There is no shortage of negative news for Tapestry: for example, it expects up to 1 billion revenues less in the April-June period. But there is also a good one: as the lockdown is over, the Italian tanning reopens, together with Spanish suppliers. In the midst of Coronavirus tussle, the US group is experimenting with new retail ideas, while facing the decline of Stuart Weitzman.
The Italian tanning reopens
Jide Zeitlin, Tapestry president and CEO, and Joanne Crevoiserat, chief financial officer of the group, analysed the situation during the conference call that took place after the release of third quarter data. The period, which ended March 28, is the first presenting loss over a 20 years period: Coronavirus cost the group -19.4%. Crevoiserat said that supply chain disruptions suffered by the company were minimal, because Tapestry transferred “most of the production of finished products” from China.
In addition, highlighting the benefits of a diversified supply chain, the finance director himself admitted: “We have been hit by the stop of raw material suppliers in Italy and some finished products in Spain, in particular for Stuart Weitzman. However, today production has realigned”. Zeitlin added: “We are delighted that most of our partners in Europe have reopened, including tanneries in Italy and footwear manufacturers in Spain”. With regard to inventory management, the two managers said that Tapestry is canceling the deliveries scheduled for the end of summer and the beginning of autumn 2020.
Expectations
Tapestry did not provide forecasts for the fourth quarter (and for the whole year), providing instead indications. “In the third quarter, sales dropped by about 260 million dollars compared to last year – are the words of Crevoiserat -. And this occurred with just 2.5 weeks of store closings in North America and Europe. Starting from this, we predict that the impact of the fourth quarter could be three to four times those levels”. Which means up to over a billion dollars in lost sales.
Zeitlin has also announced a new way of selling: customers will have the opportunity to place orders by phone or online for some stores and will be able to collect their products either “on the sidewalk outside the shop” or in the shop. A system that has allowed the reopening of about 40 stores in North America, and which will soon be extended to other stores.
Stuart Weitzman difficulties
In the January-March period, the footwear brand Stuart Weitzman lost 40% in revenues. “We are taking very disciplined measures to restrict the brand’s assortment – concludes Zeitlin – and focus much more on boots, espadrilles and sandals. And, geographically, on China, North America and the digital channel”.
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