SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SPECIALIZED DISCLOSURE REPORT
STITCH FIX, INC.
(Exact name of Registrant as Specified in Its Charter)
Commission file number: 001-38291
|(State or other jurisdiction of incorporation or organization)||(I.R.S. Employer Identification No.)|
|1 Montgomery Street||Suite 1500|
|(Address of Principal Executive Offices)||(Zip Code)|
Chief Legal Officer and Corporate Secretary
(Name and telephone number, including area code of person to contact in connection with this report)
Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information in this form applies:
|||Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2019.|
Item 1.01 Conflict Minerals Disclosure and Report
This Form SD of Stitch Fix, Inc. (the “Company”) is filed pursuant to Rule 13p-1 promulgated under the Securities Exchange Act of 1934 for the reporting period January 1, 2019, to December 31, 2019.
This Specialized Disclosure Form (“Form SD”) and the associated Conflict Minerals Report (see Exhibit 1.01 to this Form SD) are being posted to the publicly available Internet site https://investors.stitchfix.com/sec-filings upon the filing of this Form SD.
Item 1.02 Exhibits
The Company’s Conflict Minerals Report for the reporting period January 1, 2019, to December 31, 2019, is attached hereto as Exhibit 1.01.
Item 2.01 Exhibits
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the duly authorized undersigned.
THE STITCH FIX, INC.
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|By:||/s/ Scott Darling|| ||June 1, 2020|
|Name:||Scott Darling|| ||(Date)|
|Title:||Chief Legal Officer and Corporate Secretary|| || |
Conflict Minerals Report of Stitch Fix, Inc. in Accordance with
Rule 13p-1 under the Securities Exchange Act of 1934
This is the Conflict Minerals Report of Stitch Fix, Inc. (the “Company,” “we,” “us,” or “our”) for the reporting period January 1, 2019, to December 31, 2019, in accordance with Rule 13p-1 promulgated under the Securities Exchange Act of 1934 (the “1934 Act”), as amended (“Rule 13p-1”). Please refer to Rule 13p-1, Form SD, and 1934 Act Release No. 34-67716 for definitions of terms used in this report, unless otherwise defined herein.
Stitch Fix is an online personal styling service that is reinventing the shopping experience by delivering one-to-one personalization to our clients through the combination of data science and human judgment. We purchase third-party brand and exclusive brand products from independent vendors who manufacture our products in factories around the world. Our service is available in the United States and the United Kingdom, and our products include apparel, shoes, and accessories for women, men, and kids.
This report relates to Company products for which certain conflict minerals may be necessary to the functionality or production of the products, that were contracted to be manufactured by us, and for which the manufacture was completed during the period from January 1, 2019, through December 31, 2019.
Of the four minerals that are subject to Rule 13p-1 (tin, tantalum, tungsten, or gold, collectively “3TG”), we believe that small amounts of tin and gold are necessary to the functionality or production of certain products that the Company contracts to be manufactured (“In-Scope Products”). These products include apparel, such as tops and bottoms with zippers or buttons, and jewelry.
We designed our due diligence measures to conform, in all material respects, to the Organisation for Economic Co-operation and Development’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, including related supplements (“OECD Guidance”), consistent with our position as a downstream company.
The Company has established an internal management team to support supply chain due diligence, including members from our responsible sourcing, merchandising, vendor compliance, and legal teams to oversee due diligence, and we have an ethics hotline through which grievances are reported. We periodically report to senior management regarding our responsible sourcing efforts, including with respect to 3TG. We have also engaged a third-party service provider to assist us in reviewing our supply chain and identifying risks in the supply chain.
Our vendor manual also contains a policy expressing the Company’s commitment to an ethical supply chain. The policy, which is publicly available at https://www.stitchfix.com/supply-chain-information, sets forth our expectations of vendors to:
•ensure that any 3TG in their products is conflict-free,
•require their suppliers to adopt similar policies and processes,
•establish due diligence programs to ensure conflict-free supply chains, and
•share the results of the due diligence programs with the Company.
We ask all of our vendors to acknowledge and accept our vendor manual.
To determine which products that we contract to manufacture were potentially In-Scope Products for purposes of Rule 13p-1, we conducted a survey of our merchandising team, examined product specifications, conducted visual
inspections, made inquiry of our vendors, and reviewed other relevant information. To determine whether we “contract to manufacture” the products as interpreted under applicable rules, we also considered the degree of influence that we had over the manufacture of the products.
As part of our review of supply chain risk, we conducted a good faith reasonable country-of-origin inquiry (“RCOI”) that was reasonably designed to determine whether any of the 3TG minerals contained in the In-Scope Products originated in the Democratic Republic of Congo or an adjoining country (“Covered Country”) or are from recycled or scrap sources. Because, as a result of the RCOI, we were unable to determine the countries of origin of all of the 3TG in our supply chain, we also performed due diligence on the source and chain of custody of the 3TG.
We do not have any direct relationships with smelters or refiners, so our due diligence was completed via communications with our vendors. There are many third parties in the supply chain between the ultimate manufacture of our In-Scope Products and the original sources of the 3TG. However, tracing these minerals to their sources is a challenge that requires us to rely on our vendors in our efforts to achieve supply chain transparency, including obtaining information regarding the origin of the 3TG. The information provided by vendors may be inaccurate or incomplete or subject to other irregularities. In addition, because of our relative location within the supply chain in relation to the actual extraction and transport of 3TG, our ability to verify the accuracy of information reported by vendors is limited.
We provided our third-party service provider with a list of vendors with which we contracted to manufacture products that are potentially In-Scope Products. Our service provider surveyed all of these vendors, distributing the latest version of the Conflict Minerals Reporting Template (“CMRT”) developed by the Responsible Minerals Initiative (“RMI”). Vendors had the opportunity to share information at the company or product level, and were required to specify the scope of their response. During the survey, the Company and our service provider provided training to vendors on use of the CMRT, sent reminders to vendors, and escalated with non-responsive vendors via direct outreach by the Company.
Upon receiving vendor responses, the Company and our service provider reviewed the data to evaluate the quality of each supplier response and to identify areas that required further classification or risk assessment. Vendors that submitted invalid forms were contacted and asked to clarify or re-submit their responses. Approximately 80% of our vendors contacted completed the CMRT.
A very small number of our vendors responded that the products they manufactured for the Company contained 3TG. Because we do not have direct relationships with smelters or refiners and do not perform or direct audits of these entities within our supply chain, we rely on information provided by third-party audit programs, such as the RMI’s Responsible Minerals Assurance Process (“RMAP”). Accordingly, our service provider examined the RMI lists of smelters and refiners and determined from those lists whether the smelters and refiners identified by our vendors had been audited against a standard developed by RMAP in conformance with the OECD Guidance, including cross-recognized assessments with either the London Bullion Market Association or Responsible Jewelry Council.
In cases where the smelter’s due diligence process has not been audited against such a standard, the service provider followed up with those suppliers and assessed the smelters for potential sourcing risk.
The Company’s Form SD and this Conflict Minerals Report, which is intended to comply with the OECD recommendation to report annually on supply chain due diligence, is available on our website at https://investors.stitchfix.com/sec-filings.
Results of Due Diligence Process
Following our RCOI and due diligence efforts, we were not able to determine with reasonable certainty all of the countries of origin of 3TG used in In-Scope Products or whether the 3TG are from recycled or scrap sources.
Identified Smelters and Refiners. In most cases, the information provided by vendors was not specific enough to identify the smelters and refiners that processed the 3TG in the specific products provided to us by the vendor, but instead included information regarding the smelters and refiners that processed 3TG used by the responding vendor only on a company-wide or general product basis. As a result, in those cases, we have not been able to reasonably or reliably determine whether the identified smelters and refiners have been used to process 3TG in the In-Scope Products actually furnished to us and thus did not include the smelters or refiners below. However, when the vendor provided information that reasonably appeared to be specific product-level information, we have listed on Appendix A the smelters or refiners identified by the vendor. Based on the information that was provided by our vendors through the due diligence process, we believe that, to the extent reasonably determinable by us, the facilities that were used to process the necessary 3TG contained in the In-Scope Products included the smelters and refiners identified on Appendix A.
Identified Countries of Origin. Based on the information provided by vendors pursuant to the due diligence process, we do not have sufficient information to reliably determine the countries of origin of all of the 3TG in the In-Scope Products. However, as noted above, when the vendor provided information that reasonably appeared to be specific product-level information, we have listed on Appendix A the country of origin of the necessary 3TG identified by the vendor. When the vendor provided only company-level or general product information, we determined that we did not have sufficient information to identify with any reasonable level of confidence the particular countries of origin of the necessary 3TG contained in the In-Scope Products, and thus did not include the country of origin. Accordingly, based on the information that has been obtained, we believe, to the extent reasonably determinable by us, that the countries of origin of the necessary 3TG include the countries listed on Appendix A.
Efforts to Determine Mine or Location of Origin. Our efforts to determine the mines or locations of origin with the greatest possible specificity included the use of the due diligence measures described above.
Steps to Mitigate Risk
We intend to take the following steps to continue to improve our supply chain due diligence efforts in 2020 and reduce sourcing risks:
•continue to follow the due diligence process described in this report with any adjustments as appropriate;
•continue to share individual CMRT data validation results with our vendors to help them understand areas that require improvement;
•emphasize our responsible sourcing policy to our vendors, including our conflict minerals policy;
•work with our service provider to increase responses and quality of information collected through our annual survey of vendors;
•Engage with our vendors to encourage smelters and refiners in our supply chain that have not been audited under RMAP to undergo smelter or refiner audits; and
•Advise non-responsive or non-compliant vendors that we will assess their future compliance.
This Conflict Minerals Report contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact could be deemed forward looking, including but not limited to statements regarding Stitch Fix’s efforts to reduce sourcing risks, ability to work with vendors to ensure conflict-free supply chains and products, and improve responses and quality of information collected from vendors. Words such as “expects,” “anticipates,” ”intends,” “plans,” “believes” and variations of these words, and similar expressions are intended to identify such forward-looking statements. Actual results could differ materially from the forward-looking statements. These statements involve substantial risks and uncertainties, including, without limitation, risks and uncertainties associated with the progress of industry and other supply chain transparency and smelter or refiner validation programs for 3TG (including the possibility of inaccurate information, fraud and other irregularities), inadequate supplier education and knowledge, limitations related to the ability or willingness of suppliers to provide accurate, complete and detailed information and limitations on our ability to verify the accuracy or completeness of any supply chain information provided by suppliers, third-party audit programs or others, as well as those risks and uncertainties described in the filings we make with the Securities and Exchange Commission. We undertake no obligation to update any forward-looking statements made in this Conflict Minerals Report as a result of new information, future events, or otherwise, except as required by law. You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent our management's beliefs and assumptions only as of the date of filing of this document.
Neither our Form SD nor this report incorporates by reference the content of any website to which we refer.
|Metal||Smelter Name||Country of Origin of Minerals|
|Gold||Penglai Penggang Gold Industry Co., Ltd.||China|
|Gold||Shandong Zhaojin Gold & Silver Refinery Co., Ltd.||China, Japan, USA|
|Gold||The Refinery of Shandong Gold Mining Co., Ltd.||Australia, China, Indonesia, Japan, Peru, USA|