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Stitch Fix CEO says the online-styling company could feel impact of future tariffs hike

Key Points
  • "Tariffs that we've had to date don't impact us. The ones that are being contemplated now potentially could," Stitch Fix CEO Katrina Lake tells CNBC.
  • Another round of tariffs is scheduled to be levied on Chinese imports in December.
  • "Our perspective is that we'll see the brands take up … some of that cost, and currency definitely helps them a little bit," she says in a "Mad Money" interview.

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Stitch Fix CEO says company could feel potential tariffs

Stitch Fix has been able to avoid being affected by the trade dispute between the United States and China, but the online-styling service may face some headwinds in the future.

President Donald Trump has had duties in place on billions of dollars worth of Chinese imports, many for more than a year, and more are expected to go into effect on Dec. 15.

"Tariffs that we've had to date don't impact us," Stitch Fix CEO Katrina Lake told Jim Cramer in a "Mad Money" interview Friday. "The ones that are being contemplated now potentially could."

Stitch Fix, a web-based service that sends clothes and accessories to customers, carries more than 1,000 brands. Among them are Rebecca Minkoff, Cole Haan and Kate Spade.

Stitch Fix began diversifying production out of China before trade tensions spiked between the world's two largest economies, said Lake, who co-founded the fashion company in 2011. The company has been confident in mitigating tariffs because Stitch Fix has partners in other countries, is a partner of choice for vendors and the platform is a full-price channel that helps labels grow their brands, she said.

"Our perspective is that we'll see the brands take up … some of that cost, and currency definitely helps them a little bit," she explained. "And then the algorithmic component of our business is also helpful, because there might be product categories where, you know, there might be less price elasticity than others if we're forced to make that choice."

U.S. and China trade officials will continue discussions next week. On Friday, White House economic advisor Larry Kudlow teased that "positive surprises" could come out of the meetings.

Earlier this week, Stitch Fix reported fiscal fourth-quarter results that were mostly in line with Wall Street expectations. The company's client base grew 18% year over year, to 3.2 million people. The stock price declined, though, on news that it expected "softer" results in the current quarter.

The stock price is up nearly 15% in 2019 but is off about $14 from its closing high in March. It closed Friday's session at $19.61.

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Stitch Fix CEO says the online-styling company could feel potential tariffs

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source: CNBC

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