(Reuters) — Stitch Fix Inc has hired investment banks for an initial public offering (IPO) that could value the U.S. personalized fashion internet retailer at between $3 billion and $4 billion, including debt, according to people familiar with the matter.
The IPO would be the first by a U.S. e-commerce company in two years, as stock market investors have been wary of betting on companies in the sector that, unlike Stitch Fix, are not already profitable.
San Francisco-based Stitch Fix has hired investment banks Goldman Sachs Group Inc (GS.N) and JPMorgan Chase & Co (JPM.N) to lead the IPO, four people said this week, asking not to be identified because the matter is confidential.
Stitch Fix, Goldman Sachs and JPMorgan declined to comment.
Founded in 2011 by Harvard Business School graduate Katrina Lake, Stitch Fix has over 5,700 employees. It had $730 million in sales in its fiscal year for 2016, its third year of profitability.
Stitch Fix sends its customers five personalized apparel and accessories items based on size, budget and style. Customers fill out a survey of their preferences, which the company then uses to select items for them with the aid of a personal stylist. Customers can return what they do not like in the company’s prepaid packaging.
Stitch Fix works with more than 250 women’s fashion brands, including Joie and Citizens for Humanity, and more than 30 men’s brands including Scotch & Soda.
Stitch Fix is a variant on the popular e-commerce “subscription box” model, in which customers pay to have regular – often monthly – shipments of goods. Stitch Fix offers subscriptions, but does not require customers to subscribe to use their service.
Subscription businesses such as cosmetics supplier Birchbox and athleisure brand Fabletics have proliferated in recent years, offering retailers more predictable revenue streams, albeit at the expense of putting off some customers who do not like the commitment of a subscription.
The reach of subscription businesses has attracted corporate acquirers in recent years. Subscription shave business Dollar Shave Club, for example, agreed last year to be sold to consumer goods company Unilever Plc (ULVR.L) for $1 billion.