Tapestry replaces CEO as shares halved under his tenure
Former Goldman Sachs executive Jide Zeitlin has been chair since 2014
Bengaluru — Tapestry replaced CEO Victor Luis with long-time chair Jide Zeitlin on Wednesday, just weeks after the high-end fashion house cut its full-year earnings forecast and warned of trouble at its Kate Spade brand.
Luis stepped into the CEO role more than five years ago with the aim of transforming Tapestry into a global fashion house after successfully building the company’s business in China, the world’s fastest-growing market for luxury goods.
Under Luis, the company changed its name to Tapestry from Coach and added shoemaker Stuart Weitzman and millennial-focused Kate Spade to win new customers. But his tenure has been fraught with challenges as the company has struggled to integrate the brands and keep up with the latest fashion trends.
Adding to his headaches, Kate Spade’s excess inventory blunted the impact of new collections from Nicola Glass, a Gucci and Michael Kors alumna, hired by Tapestry in 2018 to refresh the brand’s designs.
Shares have halved during Luis’s term as CEO. They were up about 3% in trading before the bell.
“We ultimately came to the conclusion that as much as we believe in our strategy, there was a gap between our strategic intent and operational delivery,” Zeitlin told Reuters. “It made sense to change leadership at the very top.”
A former Goldman Sachs executive, Zeitlin has been chair since 2014 and a director since 2006. He said he would continue to focus on integrating the two brands, Stuart Weitzman and Kate Spade, with no plans of adding more labels through acquisitions in the near future.
“We feel quite good about where the brand is … A lot of growth opportunities will come from Kate Spade,” Zeitlin said.
In August, the company forecast a surprise fall in first-quarter revenue and profit and said it was not sure when same-store sales at Kate Spade would rise. Luis blamed a lack of newness in some Kate Spade satchels and heavy discounts from competing brands for the weakness.
Jefferies analyst Randal Konik said he expects the brand to remain a drag on the company, writing in a note, “The CEO leaving is not a surprise and we believe the company’s strategy is flawed as the portfolio was constructed on synergies and less on longevity of brand potential.”
The company’s board will be reduced to eight members after Luis’s departure.