Tapestry got hit with a one-two punch in its fiscal third-quarter as the coronavirus hit the company’s fast-growing Asian business, and then impacted North America and Europe late in the period.
As the New York-based company — parent to Coach, Kate Spade and Stuart Weitzman — tries to get back on track, it will see how shoppers respond to the reopening of 40 brick-and-mortar locations in North America tomorrow. Service will be limited to contactless curbside and storefront pickup service.
“Customers will have the ability to place orders over the phone, and for some retail stores online as well — and have orders brought to them curbside or at the storefront, depending on mall configurations,” said chairman and CEO Jide Zeitlin during a conference call today. “We plan to offer this service in additional stores in the future.”
As of today, all of the company’s China stores were back in operation, and Tapestry had also reopened five locations in Germany and Austria as well as a dozen in Australia.
Overall, the firm plans to implement many of the same regulations other retailers have announced, including regular cleaning of stores and fitting rooms, the debut of signage that highlights social distancing requirements, enforcement of maximum customer densities and the use of masks and gloves where appropriate. The company will offer sanitizers and wipes at cash wraps.
Zeitlin said that physical locations will “always” play a vital role in the Tapestry story, even as the shift to digital continues to accelerate. “We continue to be very, very invested in our brick-and-mortar stores,” he reiterated.
Looking ahead, it will be critical for the company to get messaging right as it looks to lure shoppers back, according to Jessica Ramirez, retail research analyst at Jane Hali & Associates. “Offer a shopping journey that suits and puts that customer at ease,” Ramirez said, noting that Tapestry, headquartered in hard-hit New York, has the opportunity to connect with its community in an authentic way.
Ramirez was also encouraged by emerging digital opportunities across the portfolio, including Zoom shopping parties and livestreams. “Coach has done a really good job in trying to tap into what is relevant,” Ramirez said.
Digital was crucial while stores were closed in China. Over the last six weeks, Tapestry has reopened all locations there. “We seen brick-and-mortar sales build. We’ve also seen significant disparities within the country, impacted in part by domestic travel restrictions,” Zeitlin noted, emphasizing that China and South Korea remain key growth priorities going forward.
Tapestry logged a net loss of $76 million, or a 27-cent loss per diluted share, compared with last year’s earnings per diluted share of 42 cents on profits of $122 million. Revenues, on the other hand, plunged 19.5% to $1.07 billion. Analysts had forecasted a net loss of 11 cents a share with sales of $1.03 billion.
For the three-month period ended March 28, its top brand Coach saw sales drop 20% to $772 million. Revenues at Kate Spade dropped 11% to $250 million, while Stuart Weitzman plummeted 40% to $51 million.