Tapestry, Inc. Announces Additional Responses to Covid-19

Tapestry, Inc. (NYSE:TPR), a leading New York-based house of modern luxury accessories and lifestyle brands, today announced additional actions that the Company is taking to reinforce the financial strength of the organization amid the deepening global impact of the Covid-19 pandemic.

“During this deepening crisis we are guided by our values, prioritizing the health and wellbeing of our employees, their families, our customers, and communities. These values are guiding us through many important decisions. We continue to pay our retail associates, despite store closures. We have heightened safety precautions in our distribution centers, and are maintaining remote working for our corporate employees in numerous global offices. We are supporting our local communities and those on the front lines impacted by the pandemic through our respective brand foundations and philanthropic initiatives,” said Jide Zeitlin, Chairman and Chief Executive Officer of Tapestry, Inc. “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.”

Mitigating Actions:

Tapestry is taking pre-emptive actions to mitigate the impact of the novel coronavirus on its business. The specific measures include:

A Focus on Revenue:

• Re-opening stores in China as quickly as possible, while following governmental and public health guidelines. All stores on the Mainland are now open;
• Aggressively leaning into the global digital opportunity for all brands. Ensuring that the Company’s e-commerce platforms and distribution centers remain operational across all major regions;

Eliminating Non-Essential Operating Costs Across All Key Areas of Spend:

• Driving SG&A savings through the right-sizing of marketing expenses to adjust to the lower revenue base, while maintaining a focus on digital; reducing fixed costs such as rent; driving procurement savings, including reducing external third party services;

Strengthening the Company’s Balance Sheet and Enhancing Financial Flexibility:

• Tightly managing inventories by reflowing late spring and early summer product introductions and cancelling inventory receipts for late summer/early fall 2020;
• Reducing Capex by delaying or cancelling new store openings, while prioritizing investment in high-return projects aligned with the multi-year growth agenda, notably in digital.

Preserving Liquidity, as Previously Announced: