Victor Luis exits Tapestry, chairman takes over as CEO for now
It's become something of a tradition in the fashion industry in recent years that shortly after releasing less-than-stellar results, the CEO heads for the exit, however distinguished his or her record may have been.
And on Wednesday, Coach, Kate Spade and Stuart Weitzman owner Tapestry Inc said that its CEO Victor Luis is leaving the company. It had cut its full-year earnings forecast just a few weeks ago.
And it has appointed a successor from within the organisation. Jide Zeitlin, the company’s chairman, has been appointed CEO in place of Luis, while also retaining his chairman’s role. At the same time, Susan Kropf, a current member of the Tapestry board, was named lead independent director. All appointments are effective immediately.
Victor Luis had been with the company since 2006, starting there as CEO of its Japanese unit. In recent years, he has worked on transforming a company that was originally known as a premium-priced handbag specialist into a multibrand fashion group positioned at the more affordable end of the luxury sector.
But that transformation hasn't been without its problems and both Stuart Weitzman’s and Kate Spade’s integration into the business has been far from seamless, each of them remaining a work-in-progress.
This has dented the company share price (and its overall market capitalisation as well) with the shares now changing hands at less than half the price they were when Luis took over as CEO.
So what happens now under Zeitlin? Well, we know that he's not planning to be a permanent replacement. Tapestry said on Wednesday that “with more than 30 years of global financial and operational experience and over a decade of serving on Tapestry’s board, [he] will actively drive the business performance with the objective of creating long-term sustainable growth. At the appropriate time, Mr Zeitlin, with his board colleagues, will lead a search for a future Chief Executive Officer.” We don't know when the appropriate time will be, however.
It's interesting that just a few weeks ago when the disappointing results were announced, Luis had said that the company won't be focusing on making any acquisitions in the short term. That was a surprise as there have been persistent rumours that it has a couple of major names in its sights.
But this could have been one of the issues on which Luis and the board disagreed. Luis had been the key executive driving the acquisition strategy at the company. Today though, the group seems to be fighting shy of any new buys.
On Wednesday, Kropf said: “The board remains committed to Tapestry’s multi-brand model, while recognising the need to sharpen our focus on execution. Given the continued strength and momentum at Coach – the largest brand at Tapestry – our top priority remains driving significantly improved performance at our acquired brands.”
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