Stitch Fix is cutting five US warehouses to three to save about $15 million a year

Stitch Fix entered fiscal 2023 shrinking fast: in the quarter ended April 29, 2023, net revenue fell 20% year over year and active clients fell 11%, after January's cut of 20% of salaried staff. On the June 6, 2023 earnings call, founder and executive chairperson Katrina Lake said the company would close its Bethlehem, Pennsylvania, fulfillment center and, in 2024, its Dallas warehouse, cutting the US network from five sites to three: Atlanta, Indianapolis and Phoenix.

Bethlehem's closure affects 393 employees, notified in June; per a WARN Act notice, separations began September 8, 2023 in phases and the site's operations are slated to end February 2, 2024. Lake framed the move as inventory strategy: 'We believe our inventory will be better optimized across a smaller network of warehouses in the U.S.' She said the three-node network can serve the whole country while showing clients and stylists the greatest breadth and depth of inventory, and the remaining warehouses can expand their existing capacity if the client base grows.

The math is explicit: around $15 million in annual cost savings once the three-node strategy is complete, against $5 million to $7 million for separation-related payments, benefits and related taxes plus $2 million to $3 million to redistribute inventory, per a June securities filing. 'While there are a number of moving parts to these operational changes, we know they are the right decisions to make,' Lake said.

About $15 million in annual cost savings expected once complete, against $5–7 million separation costs plus $2–3 million inventory redistribution

Demand had shrunk faster than costs: revenue down 20% year over year left a five-warehouse network sized for a much larger client base.

Three well-placed nodes can cover the whole country and hold more of each SKU, improving inventory depth without adding sites.

The remaining sites have expandable capacity, so the network still works if clients return — the plan cuts fixed cost without burning option value.

The trade is quantified: about $15 million of recurring savings against roughly $7–10 million of bounded one-time costs.

In a shrinking business, consolidating a fixed-cost network beats waiting for demand to return: fewer nodes with spare capacity can serve the same map and free recurring cash.

Layoffs at Bethlehem ran in phases from September 8, 2023, with the site's operations slated to end February 2, 2024; Dallas was set to close in 2024, leaving Atlanta, Indianapolis and Phoenix as the US network. Stitch Fix expects the completed three-node strategy to yield around $15 million in annual savings; most affected workers are warehouse associates, along with some managers and supervisors.