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There is a big shakeup at the top of one of the most well-known luxury accessories brands around. But don’t expect a complete overhaul in strategy that sees underperforming brands jettisoned.
Tapestry (TPR) surprised most on Wall Street on Wednesday by announcing chairman Jide Zeitlin will assume the role of CEO effective immediately. Zeitlin takes over for longtime Tapestry CEO and executive Victor Luis, who is no longer at the firm.
Luis is credited with successfully expanding the Coach brand overseas, reviving the Coach brand by re-investing in product quality and signing off on the splashy (though expensive) acquisitions of accessories maker Kate Spade and high-end footwear player Stuart Weitzman.
But with Tapestry’s stock down about 60% over the past year amid struggles turning around Kate Spade, it was likely time for a change in leadership.
"We have a ton of confidence in Tapestry's brands and the strategy, but we have had a few slips in strategic intent and operational delivery," Zeitlin tells Yahoo Finance.
Zeitlin — who spent 20 years at Goldman Sachs in various management positions — has been on Tapestry’s board of directors since 2006. He assumed the chairman role in November 2014. He will continue to serve as chairman.
Zeitlin says while he knows the Tapestry business very well, he does offer fresh eyes at a critical time for the accessories purveyor. Zeitlin says he is focused right now on execution first, namely at Kate Spade, then looking for a successor to Luis.
“We still firmly believe the multi-brand model is appropriate,” Zeitlin tells Yahoo Finance, which should quiet any early rumors a Kate Spade or Stuart Weitzman would be sold off.
Tapestry shares rose 2.4% on the leadership shuffle up.
Not everyone on the Street was surprised, however.
“CEO leaving not a surprise and we believe the Tapestry strategy is flawed as the portfolio was constructed on synergies and less on longevity of brand potential. The market liked the Tapestry portfolio initially for the synergy "math" while we disliked the portfolio as we didn't see strong brands in the portfolio with Kate in particular,” wrote Jefferies analyst Randal Konik in a note to clients. Konik rates Tapestry’s stock a hold.