Tapestry on Monday said it will lay off about 2,100 part-time store associates across its three brands, Coach, Kate Spade and Stuart Weitzman, effective April 25. Each of those employees — who represent about 10% of the company's workforce, according to its latest annual report — will receive a one-time payment of $1,000.
For retail teams in North America who remain, the company is extending salary and benefits through May 30, then furloughing most assistant store managers and sales associates at stores that haven't reopened. Corporate workers will get pay cuts of 5% to 20%, all 2020 bonuses have been suspended and 2021 merit salary increases have been eliminated. Board members will receive half their cash compensation, and CEO Jide Zeitlin will take half his salary.
Other actions to shore up the business during the ongoing COVID-19 pandemic include re-opening stores in China, "aggressively leaning into" e-commerce globally, tightly managing inventory, and cutting expenses, including rent and marketing, the company said in a press release. The conglomerate is also drawing down $700 million from its $900 million revolving credit facility, suspending its quarterly cash dividend beginning in the fourth quarter and suspending its share repurchase program.
Tapestry joins several other retail companies in pulling various financial and operational levers to stay afloat during the ongoing COVID-19 pandemic.
That includes reopening stores in China, one of its most lucrative trading areas, as swiftly as possible. In fact, all of its Mainlaind China stores are now open again, Tapestry said. But the conglomerate also acknowledged that several stores may not open at all: Much of its reduction to capital expenditures entails the delay or canceling of new store development, while prioritizing digital sales.
Tapestry brands, like those at Gap Inc., PVH and Levi's, among others, are also slashing merchandise orders and packing away what it already has. The company said that it's "reflowing late spring and early summer product introductions and cancelling inventory receipts for late summer/early fall 2020."
Such actions come as no surprise, considering that apparel sales plunged more than 50% in March, when most stores were still open. But a pivot to digital and even an ironclad grip on inventory will only go so far as stores remain closed, and off-price retailers appear to see opportunity in that.
Burlington, for example, has taken on debt in part to "largely be used in anticipation of the best off-price inventory buying environment in a decade," Credit Suisse analyst Michael Binetti wrote April 21 in emailed comments, noting that the off-pricer "is evaluating leasing external warehouse space for the first time ever to house an anticipated abundance of inventory."