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.
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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."  

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.