TPR Tapestry Inc

By Agam Shah 

Luxury-goods company Tapestry Inc., the owner of the Coach and Kate Spade brands, has undergone a tech makeover aimed at cutting costs and improving the shopping experience.

Acquiring Kate Spade in 2017 for $2.4 billion and Stuart Weitzman in 2015 for $574 million left the company, formerly called Coach, with three brands operating independently under one roof. Various employees were doing similar tasks using different processes and information-technology systems.

Michael Braine, the company's chief information officer, is putting the finishing touches on an overhaul that has reduced duplication and centralized business operations across the three brands. The CIO in August wrapped up the latest phase to establish a common technological backbone for functions including inventory management, distribution and sales.

"The real value of what we've done is take out excess system costs, excess people costs across three brands," said Mr. Braine, who manages a combined IT staff of about 400. The company now has about 550 software applications, down from a peak of nearly 800.

New York-based Tapestry operates about 1,500 stores under its three brands and employs roughly 20,000 people world-wide. It also sells its handbags, shoes and apparel in department stores.

Last month, the company ousted Victor Luis, who had been chief executive for five years, after struggles with the Kate Spade brand prompted it to lower earnings guidance for the year. Mr. Luis was succeeded by Chairman Jide Zeitlin, who has been on the board since 2006.

The centerpiece of the IT overhaul is a new software platform built around SAP SE's S/4HANA enterprise-resource planning software that bridges back-office, logistics and other systems. ERP software integrates various functions into one system, streamlining processes and data across the company.

Different functions were integrated in phases. "In the past the [systems] were integrated into seven ERP systems across brands and geographies and now we have one, single, global, multibrand platform," Mr. Braine said.

That provides a foundation for real-time features including inventory checks, in-store pickup for online purchases or the ability for sales associates to reserve a product for customers. Some shopping features are already available, while others will be implemented later, Mr. Braine said.

"All of these types of things that people want to do rely on the real-time accuracy of customer and inventory and sales data," Mr. Braine said.

A spokeswoman said Tapestry will start seeing benefits from the ERP system in the fiscal year ending in June 2020, but declined to say how much the company expects to save. The company took a charge of $36.9 million related to ERP implementations in fiscal 2019 and expects a charge of about $30 million to $40 million for the current financial year.

ERP systems are long-term investments that don't necessarily pay for themselves right off the bat, said Paul Schenck, a senior principal analyst at research and advisory firm Gartner Inc. "Seven years to eight years is often the break-even where you will see all of the investment that it took to get the system live start to pay off," he said.

Tapestry's ERP system takes information from point-of-sales systems in stores into a common back-office operation so there is a single process on functions such as reporting and auditing as well as calculating margins and taxes due.

The company now has a common system to collect and merge data generated by operations including inventory management and sales, providing a better high-level view of business performance across brands.

"From a customer or [sales] associate perspective, it's the same point-of-sales that they've historically had, but on the back-office perspective, everything is transformed so that it is a common process," Mr. Braine said.

Gartner's Mr. Schenck said a phased approach helps Tapestry avoid costly mistakes and reduce complexities. That is different from a previous approach that companies used to take, where entire ERP systems were delivered in one go, he added.

Write to Agam Shah at agam.shah@wsj.com

(END) Dow Jones Newswires

October 24, 2019 10:14 ET (14:14 GMT)

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