Coach parent in new moves to deal with COVID-19 — with more streamlining to come
Tapestry Inc. announced layoffs, corporate pay cuts and possible furloughs as part of new efforts to mitigate the impact of COVID-19 on its business. It also suggested more streamlining in the coming months.
The parent company of Coach, Kate Spade and Staurt Weitzman said it will reduce its workforce by approximately 2,100 part-time in-store employees across all three banners, effective May 25. Each employee will receive a one-time payment of $1,000 to help “reduce the financial burden” of the action.
In addition, Tapestry said it will furlough most of its North American assistant managers and store employees in stores that have not reopened by May 30. Salary and benefits for these workers will be extended until then.
In other moves, Tapestry is reducing the salary of chairman and CEO Jide Zeitlin and the cash compensation for its board by 50%. North American corporate employees will see their pay reduced from 5% to 20% depending on salary level with similar reductions globally. It also has canceled its annual incentive plan for fiscal year 2020, which will result in no bonuses being paid for the year. Merit salary increases for fiscal 2021 have also been eliminated. The company has also suspended its cash dividend and share repurchase programs.
Tapestry said it will continue to reduce operating expenses and capital spend, including canceling or delaying new store openings, reducing inventory by canceling inventory receipts for late summer and early fall, limiting the use of third-party services, decreasing rent payments and leaning into the company’s digital businesses.
In addition, the company said it is working to identify long-term efficiency opportunities by accelerating the work already underway as part of Tapestry’s multi-year growth agenda. As part of this initiative, the company anticipates making additional changes in coming months that will result in a streamlined organization, including reductions in the corporate workforce
“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 Zeitlin. “These decisions are balanced with numerous steps to moderate the impact of the current environment on our people.”
Although its stores are closed, the e-commerce sites for Tapestry’s three brands remain open for business.
“We have heightened safety precautions in our distribution centers and are maintaining remote working for our corporate employees in numerous global offices,” Zeitlin said.