Tapestry are going to be in the trenches in the next six months. Due to Coronavirus outbreak, the US group’s sales will expectedly decrease by 200 to 250 million dollars by the end of June. Why? Because in China a vast majority of stores will shut down. Tapestry made such forecast while making public, at the same time, some data about the second quarter. They are “better than expected” and are simultaneous with a few important management changes.
With gritted teeth
Tapestry revenues, in the second financial quarter (closed on 28 December 2019), amounted to 1.82 billion dollars: +1% both at current and fixed rates of exchange. They therefore went slightly beyond FactSet forecast (1.81 billion dollars). As regards the brands, Coach sales reached 1.27 billion dollars: +2%, while Kate Spade earnings amounted to 430 million dollars, therefore increasing compared to the previous year (428 million dollars). Finally, Stuart Weitzman revenues reached 116 million dollars: they dropped by 7% at current rates of exchange and decreased by 6% at fixed rates of exchange. Looking at the semester, at the end of the period Tapestry net sales amounted to 3.174 billion dollars: they slightly went down compared to last year (3.182 billion dollars).
Momentum and improvement
Jide Zeitlin, president and managing director of Tapestry, emphasized Coach “momentum” and Kate Spade “improvement”. Conversely, “Stuart Weitzman sales have gone down because our supply of heritage products failed to deliver persuasive innovation”, pointed out Zeitlin. “We expected we would keep our outlooks unchanged throughout the whole year. Yet, the Coronavirus outbreak escalation is remarkably affecting and hitting our business activity in China: owing to that, most of our stores will shut down. Our major concern is about the health and the welfare of our work team, their own families and their local communities. Considering the situation currently underway in China, we expect our business performance to suffer from such negative effects in the next semester, as revenues from sales might decrease by 200 to 250 million dollars approximately”.
Management changes
Tapestry announced a few changes regarding the group’s management. They appointed Liz Fraser as Chief Executive Officer and Brand President of Kate Spade: she will take office on March 1st. Giorgio Sarné is the newly appointed Chief Executive Officer and Brand President of Stuart Weitzman. He is going to replace Eraldo Poletto, who decided to quit: he will be leaving the company on March 1st. Emmanuel Ruelland will take over, after Sarné, as president of Coach Asia. Finally, Yann Bozec obtained a promotion: he is going to be the Asia Pacific area Tapestry president.
Picture taken from tapestry.com
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