Tapestry, the parent company of well-known brands Coach, Kate Spade, and Stuart Weitzman, is taking various measures to alleviate the effects of the Covid-19 pandemic. One significant action is the reduction of approximately 2,100 part-time retail associates across all three brands in North America. These employees will receive a one-time payment of $1,000. Despite the temporary closure of stores, the remaining retail team will continue to receive their salaries and benefits until May 30. However, if the stores have not reopened by that date, Tapestry plans to furlough most of the assistant store managers and sales associates.
In addition to trimming its retail workforce, Tapestry has implemented additional austerity measures. The board of directors will experience a 50% reduction in cash compensation, and the salary of Chairman and CEO, Jide Zeitlin, will also be reduced. Employees in corporate positions in North America who earn above a certain threshold will face salary cuts ranging from 5% to 20%. Bonuses for the fiscal year of 2020 have been suspended, and there will be no merit salary raises throughout fiscal year 2021.
The company is also focusing on cost-cutting by eliminating non-essential operating expenses, closely managing inventories, and postponing or canceling the opening of new stores. It intends to redirect funds towards projects with high returns, especially those related to digital development. To maintain liquidity, Tapestry has halted its quarterly cash dividend and share repurchase program. Furthermore, the company has drawn down $700 million from its $900 million revolving credit facility.
While grappling with the current global health crisis, Tapestry is simultaneously capitalizing on revenue opportunities. It is eager to reopen all of its stores in China swiftly and has already resumed operations in its retail locations on the mainland. The company is actively embracing the digital landscape for its brands, ensuring that its e-commerce platforms and distribution centers remain operational in major regions.
Jide Zeitlin acknowledged the challenging circumstances by stating, “As time goes on, the financial performance of our business is increasingly under pressure, necessitating difficult decisions to ensure that Tapestry and its brands not only survive but thrive in the future. We are taking a balanced approach, making these decisions while also implementing measures to minimize the impact of the current situation on our employees.”
For additional information on Tapestry’s response to the Covid-19 pandemic, please visit their official website:
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