Tapestry Loses $652 Million for Year, But Beats Quarterly Expectations
Meanwhile, turnaround plans continue for the Coach, Kate Spade and Stuart Weitzman parent company.
by Kellie Ell · WWDThe fashion house — parent company to Coach, Kate Spade and Stuart Weitzman brands — narrowly beat analyst expectations for the quarter, but still logging a $652 million loss for the year. Shares of Tapestry, which closed up 0.5 percent Wednesday to $15.60 a piece, shot up nearly 5 percent during Thursday’s pre-market hours as a result.
“Our fourth-quarter results reflected our effective and values-led approach to navigating the COVID-19 pandemic,” said Joanne Crevoiserat, Tapestry’s interim chief executive officer. “This performance exceeded internal expectations, demonstrating the power of our unique brands and the decisive actions taken to adapt our business to the rapidly evolving environment and enhance financial flexibility. I am incredibly proud of our global teams for the resilience, passion and commitment they have shown during these unprecedented times.
“Looking forward, Tapestry’s next chapter of growth is ours to write,” she continued. “While the backdrop remains volatile, it has not changed our long-term objectives. Rather, it has been a catalyst to accelerate our strategic agenda. Through our acceleration program, we are transforming into a world-class consumer centric organization that is more agile and data-driven with a digital-first mind-set. We believe these initiatives will create stronger connections with our customers, fueling accelerated growth and profitability for Tapestry and each of our brands.”
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For the three-month period ending June 27, total company revenues were $715 million, compared with $1.5 billion last year. By brand, Coach ended the quarter with $517 million in revenues, down from $1.09 billion the same time last year. Revenues at Kate Spade were $164 million, compared with $332 million a year ago, while shoe and accessories brand Stuart Weitzman reported quarterly revenues of $33.3 million, down from $85.2 million the previous year.
For the year total company revenues were $4.9 billion, down from more than $6 billion last year. Coach’s top-line revenues for the entire year were $3.5 billion, compared with $4.2 billion last year. Kate Spade’s revenues fell to $1.15 billion, down from $1.36 billion a year earlier. And Stuart Weitzman’s revenues fell to $286 million, down from $389 million the previous year.
Tapestry lost $294 million during the quarter, down from earnings of $149 million a year earlier. However adjusted losses of 25 cents per share for the quarter were far better than the 56 cent deficit analysts projected.
Full-year losses of $652 million compared with earnings of $643 million during 2019’s fiscal year.
There were a few bright spots. The retailer said e-commerce sales tripled during the quarter, compared with the same time last year, while sales growth in mainland China returned to positive growth year-over-year during the quarter. The company also said inventories declined by 5 percent, compared with a year earlier.
Changes to the company’s operating model resulted in reduced selling, general and administrative, including a 20 percent decline in the company’s run-rate corporate headcount cost and effective expense management. (Tapestry laid off approximately 2,100 people across all three brands last April and continued to trim the headcount in May and June.)
Tapestry ended the quarter with $1.4 billion in cash and short-term investments, including $700 million drawn down on its revolver, and $1.58 billion in long-term debt.
The company has 1,567 stores around the globe, or 958 Coach stores, 420 Kate Spade stores and 189 Stuart Weitzman stores. The majority of Tapestry’s directly-operated stores reopened by the end of the quarter.
The company is not providing forward-looking guidance, but said it expects to save approximately $200 million in gross run-rate expenses during the next fiscal year by way of cost-saving initiatives. The retailer said it will also continue to lean into its digital operations while reevaluating its store fleet.
Tapestry, like so many others in the retail industry, is still reeling from store closures around the globe earlier this year in an effort to prevent the spread of the coronavirus.
But other headwinds abound, including the loss of a permanent leader. Former chairman and ceo Jide Zeitlin abruptly resigned in July — a few months into his three-year stint at the fashion house — after a 2007 #MeToo allegation resurfaced.
Tapestry’s current management team includes Crevoiserat; Todd Kahn, president and chief administrative officer and company secretary, as Coach’s interim ceo and brand president; Andrea Shaw Resnick, global head of investor relations and corporate communications, as interim chief financial officer, and Susan Kropf, lead independent director, now chair of the board.
Tapestry’s stock is down 41.5 percent year-over-year.