Tapestry appointed Jide Zeitlin as its new CEO on Wednesday, replacing Victor Luis, who was with the company for 13 years and oversaw the acquisition of its struggling Kate Spade brand.
The change is effective immediately, said the company, whose luxury brands include Coach and Stuart Weitzman.
Zeitlin has been chairman of the board since November 2014 and will continue in that role.
Shares of Tapestry rose 4% in premarket trading Wednesday but have fallen 39% since January, bringing the company to a market cap of around $5.9 billion.
In the company's last earnings report, Tapestry said sales at Kate Spade have been sluggish, and it warned of challenges at the division. Same-store sales at Kate Spade for the quarter ended June 29 fell 6% compared with analyst estimates of a 1.4% gain. Tapestry also said it was scaling back plans to open new Kate Spade stores.
More broadly, Tapestry has been working to pull back on heavy discounting, which has hurt the company in the past. Kate Spade and Coach merchandise ends up in off-price channels and thus discourages consumers to buy those same goods at full price.
Zeitlin said in an interview Wednesday morning that one of his primary initiatives as CEO will be to work on "core growth drivers," one of those being Kate Spade.
He said the team has to "think through [Kate Spade] product ... make sure it's as appropriate as possible." And Zeitlin said the Kate Spade brand also needs to continue to "plug into Coach's international infrastructure." He said Kate Spade remains a $2 billion or larger opportunity for Tapestry.
Tapestry said in last month's earnings report that it didn't expect to make new acquisitions in the coming fiscal year, and it lowered its forecast, expecting low single-digit increases in revenue and flat earnings.
In its announcement Wednesday, Tapestry said it is maintaining its 2020 outlook and expects to return about $700 million to shareholders through dividend and repurchase programs.
"This is a very good, positive moment for Coach," Zeitlin said. "We made a difficult decision as a board but one we ultimately believe allows us to further unlock the potential in our business."
He added that "Victor did well by us," especially helping build Tapestry's position in China.
"All geopolitical movement aside, China is the second-largest economy on the planet," Zeitlin said. "It continues to be a huge opportunity for us."
Zeitlin was elected to Tapestry's board in 2006. He was previously a partner at Goldman Sachs, where he was global chief operating officer of the investment banking division.
Susan Kropf, a current member of the board, was named lead independent director.
Luis also oversaw the company's acquisition of Stuart Weitzman in 2015.
Correction: Victor Luis was with the company for 13 years.