Tapestry Inc.’s new leadership team is ushering in a new era.
The entire C-suite of the fashion group — parent to the Coach, Kate Spade and Stuart Weitzman brands — has been in flux over the last several years. But Joanne Crevoiserat, chief executive officer of Tapestry, said the company may have finally gotten it right.
“I am delighted with the team that we’ve brought together,” Crevoiserat told WWD. “We have proven talent internally. It combines deep knowledge, internal knowledge of our business, with fresh perspectives coming in.”
The roster includes Todd Kahn, who was named the permanent CEO of the Coach brand in April; VF Corp. alum Scott Roe, who will begin as Tapestry’s new chief financial officer in June; Andrea Resnick, formerly serving as interim CFO moving into the role of Tapestry’s chief communications officer, and Christina Colone, Tapestry’s new global head of investor relations.
“We are galvanized by our Acceleration program and the work that we’re doing,” Crevoiserat continued. “And we have increasing confidence that we’ve got the right strategy and are on the right path and looking forward to continuing to drive execution into the future.”
While the long-term effects of the current lineup won’t take shape for some time, many of the players helped the company navigate the pandemic and an unpredictable retail environment. Both Kahn and Resnick, for example, have been with the company for several years, serving in various capacities.
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“I’m thrilled that they’re both continuing in our executive committee as key members of our team,” Crevoiserat said. “They’ll be providing great leadership to our teams internally and to our business.”
As for Roe, Crevoiserat said, “He’ll bring considerable experience. But also with a new perspective to our organization. With his extensive experience in consumer, retail and apparel businesses, as well as his deep expertise developing best-in-class global multibrand platforms, I’m confident he is the right strategic business partner to further enhance our strategy and financial performance. So I’m excited to bring the team together.”
The four appointments are just part of Tapestry’s massive leadership transformation over the last three years. Former Tapestry CEO Victor Luis was ousted from his post in September 2019 after delivering disappointing results. But it wasn’t because of the Coach brand. In fact, Coach is the retailer’s most lucrative business. It was Kate Spade and Stuart Weitzman that had declining sales, even pre-pandemic.
Jide Zeitlin was named interim CEO in September 2019 and then permanent CEO in March 2020. At the time, Zeitlin promised to stay with the company for at least three years. But a few months later, Zeitlin abruptly resigned over past #MeToo allegations.
Crevoiserat was named interim CEO in July 2020. She was appointed to the permanent position in October.
Meanwhile, the company continues to make gains, most notably in its China and digital businesses. Tapestry improved on top and bottom lines in the last three months, logging a $92 million profit — it’s third consecutive quarter posting a profit during the pandemic.
“We started our Acceleration program before the pandemic hit,” Crevoiserat explained. “We saw trends happening in the business at a faster and faster rate. We saw the consumer changing quite a bit. We knew we had to change as a company to be able to serve what we were calling at the time the new world of retailing. We had to be agile as an organization. We couldn’t work in the old way to make this happen. We knew we had to stay closer to consumers; stay closer to stay in front of, or with them, in terms of their shopping preferences, their fashion preferences and what was happening in the world. And really nowhere faster than in China, where we have a robust business.”
Revenues in China surged 175 percent compared to last year, or 40 percent compared to the pre-pandemic third quarter in 2019. Other areas of strength include social media platforms, for engaging and selling.
During Thursday morning’s conference call, Crevoiserat pointed out that two Kate Spade handbags went viral on TikTok during the quarter — the Strawberry handbag and the Butterfly Wing crossbody handbag — garnering about 12 million views to date on the platform.
“This highlights the importance of social selling through the loyal and passionate members of the Kate Spade community,” Crevoiserat said. “As a result, we saw increased site searches for these products, driving significant uptick in sales.”
Likewise, the Stuart Weitzman campaign featuring Serena Williams and her daughter Olympia garnered more than eight billion impressions, making it what Crevoiserat called “the most impactful campaign in the brand’s history.”
But investors and critics seemed to have mixed feelings about Thursday’s earnings release. Company shares closed down 3.45 percent Thursday to $46.74 a piece.
“We believe increased consumer acceptance of the resale market and shift in spend to services in [the] second half of 2021, following inoculation, will weigh on shares,” Aaron Siegel, vice president of MacMillan Communications, wrote in a note.
Headwinds for the company include closures of unprofitable stores, softness in the Stuart Weitzman wholesale business and a slowdown in the European business.
Still, shares of Tapestry are up more than 222 percent year-over-year, leading some analysts to be bullish on the stock.
In a separate note, Ike Boruchow, senior retail analyst at Wells Fargo, called Tapestry “a top recovery pick that continues to ride multiple tailwinds into 2021. Continued momentum at Coach, an improving Kate Spade brand, enhanced data and analytics capabilities, a digital business firing on all cylinders and outsized growth in China will drive top- and bottom-line growth into [fourth-quarter] ’21 and into [fiscal year] ’22. We expect both numbers and the stock to continue to move higher.”
Simeon Siegel, managing director and senior retail analyst at BMO Capital Markets, added in another note that his firm continues “to expect strong [average unit retail] benefits to continue, further boosted by stimulus, vaccines and tight industry inventory.”
Meanwhile, the entire industry continues to navigate an unpredictable retail environment as vaccines roll out at varying speeds around the globe.
Long-term, Crevoiserat said the company isn’t opposed to adding brands to the Tapestry portfolio, but said in “the near-term, we see a lot of runway ahead in the brands that we have in our portfolio. And that is our focus: to drive organic growth with the brands in our portfolio today.”
Consumers, on the other hand, are ready for something new. But it’s not just celebratory attire and party dresses that are trending, Kahn said. Accessories and footwear showed strength in the most recent quarter. The average price of handbags at Coach, for example, rose more than 25 percent in North America and internationally in the last three months.
“A year ago when we had to shut down our stores in North America, we didn’t have clarity that if you’re sitting at home you were going to run and buy a bag,” Kahn said. “But that’s exactly what our customer did, because it was an emotional, feel-good purchase. Now that people are returning and they’re going out again, we’re seeing the gamut of really, really fun, emotional product.
“While there’s going to be dress-up components, I think it doesn’t mean that the casualization that’s taken place is going to be abandoned,” he continued. “I really think of it as an ‘and’ [incorporating casual and dressier trends.] I think you’re seeing it in our customer, and you’re seeing an optimism. And you’re seeing that in our design — whether that’s Pillow Tabby [bags at Coach], whether that’s the colors that we’re introducing in our silhouettes, whether that’s the quilties that are going to come in the fall — there’s so many fun, optimism, sizes and shapes and a continuity of our collections that you’re going to see over time. It bodes well for us.”
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