Luxury fashion conglomerate Tapestry (NYSE:TPR), enacting a set of temporary measures to cope with the economic fallout of the SARS-CoV-2 coronavirus, is suspending its quarterly dividend and halting its share repurchase program.
Management pointed out that the former move does not affect the forthcoming payout, which is slated to be distributed to shareholders on Monday. But future distributions will certainly be missed by dividend stock investors, as the stock's yield was nearly 9%.
Before it halted its stock buybacks, Tapestry had expended $300 million on them in its fiscal first quarter. It now has $600 million remaining under its current share repurchase authorization.
In the press release announcing these moves, the luxury goods specialist said it "has a long history of successfully navigating economic cycles and global crises."
It added that it was enacting these defensive financial measures "to preserve cash and pre-emptively ensure that the company maintains ample liquidity."
Tapestry is also leaning on borrowed money; it is drawing down $700 million from a $900 million credit facility. On the expenses side, it said it is actively looking for ways it can slice non-essential operating costs. It's also trimming capital expenditures and looking for ways to more efficiently manage inventory.
As for retail operations, Tapestry has extended its ongoing store closures for another week. It is now targeting April 10 as the date on which it hopes to reopen them, but says it will reassess the situation every two weeks. Employees of its stores will continue to receive wages and benefits.
The company also said it will provide financial support to coronavirus-related nonprofits, and donate 15,000 face masks to hospitals in the U.S. and in Europe.
On Thursday, the high-profile consumer goods stock rose by almost 2%, lagging the broader stock market's more than 6% advance.