Tapestry to cut 2,100 part-time retail associates, reduce corporate salaries
Tapestry, Inc., the New York-based owner of Coach, Kate Spade and Stuart Weitzman, announced a range of new measures to deal with disruption caused by Covid-19 on Monday, including the reduction of its part-time workforce and cuts in corporate salaries.
The company said that it will be cutting around 2,100 part-time store associates across its three brands in North America, effective April 25. Affected employees will receive a one-off payment of $1,000.
The remainder of the group’s North American retail team will continue to receive their salaries and benefits through May 30, despite ongoing store closures. If the company’s stores have still not reopened on this date, Tapestry will furlough the majority of assistant store managers and sales associates in all regions where retail locations remain closed.
The company has also introduced a 50% reduction in cash compensation for its board of directors, as well as in the salary of chairman and CEO Jide Zeitlin. All other corporate employees in North America above a certain pay grade will see their salaries cut by between 5% and 20%, depending on their salary level.
Bonuses have been suspended in fiscal 2020, while merit salary increases will be eliminated for the duration of fiscal 2021.
In addition, Tapestry is working to eliminate non-essential operating costs across its businesses, is tightly managing inventories and has delayed or cancelled new store openings, while also redirecting funds into high-return projects, such as digital development.
In order to preserve liquidity, the company’s quarterly cash dividend and share repurchase program have both been suspended, with Tapestry also drawing down $700 million from its $900 million revolving credit facility.
As the global health crisis continues to evolve, the company is making the most of the revenue opportunities available to it. For example, Tapestry is working to reopen all stores in China as quickly as possible and has already opened all of its retail locations on the mainland.
In line with this strategy, the group is also “aggressively leaning into the global digital opportunity for all brands,” maintaining e-commerce platforms and distribution centers operational in all major regions.
“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,” commented Zeitlin in a release. “These decisions are balanced with numerous steps to moderate the impact of the current environment on our people.”
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