Tapestry (NYSE:TPR), the parent company of luxury names Coach, Kate Spade, and Stuart Weitzman, was trying to pull itself together amid declining sales before the COVID-19 pandemic. The pandemic certainly didn't help matters, contributing to a 53% sales drop year over year in the fourth quarter ended June 27. But the quarter wasn't all bad.
Making it through to the other side
Despite the plunge, sales and earnings exceeded company expectations. Tapestry has been working on a plan to accelerate digital and create an omni-channel experience, building community to emotionally connect with customers. That prepared it for store closures, with enhanced e-commerce options and a triple-digit rise in digital sales. As a more insightful signal of progress, sales growth turned positive in China, where stores have been open for longer than other parts of the world.
The company also instituted a cost-savings plan with an expected $300 million in gross run rate expense savings, $200 million of which is expected in 2021. Tapestry ended the quarter with $1.4 billion in cash and cash equivalents, including a full draw-down of a $700 million revolving credit line. Loss per share was $1.06.
The light at the end of the tunnel
Tapestry is experiencing some internal challenges as well, after now-former CEO Jide Zeitlin abruptly resigned in July. CFO Joanne Crevoiserat became interim CEO as the company looks for a permanent replacement.
The company declined to give a first-quarter outlook, but said it's continuing with its plans to grow and is expecting progress.
"Looking forward, Tapestry's next chapter of growth is ours to write," Crevoiserat said in a statement.