Tapestry Inc.’s go-forward strategy continues along a volatile path.
Most recently, the fashion house — parent company to the Coach, Kate Spade and Stuart Weitzman brands — registered losses of $652 million for the year, but still managed to satisfy Wall Street with better-than-expected top-line sales. Company shares rose approximately 4 percent in the last month as a result, but are still down about 27 percent in the last year.
The retailer’s next steps then will be crucial, perhaps determining Tapestry’s fate in the years to come. The pressure falls on the shoulders of the company’s leader. But first it will have find a permanent one.
Tapestry’s c-suite has been a revolving door over the last few years. The company lost its most recent commander-in-chief in July, after a 2007 #MeToo allegation resurfaced against former chairman and ceo Jide Zeitlin, causing him to resign. Zeitlin was the only Black ceo of a major U.S. fashion group.
Joanne Crevoiserat was immediately named interim ceo. Other members of the newly formed senior leadership team include Todd Kahn, president and chief administrative officer and company secretary, as well as Coach’s interim ceo and brand president; Andrea Shaw Resnick, global head of investor relations and corporate communications became interim chief financial officer, and Susan Kropf, lead independent director, is acting as chair of the board.
Just how long Crevoiserat or any of the current players will be in the c-suite — or who their potential successors will be — remains unclear.
Moreover, the skills needed to run a global fashion house are hard to find. The retailer is dealing with the aftermath of the coronavirus shutdown, restructuring two of its three brands and a continual rotation of top-level talent. The pool of executives in the industry who have apparel, accessories and international experience and who offer diversity — and are currently available for the job — is small.
“The number-one priority would be to bring in someone with experience in the accessories and apparel space, especially someone with experience in China, because China is such an important market for Coach. And it’s a growing market for its other two brands as well,” David Swartz, equity analyst at Morningstar, told WWD.
Swartz added that it’s not just Tapestry’s ceo seat that needs to be filled either. The Coach brand, for example, still does not have a permanent ceo after Josh Schulman stepped down in March for what is believed to be another gig elsewhere.
“I suspect the whole management is going to be turned over,” Swartz said.
But a reshuffle of the entire leadership team is not necessarily a sign of weakness, said Ike Boruchow, senior retail analyst at Wells Fargo.
“Sometimes this signals potential for new, stronger management and board members,” Boruchow wrote in a note. “We think new additions would present a compelling opportunity for [Tapestry] to enact some change to the executive ranks.”
The analyst also pointed out that the majority of executives who helped lead the Kate Spade and Stuart Weitzman acquisitions over the last few years have since left, perhaps signaling not only a changing of the guard, but of fresh perspectives to come.
“While much of the space remains under pressure, we think there are several opportunities that make Tapestry a more compelling name relative to its peers,” Boruchow said. “Notably, executive turnover could be a catalyst for how management thinks about the future of the company and creates potential for portfolio changes that [the] prior regime struggled to integrate.”