On April 20, Tapestry announced additional actions to reinforce its financial strength amid the deepening global impact of the Covid-19 pandemic. These include a focus on revenue by re-opening stores in China as quickly as possible, and aggressively leaning into the global digital opportunity for all brands; eliminating non-essential operating costs across all key areas of spend, such as reducing fixed costs such as rent, driving procurement savings and reducing external third party services; strengthening the company’s balance sheet and enhancing financial flexibility by tightly managing inventories by reflowing late spring and early summer product introductions and cancelling inventory receipts for late summer/early fall 2020, and delaying or cancelling new store openings; and preserving liquidity.

Addressing organisational costs, the Group said it is extending salary and benefits to the vast majority of its North America retail team through May 30 at which time it will furlough most assistant store managers and sales associates where stores have not reopened. Tapestry said it is also reducing its retail workforce in North America by approximately 2,100 part-time store associates across the three brands and that it is applying for available government payroll subsidy programmes in various countries to mitigate payroll expense.

To minimise corporate costs, the Group announced a 50% reduction in cash compensation for the Board of Directors; a 50% salary reduction for Chairman and CEO Jide Zeitlin; salary reductions of 5% to 20%, depending on salary level, for all North America corporate employees above a certain salary threshold; the cancellation of its Annual Incentive Plan (AIP) for fiscal year 2020, which will result in no bonuses being paid for the current fiscal year; and the elimination of merit salary increases for all employees for fiscal year 2021.

“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. These decisions are balanced with numerous steps to moderate the impact of the current environment on our people”, said Jide Zeitlin, Chairman and CEO, Tapestry.