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Tapestry Shares Off After Swing to Loss on 53% Lower Sales

Tapestry, the parent of Coach and Kate Spade, swung to a fiscal-fourth-quarter loss on 53% lower sales. The shares are down.

Tapestry TPR shares on Thursday were lower after the parent of luxury-product brands swung to a fiscal-fourth-quarter loss on 53% lower sales.

For the quarter ended June 27 the New York owner of Coach, Kate Spade and Stuart Weitzman reported a GAAP loss of $1.06 a share compared with earnings of 51 cents a share in the year-earlier quarter.

The adjusted loss was 25 cents a share. Analysts surveyed by FactSet were expecting a loss of 56 cents a share.

Sales fell to $715 million from from $1.51 billion. The FactSet consensus analyst estimate was $670 million. 

"This performance exceeded internal expectations," interim Chief Executive Joanne Crevoiserat said in a statement. 

The company has taken "decisive actions taken to adapt our business to the rapidly evolving environment and enhance financial flexibility."  

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Former Tapestry CEO Jide Zeitlin resigned last month after allegations of sexual misconduct from 2007. 

Coach remained the company's biggest brand, with revenue of $517 million, or about half the $1.09 billion it brought in a year earlier. Sales at Kate Spade fell to $164 million from $332 million and Stuart Weitzman's sales declined to $33.3 million from $85.2 million. 

Putting in place a strategic review of its business, Tapestry said it would be streamlining the organization and selectively closing stores. It said the plan requires professional fees and compensation as it implements profit-boosting initiatives.

To implement the plan, Tapestry took $87 million of charges in the fourth quarter and full year 2020. And it expects to take $100 million to $115 million of charges in fiscal 2021. 

Citing the uncertainty prompted by the covid-19 pandemic, Tapestry declined to provide a detailed outlook for fiscal 2021.

The chief executive did say that "assuming continued steady recovery as we emerge from the pandemic, we would expect a return to sustained top-line growth in the second half of fiscal 2021, with bottom-line growth in each of fiscal 2021, 2022 and 2023."

At last check Tapestry shares were off 2.7% at $15.19.