There’s a (not so) new leader in town at Tapestry.
The owner of Kate Spade, Coach and Stuart Weitzman said Wednesday that its longtime board member and chairman Jide Zeitlin is assuming the role of CEO as its chief executive of five years, Victor Luis, exits the post.
After what has been a challenging stretch for Tapestry — which has shouldered challenges as it aims to reposition Kate Spade amid a three-year turnaround plan — investors appeared to cheer the news of newly appointed leader Zeitlin, who is also now one of just six African-American S&P 500 CEOs. (Tapestry’s stock ended the trading day Wednesday up more than 5% to $21.49.)
Zeitlin’s appointment comes at a critical time for the fashion community on the diversity and inclusion front — over the past year, brands like Gucci and Prada have suffered high-profile racially insensitive missteps. While Zeitlin said he will continue to drive the D&I initiatives that were championed by his predecessor — under Luis, the firm at one time had female leaders for all three brands — the new chief said his immediate focus is on producing stronger business results at the company.
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“At the end of the day, we need to deliver. We need to create shareholder value,” he told FN. “Then we will have a lot of license to have that [diversity] conversation. But, if we do not deliver, it’s to some degree irrelevant. And one would set oneself up to be vulnerable to heightened scrutiny or criticism. My focus is on delivery and doing it with as diverse a workforce that is appropriate. If we deliver, I’d be happy to get back to you on what that may or may not mean.”
Although Zeitlin has not been named an “interim” leader, the company has said that it intends to use his learnings over an undisclosed period of time to inform its search for another — presumably permanent — CEO in the future. (Zeitlin will remain in his role as chairman during this CEO tenure.)
Here, Zeitlin opens up about the decision to part ways with Luis, footwear plans at all three labels and what it will take to turn around Kate Spade.
How has your experience prepared you to step into the leadership slot at Tapestry?
“I’m reasonably familiar with the business — having been on the board for 13 years. And, even before being on the board, while at Goldman Sachs, I was a financial advisor to this company and to other retailers for 10 years. So I’ve been in this sector and around this company for north of 20 years. I bring a perspective that is informed by that. As a board member, I hope I’m able to bring some freshness to looking at issues and asking questions and challenging assumptions. We also have terrific team across brand presidents and across functional heads. So I’ll be working with that team to figure out how we best unlock the opportunity within each brand.”
What were some of Luis’ key contributions to the company while at the helm?
“The impact Victor had on this business has been tremendous. This is somebody who was at Coach then at Tapestry for [a total] 13 years and a key player in helping to build out an-already-established Japan business and a key player in helping building out a less mature, at the time, China business. And those businesses collectively are a really critical part of our growth profile today going forward. So we owe him a lot of credit for that. We also owe him a lot of credit for taking the Coach brand that was in a more difficult place when he stepped in as CEO and transforming it to the very solid footing it’s on now. It’s had seven sequential quarters of positive comps and a lot of other strong brand health metrics. And [he had] the vision to think about a multi-brand strategy and moving us towards that. So lots of things to feel good about [regarding] Victor.”
Why the decision to part ways with him at this juncture?
“At the same time, while we are quite supportive of the multi-brand strategy, we have had some hiccups in the translation of that strategy into operating results and in the integration of Stuart Weizman and Kate Spade, for different reasons. Ultimately, the board decided to change the leadership at the very top — at the CEO level. It wasn’t an abrupt or overnight decision. It was a considered decision, but once decided, we moved forward swiftly. This said, we have a lot of respect for Victor and what he contributed over many years.”
Why did the board have you step in to lead?
“What the board was thinking about was finding a balance: We’ve been very clear internally that this is about stability and continuity and that this is about continuing to move forward and not taking a moment to pause to tread water. It’s about recognizing that the world and our competitors are not pausing for us and, particularly as we head into the critical holiday season, we need to be moving very fully and aggressively forward. After this work, I will then step back with colleagues on the board and more frontally take on the task of identifying who would be right CEO for the business at this moment in time — given the needs of the business.”
What are your immediate goals?
“My focus right now is on getting into the business and I’m focused [also] on the operations. I [want to] make sure that as we as take a strategy and group of brands we feel very good about and a senior management team who we think are second to none in terms of experience and their knowledge and wisdom, that we translate that into strong results and continue to unlock the potential of each of these brands.”
How does footwear fit in to the equation to grow Coach and Kate Spade?
“Footwear is hugely important. When you think about our largest business, Coach, our ability to broaden beyond handbags and into footwear and outerwear is critical and something we’re very focused on. Having seen some of the latest [shoes], we feel very good about the newness and innovation, we’re in a good place and moving forward on that front. Footwear is critical part our ability to grow the Coach business. If [Coach CEO] Josh Schulman were on this call, he would say that he thinks footwear can be 10% of the business — so a very significant contributor, given the scale of Coach.
“If you look at the Kate Spade business — it’s not dissimilar in some ways to the game plan we played out with Coach. We’re bringing in that brand’s footwear business from a license [model].”
What will it take to turn around Kate Spade?
“On the supply chain side, we feel good about the synergies we got out of that. Where there are opportunities to grow that business are: in North America, if you look at the retail and full price side of the business, there’s real opportunity in the line or product architecture to make sure we have product that addresses a greater breadth of product demands — whether that’s additional color, profiles or price points. [It’s about] making sure we have more product available for more needs of our customer. We think there’s more opportunity there. Similarly, we think there’s an opportunity — whether it is color or product — to further differentiate our [wares] in the outlet business. Internationally, we should be able to turbo charge our ability to grow by leveraging the knowledge, experience and infrastructure we built out in the Coach business.”
How will you expand Stuart Weitzman?
“The Stuart Weitzman business is clearly a footwear business, but there’s opportunity within that. At one level, there’s opportunity to take a business that has been traditionally more defined by boots and extending it into sneakers and pumps. There’s a huge opportunity geographically — it is a beloved brand in China but with a lot of opportunity to grow there and in Europe.”
How much of a priority is diversity for you?
“Diversity, is overall, core to how we define and think of ourselves at Tapestry. Inclusion is critical. It’s important because it’s the right thing but, more importantly, [it’s critical] in an industry that is defined by innovation and creativity and is competitive in that you have to be making the best decisions everyday if you’re going to succeed. The best way to do that is to have a diverse range of perspectives and people around the table. If we’re going to succeed and deliver against our strategy, we’re going to do that much more successfully with a diverse team that is inclusive in so many ways. I get that and believe in that fundamentally. I don’t think it’s distinct from the rest of our strategy. We won’t succeed as effectively, without a real appreciation and incorporation of diversity and inclusivity across our organization.”