Coach owner Tapestry sales plunge nearly 20% as coronavirus pandemic shuts vast majority of its stores

Coach owner Tapestry reported Thursday a nearly 20% drop in quarterly sales, as the coronavirus pandemic forced 90% of its stores either shut or to operate on reduced hours during the period. 

Chief Executive Jide Zeitlin said the crisis materially weakened the retailer’s results during the period. “No one is immune to the effects of this one hundred year storm,” he said. 

The company also Thursday laid out its reopening strategy. Starting Friday, it will reopen roughly 40 shops in North America for curbside pickup. Tapestry said it plans to used a phased-in approach to bring shoppers back to stores, and it will provide gloves and masks to store workers. 

The company said it has already opened back up most of its stores across China and South Korea. 

Tapestry shares were recently down about 2.5% in premarket trading following the release. 

Here’s what the company reported for its fiscal third quarter, ended March 28: 

• Earnings per share: A net loss of $2.45 
• Revenue: $1.07 billion 

Tapestry reported a net loss of $677.1 million, or $2.45 per share, compared with a profit of $117.4 million, or 40 cents a share, a year ago. 

Excluding special items, the company lost 27 cents per share. 

Net sales dropped to $1.07 billion from $1.33 billion a year ago. 

Analysts had been calling for a loss of 12 cents per share, adjusted, on revenue of $1.03 billion, based on a Refinitiv survey. However, it is difficult to compare reported earnings to analysts’ estimates due to the coronavirus pandemic, which continues to hit global economies and makes earnings impact difficult to assess. 

Coach sales fell 20%, while sales at Kate Spade dropped 11%, and sales at its Stuart Weitzman brand plunged 40% during the quarter. 

The company said its strong growth online was not enough to offset the loss of revenue due to store closures. 

Tapestry said it is not able to forecast fourth-quarter or full-year earnings due to the pandemic. 

It ended the latest quarter with about $900 million in cash and cash equivalents on hand, and $900 million available on its credit revolver. 

To cut costs further, Tapestry said it plans to eliminate some corporate and retail jobs. It said it expects these actions to result in pretax charges of roughly $55 million to $70 million, primarily related to cash severance costs, which will be reflected starting in its fiscal fourth quarter. 

As of Wednesday’s market close, Tapestry shares are down more than 36% this year. The company has a market cap of about $4.7 billion. 

CORRECTION: This story has been corrected to say excluding special items, the company lost 27 cents per share. A previous version misstated that amount.