Online clothing retailer Stitch Fix is laying off 1,400 California employees and instead hiring in lower-cost cities like Austin and Minneapolis

• Online personal styling retailer Stitch Fix is laying off 1,400 California employees, or about 18% of its total workforce.
• The employees affected can stay with the San Francisco-based company if they relocate — Stitch Fix will start hiring for 2,000 positions in lower-cost cities this summer.
• The company said the layoffs are not related to the pandemic, but the public health crisis has dealt a blow to the retail industry.
• California companies have looked elsewhere to expand since before the pandemic set in due to the state's high operating costs.

Stitch Fix, the personal styling retailer, is laying off 1,400 employees in California, or roughly 18% of its total 8,000-person workforce.

Originally reported by The Wall Street Journal, the San Francisco-based company said the layoffs will begin now through September, but the stylists affected will also be able to stay with the company if they relocate. According to the Journal, Stitch Fix will start the hiring process for 2,000 stylists this summer and through 2021 in low-cost cities like Austin, Cleveland, and Minneapolis.

As the San Francisco Chronicle reports, the affected employees are all remote workers in the state of California. If they choose not to relocate out of state, stylists will receive severance payments, potential bonuses, and health-care coverage, according to CNBC.

There are 5,100 stylists among the company's 8,000 total employees. They help select the clothing and accessory items that customers receive in their monthly curated shipments. Customers then either pay to keep the items they want or return them.

Stitch Fix, founded by CEO Katrina Lake, has evolved from a fledgling startup to a retail disruptor success story. The company earned unicorn status before going public in 2017 and was valued at $2 billion in 2018.

The news comes as California companies continue looking elsewhere in the US for expansion to escape the state's high operating costs.

The pandemic-driven economic fallout also continues to result in layoffs across the US, with an estimated 40 million Americans filing for unemployment in the past 10 weeks. But Stitch Fix told the Chronicle that the layoffs are unrelated to the pandemic.

However, the crisis has wreaked havoc on the retail industry. Stitch Fix temporarily closed a South San Francisco distribution center in March in compliance with local public health orders.

Read the original article on Business Insider