Tapestry Looks for New CEO for Struggling Kate Spade Brand
(Bloomberg) -- Luxury conglomerate Tapestry Inc. said that the head of its beleaguered Kate Spade brand is leaving and the search for a new chief executive officer is underway.
Current CEO Anna Bakst will leave at year-end and be replaced on an interim basis by Chief Financial Officer Joanne Crevoiserat, the company said in a statement. Tapestry CEO Jide Zeitlin said the brand’s quarter-to-date performance is “on track” and “we are confident in our ability to meet our holiday season goal.”
The Kate Spade brand has been the weak spot within the Tapestry portfolio. The company suffered a slew of investment downgrades earlier this year with analysts pointing to the brand’s disappointing same-store sales and deteriorating near-term trends. While the retailer has acknowledged product and merchandising challenges, Zeitlin said in September that investors were underestimating the potential of the handbag and accessory brand.
“I’m not sure on what basis someone would say Kate Spade is not a strong brand,” Zeitlin said at the time. He has characterized it as having the potential for more than $2 billion of annual sales, compared with the almost $1.4 billion in posted in the latest fiscal year.
Zeitlin was brought in as Tapestry’s CEO this fall amid a prolonged dip in the company’s shares. Tapestry stock has fallen 22% this year through Thursday’s close, which ranks among the worst performers on the S&P 500 Index.
Tapestry said it had brought in external consultants to conduct a review of the company, including the Kate Spade business, in November. The handbag label has been a persistent source of investor concern in recent years, as it has been unable to recover after a period of heavy discounting and flash sales before Tapestry acquired the brand in 2017.
Bakst was hired by the previous management team under CEO Victor Luis in 2018 and tasked with working alongside newly anointed creative director Nicola Glass to spur a revival at Kate Spade. Same-store sales fell 16% last quarter, the sharpest drop since the acquisition.
Executives said last month that Kate Spade would sell more quirky handbags like elephant-shaped crossbody bags and wicker basket satchels to get shoppers excited about the label. Those kinds of novelty products had accounted for 4% to 5% of Kate Spade merchandise, but that number had fallen in the past year.
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