Canada Goose Holdings Inc, a luxury parka and footwear company based in Toronto, Ontario, has revised its full-year revenue and profit forecasts due to the impact of Omicron-related restrictions. The company has experienced store closures and decreased footfall, particularly in key markets like Canada, Germany, and China. As a result, the demand for Canada Goose’s products has been dampened, leading to a decline in sales and a significant drop in the company’s shares by nearly 20%.
Dani Reiss, the Chief Executive Officer, expressed uncertainty about when the company will see a recovery. However, Reiss reassured that there is still strong demand for their products. To cope with the impact of store closures, Canada Goose has ramped up its investment in online platforms. This strategic move has proven successful, as the company reported a notable 28.1% increase in global e-commerce revenue in the third quarter.
Nonetheless, Canada Goose faced challenges in its China business during the latest quarter. A dispute over return policies has adversely affected sales in the region. Direct-to-consumer sales, which include both retail outlet and online sales, experienced a relatively slower growth rate of 35.1% compared to the impressive 85.9% growth seen in the second quarter.
The company’s stock performance reflects market concerns over the deteriorating conditions in China and a cautious outlook for the fourth quarter. Brian McNamara, an analyst at Berenberg, commented that the share drop clearly reflects the market’s worries about Canada Goose’s performance in China and its guidance for the final quarter of the year.
Canada Goose now expects its revenue for fiscal 2022 to range between C$1.090 billion and C$1.105 billion, which is lower than its previous estimate of C$1.125 billion and C$1.175 billion. The adjusted profit for fiscal 2022 is also anticipated to be lower, ranging from C$1.02 to C$1.11 per share, compared to the previous forecast of C$1.17 to C$1.33 per share.
In conclusion, Canada Goose’s outlook has been adversely affected by Omicron-related restrictions, leading to a decrease in demand for its luxury parkas and footwear. The company has experienced store closures and low retail traffic in key markets, contributing to a decline in sales and a subsequent drop in its shares. Despite these challenges, Canada Goose remains confident in its long-term prospects and continues to invest in its online platforms to adapt to changing consumer behavior.
Useful links:
1. Official Canada Goose Website
2. Canada Goose Stock Information
