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Tapestry Takes Phased Store Re-Opening Approach Amid Coronavirus

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Luxury lifestyle retailer Tapestry, Inc. (TPR - Free Report) has provided more details on actions to fight coronavirus qualms. The company has started the store reopening process across North America, Europe and additional markets in Asia in adherence to governmental guidelines.

The company plans to open about 20 stores in Europe, 30 in Australia and 35 each in Japan and Malaysia with social distancing practice and modified working hours. Impressively, the company has reopened all stores in China and South Korea, where demand has been improving.

Tapestry is constantly assessing the situation and will continue reopening stores. Depending on the existing recommendations, the Hudson Yards global headquarters will remain shut till at least mid-June, per guidelines from the state and city of New York. Also, most of the employees are not anticipated to return till September. With regard to the reopening of other regional offices across Europe, Asia and Oceania, the company will follow government guidelines and necessary health protocols.

Furthermore, the company made major enhancements to the store environment and operating procedures, including training staff on safety protocols as well as additional cleaning and sanitation measures at the stores. Tapestry has been prioritizing support of the communities impacted by coronavirus. It has committed to financially support small businesses, minority and women-owned enterprises in New York City.

In addition, the company has been emphasizing on curbside or store pickup service. More than 300 Coach, Kate Spade and Stuart Weitzman stores across North America are expected to provide such service by the week’s end. Meanwhile, Tapestry’s e-commerce business has been robust.

The company has been expanding digitally through the rollout of the Luxury Soho flagship for Coach on TMall in China. It has also been expanding its digital distribution channels across North America, and generating significant online sales and customer acquisition.

Management had earlier taken action to curb expenses in order to stay resilient during the crisis. It has eliminated non-essential operating expenses and lowered fixed costs like rent as well as enhanced SG&A savings. Also, it cut down on capex by deferring or cancelling store openings, while prioritized investments in high-return areas, including digital.

The company had earlier announced plans to suspend shareholder-friendly moves, including repurchases and quarterly cash dividend, beginning fourth-quarter fiscal 2020. Tapestry also drew $700 million from the $900-million revolving credit facility to strengthen liquidity. The company ended fiscal 2019 with roughly $1.2 billion in cash and short-term investments.

The New York-based company’s shares have lost 57.5% compared with the industry's 46.1% decline over the past three months. Tapestry currently has a Zacks Rank #4 (Sell).

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