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Tapestry's new CEO is leaving no stone unturned to boost the stock price

Brian Sozzi
Editor-at-Large

There is a lot on the plate of Tapestry chairman and CEO Jide Zeitlin before this holiday season, to say the least.

From fixing the Kate Spade brand to surviving and thriving during a shortened holiday shopping season, Zietlin is a busy fella. And now Zeitlin — who took over as Tapestry CEO back in September after spending 13 years as a board member and five as chairman — has decided to add another item to his to-do list: a comprehensive review of the business to improve sales and profitability (and the stock price).

The luxury goods purveyor said Tuesday it has “commenced an in-depth, comprehensive and efficient review” of its business “to address both near-term and long-term opportunities to drive organic growth and profitability across the portfolio.”

SHANGHAI, CHINA - 2019/09/08: American luxury fashion design house Kate Spade store and logo seen at the IFC Mall in Shanghai. (Photo by Alex Tai/SOPA Images/LightRocket via Getty Images)

In executive-speak, this could involve any number of things. One avenue for Tapestry could be an aggressive cost-cutting campaign at Kate Spade to right-size a business that has struggled since Tapestry acquired it in June 2017. Another could be the sale of a business such as high-end footwear brand Stuart Weitzman, which has had mixed results on profitability since the legacy Coach business acquired it in 2015.

Or possibly even a sale of Kate Spade.

Zeitlin – fresh off a trip to China and meetings with U.S. store associates — tells Yahoo Finance he remains very committed to having a portfolio of three well-known accessories brands. Collectively, they have “tremendous” potential, Zietlin says.

Rather, the review right now will focus on finding areas of opportunities to trim expenses and operate better.

Kate Spade looks to turn itself around over the next 12-months.

“What we are basically doing is performing a diagnostic, looking at each of the three brands with a particular focus on Kate Spade and Stuart Weitzman. Really understanding what their core brand equity is, how that connects with the broader consumer universe. We really want to know that because that ultimately is the way to unlock greater organic growth,” Zeitlin says.

The review comes after a mixed quarter for Tapestry.

Tapestry on Tuesday reported fiscal fourth-quarter earnings of 40 cents a share versus analyst forecasts of 36 cents a share. Total sales came in at $1.36 billion, relatively in line with forecasts.

Coach brand global same-store sales rose 1%, in line with analyst estimates. Kate Spade same-store sales fell 16.8%, versus projections for a 17.8% drop.

Tapestry reiterated its full year fiscal 2020 sales growth guidance of low single-digits. For the year, Tapestry still sees earnings flat.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

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