Extended store closures could threaten the jobs of thousands of employees at Tapestry Inc., which became the latest fashion group to enter the furlough fray.
The holding company today announced a series of planned and soon-to-be-enacted changes as it shoulders the economic fallout spurred by the coronavirus pandemic. It said today that it would extend salary and benefits to its retail team across North America until May 30, at which time it said it would be forced to furlough the majority of its store managers and associates if stores stay closed.
In addition to the potential furloughs, Tapestry will reduce its workforce by roughly 2,100 part-time store associates across its Coach, Kate Spade and Stuart Weitzman brands, effective April 25. Each employee will receive a one-time payment of $1,000.
“With the passage of time, we are facing increasing pressure on the financial performance of the business, requiring us to make difficult decisions to ensure that Tapestry and its brands continue to thrive well into the future,” said chairman and CEO Jide Zeitlin. “These decisions are balanced with numerous steps to moderate the impact of the current environment on our people.”
Zeitlin will be taking home half of his salary, while the board of directors will also see their cash compensation reduced by 50%. Depending on income levels, all of Tapestry’s corporate employees in North America above a certain salary threshold will see pay cuts of 5% to 20%. No bonuses will be paid for the current fiscal year.
In late March, the fashion group made the decision to draw down $700 million of its $900 million revolving credit facility to add to its cash balance. It has put a pause on its share repurchase program and will suspend its quarterly cash dividend beginning in the fourth quarter.
While its outposts across North America and Europe remain shuttered, the company said that all of its locations in mainland China have reopened. In the meantime, new store openings have been either delayed or canceled as it prioritizes “high-return projects,” particularly in digital.
Tapestry will provide an update on the operational and financial impacts of the pandemic on its business during its third-quarter conference call scheduled for April 30.
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