from shoppers to pick out dresses, jeans and accessories the company thinks customers would buy.
Stitch Fix has a lot of competition, including Trunk Club, owned by department store operator Nordstrom. And Amazon.com Inc. is rolling out a similar service called Prime Wardrobe. Another subscription service has faltered on the stock market: Shares in meal kit-delivery company Blue Apron Holdings Inc. have lost nearly 70 percent of their value since they began trading at the end of June.
However, unlike Blue Apron, Stitch Fix has been profitable in recent years. But it did report a loss of $594,000 for the year ending July 29, as its costs rose. It had revenue in that period of $977.1 million, up 34 percent from the year before.
Stitch Fix Inc. said it raised $120 million in its IPO after selling 8 million shares at $15 each. Last week, it had expected to raise as much as $200 million by selling 10 million shares for between $18 and $20 each. The stock trades on the Nasdaq under the symbol "SFIX."