Pictured: Former Tapestry CEO Victor Luis
Tapestry, the fashion house that operates luxury brands Coach, Kate Spade and Stuart Weitzman, has appointed Chairman Jide Zeitlin as CEO, replacing Victor Luis in the role.Zeitlin has been Chairman of the Tapestry Board of Directors since November 2014 and will continue in that role. Zeitlin will lead the search for a future CEO “at the appropriate time,” the company said in a statement.
Luis had held the CEO role since 2014, when the company operated as Coach. He had been with Coach in an executive capacity since 2006, first heading Coach Japan before overseeing all of Coach’s international operations.
In its latest earnings report, Tapestry’s Q4 net income fell to $148.9 million, or $0.51 per share, from $211.7 millionor $0.73 per share.In August, Tapestry indicated that it expects low single-digit increases in revenue and flat earnings for the upcoming 2020 fiscal year. This is a far cry from the tune Tapestry sang in May, when it expected double-digit earnings per share growth for the upcoming year.
Luis engineered the overhaul of the Coach brand into the Tapestry fashion house, starting with the acquisition of Stuart Weitzman for $574 million in 2015 and continuing with the purchase of Kate Spade & Company for $2.4 billion in 2017. But both brands have weighed Tapestry down recently. Same-store sales at Kate Spade had decreased 6% in Q4 compared with analyst estimates of a 1.4% gain, causing Tapestry to scale back plans to open new Kate Spade stores. Operating losses during the quarter at Stuart Weitzman climbed to $30 million, up from $20 million the year prior.
An internal email seen by Vogue Business confirms that Luis was removed after the poor performance of the two brands.
“Executing in [a volatile retail environment] and integrating two new and incredible brands has not always been as smooth as we would hope and we have not met our expectations in delivering shareholder value,” wrote Zeitlin in an email to Tapestry employees. “Given we have not delivered on our potential, the Board decided it was time to make a change at the top and asked me to step in as CEO.”
Tapestry is maintaining its fiscal 2020 financial outlook and continues to expect to return approximately $700 million to shareholders through dividend and repurchase programs.
Zeitlin was elected to Tapestry’s board in 2006. He was previously a partner at Goldman Sachs, where he was global chief operating officer of the investment banking division.
Tapestry said that board member Susan Kropf has been named Lead Independent Director.
“The board remains committed to Tapestry’s multi-brand model, while recognizing the need to sharpen our focus on execution,” Kropf said. “Given the continued strength and momentum at Coach – the largest brand at Tapestry – our top priority remains driving significantly improved performance at our acquired brands. Having worked alongside Jide for more than 10 years, I know how eminently capable he is of leading Tapestry’s world-class teams at this time.”