In yet more turmoil at Tapestry Inc., Jide Zeitlin resigned Tuesday as chairman and chief executive officer after allegations surfaced that he posed as a photographer in 2007 to lure a woman into a relationship.
The Tapestry board has opened an internal investigation into the accusations, according to sources familiar with the situation. It also has started a search for a new ceo, and will consider both internal and external candidates.
“In the past month, a woman I photographed and had a relationship with more than 10 years ago reached out to various media organizations to express her concerns about what had occurred,” Zeitlin said in a statement Tuesday. “I felt compelled to resign today because I do not want to create a distraction for Tapestry, a company I care deeply about.”
Tapestry, parent to the Coach, Kate Spade and Stuart Weitzman brands, would not comment further. Sources, however, confirmed that Zeitlin, who only took the helm of the fashion house in September 2019, resigned and Tapestry accepted. Zeitlin, one of the fashion industry’s few Black ceo’s, had been involved with Tapestry for 14 years, first as a director.
Chief financial officer Joanne Crevoiserat has been named interim ceo at Tapestry. Susan Kropf, lead independent director, was named chair.
Despite the executive upheaval, the stock market seemed to shrug off the change. Tapestry shares closed up 4.04 percent Tuesday to $13.65 a piece, but are down 53.5 percent year-over-year as the overall fashion sector gets hammered by the coronavirus pandemic.
Zeitlin, who already was serving as the group’s chairman, took over as Tapestry’s ceo last fall after Victor Luis was forced out by the board following a string of disappointing performances. In March, Joshua Schulman resigned as Coach’s ceo, and Zeitlin took over that role as well.
The sudden c-suite shift on Tuesday resulted in several other “interim” changes. Todd Kahn, president and chief administrative officer and company secretary, will take the reins as interim ceo and brand president of Coach. Andrea Shaw Resnick, global head of investor relations and corporate communications, was tapped as interim chief financial officer.
Kropf said: “Jide has made meaningful contributions to Tapestry over the past 14 years, first as a director, and then as chairman, and most recently as ceo. During his tenure as ceo, he played a key role in driving the development of Tapestry’s strategic growth agenda. Importantly, he led with purpose during these unprecedented times. We thank him for all he has done for the company and remain committed to continuing this important work.”
Zeitlin added: “It has been a privilege to lead Tapestry with its powerful brands and outstanding people. I have incredible belief in the company’s growth potential as each brand sharpens its focus on meeting the broad and diverse needs of their consumers.”
During Zeitlin’s tenure, he set in motion a complete company overhaul, one that included leadership changes at all three brands and was meant to reverse stock losses, navigated the company through the coronavirus pandemic and subsequent global shutdown and made headlines as one of the few Black ceo’s.
His fall from grace was as swift as it was surprising. (Just last March the board announced that he would remain in the corner office for three years.)
Born in West Africa, adopted by an American family and reared in South and East Asia before coming to the U.S. and spending 20 years rising up the ranks at Goldman Sachs, Zeitlin was the only Black ceo of a major fashion group (and one of only four Black ceo’s in the Fortune 500).
As such, he quickly became a powerful voice for diversity in the industry just as the Black Lives Matter movement gained momentum and was pushed into the national consciousness anew after the killing of George Floyd at the hands of Minneapolis police.
Zeitlin called in to “Face the Nation” from Kauai in Hawaii last month and weighed in on the lack of diversity in the corner office and called it “an opportunity really for boards and for management…to really challenge themselves in terms of both diversity and inclusivity.”
“The more you have different life perspectives, different experiences around the table, we develop better products, we develop better solutions as corporations,” he said. “And it’s one of America’s great strengths if we get it right. So it’s really holding ourselves much more accountable, the same way we hold ourselves accountable for revenue and profit targets to make sure that we are diverse.”
Zeitlin enjoyed a good reputation in fashion’s financial circles from his time at Goldman and his long stint on Tapestry’s board. He was broadly seen as a savvy dealmaker and someone who could potentially drive Tapestry to ultimately be a major consolidator in the industry as the coronavirus weakened so many players and reset the competitive landscape.
But his career has come under the microscope before and this isn’t the first time he finds himself changing direction due to “personal reasons.”
In 2009, he was nominated under President Obama to be U.S. representative to the United Nations for U.N. management and reform, with the rank of ambassador. At his nomination hearing before the Senate Committee on Foreign Relations, he defended his record following a Washington Post article that looked into his business dealings.
“I’m quite proud of the record I’ve had over the last 25 years as an investor and banker,” he said at the hearing. “No investor bats 1,000.”
He also addressed a suit from American Tower, a company that competed with a firm that Zeitlin founded in India and involved an e-mail he sent to two American Tower investors.
“The facts are that I e-mailed a public article critical of the company to two longtime friends, one of whom I’ve known for over 30 years and the other for over 10 years,” Zeitlin said at the hearing. “I sent this article as though it had come from the ceo of American Tower. This was a joke that clearly fell flat.”
Zeitlin later withdrew from consideration, citing “personal reasons,” according to numerous published reports at the time.
In a LinkedIn post on Tuesday, Zeitlin addressed the woman’s accusations that sparked his resignation. Zeitlin said “as a boy” he spent summers working under his father, a foreign correspondent, in the AP photography department.
“For privacy reasons when I was rising through the ranks as a rare Black banker, I sometimes used a pseudonym, based on my middle name ‘James,’ when photographing strangers,” Zeitlin wrote. “The allegations that I drew too close to the above woman are true; however, our relationship began and concluded 13 years ago, it had nothing to do with my role at Tapestry, and I did not use power, wealth, or position to further that relationship.
“I made a mistake in having a relationship with this woman and I dealt with that in my personal life at the time,” he added. “But, more than a decade after my U.N. nomination process, I cannot allow these allegations to be weaponized against me.”
Zeitlin detailed in the LinkedIn post the reason the allegations have resurfaced after such a long time, and related them to the outreach by a person named William Cohan, who initially wanted to profile him for Graydon Carter’s Airmail online magazine. After initially resisting, Zeitlin eventually agreed but said Cohan was very focused on the 2007 incident. Cohan “resurfaced” a month ago, Zeitlin wrote, “with a long list of aggressive questions that appeared in part intended to force the Tapestry board to consider his allegations. In this incarnation, Cohan was no longer working for Airmail, but now intended to publish an article on a web site run by a little-known foundation where he is an officer and where many of the foundation’s funders are hedge funds, often short sellers. At least one of the funders has traded in Tapestry stock. Cohan has little, if any, editorial oversight.”
Zeitlin contacted legal and other advisers, who, he claims, told him that “what he is doing is a highly unusual hit job. Among other actions, he has repeatedly refused to engage with my spokeswoman and he sent e-mails to various people surrounding me that an investigative firm working with me has concluded were embedded with tracking software.”
Zeitlin wrote that he expects Cohan’s investigation is what spurred the woman to reach out to news outlets regarding her allegations, adding that, “I also expect that, upon the publication of this letter, Cohan will redouble his efforts to prove that I am a flawed person. I am the first person to acknowledge that I am human, for better and worse.…I cannot allow someone to treat me with the lack of decency that Cohan has brought to his crusade against me as I passionately worked alongside all of you to navigate this critical moment in history for Tapestry.”
But it was clear Tuesday that Zeitlin’s resignation doesn’t appear to be due to business reasons.
Tapestry wrote in an SEC filing that “Mr. Zeitlin’s departure was not due to any disagreement with the company on any matter relating to the company’s operations, financial statements or accounting.”
The sudden change at the top amounts to one more worry for Tapestry.
“The loss of a leader is a very difficult thing and the loss of a leader at this time is especially challenging,” said Les Berglass, chairman and ceo of executive search firm Berglass + Associates, referring to the coronavirus crisis.
“If all things were OK, you’re approaching the fourth quarter and locking up plans for the fourth quarter — in normal times — and now you take the leader out of the formula and your challenges escalate,” Berglass said.
The retailer said it ended the fourth quarter with $1.4 billion in cash, lower inventory and gross margin expansion on a year-over-year basis.
“These results, though pressured by the COVID-19 pandemic, exceeded internal expectations from a top and bottom-line perspective,” the company said in a statement.
Even so, Tapestry has plenty of work ahead in order to pull itself out of the slump all retailers are facing because of the pandemic.
While Tuesday’s news may not have drastically altered the course of Tapestry’s operations, said Simeon Siegel, managing director and senior retail analyst at BMO Capital Markets, the company’s best bet moving forward is to find a leader who has proven experience running a global house of brands.
“Who Tapestry chooses [to be its next leader] may well indicate what they believe they want to be, in terms of the Tapestry story,” Siegel said. “Retail in the past was run by merchant princes who were the captain of the ship. What we’re finding in this day and age of technology and data [is] the consumer becomes more important than the ceo. The companies that succeed understand that; they listen to what the consumer wants.”
Tapestry reports earnings on Aug. 13.