Canada Goose is cutting production and opening fewer stores as the coronavirus pandemic hit its sales, causing first-quarter net losses to almost double to 50.1 million Canadian dollars (€32.0m-$37.7m) from Can$ 29.4 million a year earlier. On adjusted basis, excluding restructuring charges, the net loss amounted to Can$ 38.4 million (€24.6m-$28.9m).
The company said it will now accelerate investments on its online business, where it has seen a rapid rise in traffic ahead of the busy autumn and winter season.
Revenues for the three months to June 28 fell by 63 percent to Can$ 26.1 million, driven by a decline at its wholesale unit, which was partially offset by about Can$ 7 million in sales of personal protective equipment supporting Covid-19 response efforts.
Wholesale revenues slumped to Can$ 8.7 million (€5.6m-$6.5m) from Can$ 35.6 million on the back of a “significant reduction in shipments.”
Direct-to-consumer revenues fell by 70 percent to Can$ 10.4 million (€6.6m-$7.8m) as stores were either closed or operated on reduced hours due to Covid-19 restrictions. The company said e-commerce revenues were consistent with the comparative quarter, in line with the warmer months.
Canada Goose said the current quarter is a low point for online sales “due to the limited in-season relevance of the offering,” adding that preparations for the peak online selling season are still on-track.
“Retail investments have also been reduced and refocused. New openings this year will be concentrated in mainland China, where the recovery of traffic remains ahead of other markets,” the company said.
“With international tourism now heavily constrained, serving the world’s largest luxury consumer base at home is increasingly crucial. The first of four committed new stores opened in Chengdu in June and it has consistently performed ahead of expectations.”
The company said it has resumed making down-filled jackets “on a limited basis,” adding that, with a strong finished goods position already in place, it is focused on “adding depth for key on-trend styles in the upcoming season.”
It currently plans to produce roughly one third of fiscal 2020 output, “with the intention of significantly reducing inventory by the end of fiscal 2021”.
The company pulled guidance for fiscal 2021, citing prevailing global uncertainties, including the potential for a second wave of coronavirus outbreaks, the pace of retail traffic recovery, and the impact of economic developments and travel restrictions on consumers’ discretionary spending, “all of which are unknown,” it concluded.