Luxury retailer Tapestry is working on an in-depth and comprehensive review on the business to address both near-term and long-term opportunities as the company posts mixed earnings for the quarter.
Jide Zeitlin, the newly appointed CEO, said they are focusing on becoming more agile and are working on leveraging data and technology to increase company productivity and speed to market.
“Our imperative is to fuel desire for our brands and make investment decisions through a consumer-centric lens,” Zeitlin said.
“To this end, we have commenced an in-depth, comprehensive and efficient review of our business to address both near-term and long-term opportunities to drive organic growth and profitability across the portfolio,” he said.
The owner of the Coach and Kate Spade brands has reported first quarter earnings that beat analyst estimates, but overall sales came up short due to continued weakness at its Kate Spade handbag brand which is still in the middle of an intensive overhaul under creative director Nicola Glass.
According to Zeitlin, the decline in sales with the Kate Spade brand was consistent with their expectations.
“Kate Spade’s comparable store sales declined in line with expectations, reflecting the product and merchandising challenges we’ve previously identified,” he said.
Tapestry has posted a 2 per cent decline in net sales to $1.36 billion from the $1.38 billion the previous year.
The retailer reported a 6 per cent decline in net sales of its Kate Spade brand to $306 million and net sales on Stuart Weitzman fell 9 per cent to $87 million which the company attributed to softer wholesale demand and continued operational challenges.
The company’s silver lining was its Coach brand which delivered a 1 per cent rise in net sales year over year to $966 million, helped by its digital platform and international business.
Gross profit in the quarter fell to $914 million on a reported basis from $935 million the previous year. Gross margin for the quarter contracted to 67.3 per cent from 67.7 per cent. Net income fell to $20 million on a reported basis, from $122 million in the previous corresponding period.
The company said it expects sales to rise at a low-single digit pace and flat earnings per share for fiscal 2020 compared with this year’s earnings.