Tapestry Inc. is down, but not out.
Top line revenues for the three-month period ending Sept. 8, fell 2 percent to $1.36 billion, compared with $1.38 billion the year before. Meanwhile, bottom line profits were $20 million, down from $122 million the same time last year.
But Jide Zeitlin, Tapestry’s chairman and chief executive officer, said the results are in line with expectations.
“Our business internationally was stronger than in North America where we managed continued industry headwinds,” Zeitlin said in his prepared remarks. “Further, adjusted operating income and earnings per diluted share were better than forecast, including favorable expense timing.”
Some highlights include the Coach brand, which delivered its eight consecutive quarter of positive comparable-store sales, led by growth in digital and international channels, and raising revenues 1 percent to $966 million.
The company also repurchased $300 million in common stock during the quarter.
Still, the Kate Spade brand continues to struggle. Sales during the most-recent quarter fell 6 percent to $306 million, down from $325 million a year earlier. Total revenues at shoe- and accessory-maker Stuart Weitzman also fell — 9 percent — to $87 million, compared with $95 million this time last year.
Zeitlin said revenues at Kate Spade fell in line with expectations, “reflecting the product and merchandising challenges we’ve previously identified, while Stuart Weitzman sales were negatively impacted by softer wholesale demand and continued operational challenges.”
The quarter also marks the start of a new era, one with with Jide Zeitlin in the center office as Tapestry’s new ceo.
On Sept. 4, just before New York Fashion Week, former ceo and chairman Victor Luis was outed by the board and replaced by Zeitlin, who had joined Tapestry’s board in 2006 and has served as chairman since 2014.
After last August’s disappointing earnings results, the board was clear that Luis didn’t deliver the results the board wanted.
Zeitlin has his work cut out for him. The company’s stock is down 37.5 percent year-over-year.
“Our imperative is to fuel desire for our brands and make investment decisions through a consumer-centric lens,” Zeitlin said. “We are focused on becoming more agile, continuously leveraging data and technology, to increase our productivity and speed to market. These improvements will enable us to fund additional brand-building initiatives and to return capital to shareholders. 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. Importantly, we are maintaining our outlook for fiscal 2020.
“My time as ceo has deepened my conviction that our three brands have powerful equities that connect meaningfully with significant and distinct consumer segments globally and together form a foundation for growth,” he said. “I am confident that the passionate and dedicated people of Tapestry, led by our seasoned management team, can materially strengthen our operational performance and unlock the value inherent in our brands.”