After a strong spring quarter, the Canadian luxury outdoor equipment manufacturer is losing momentum in the summer. DTC business continues to grow and gross margins are rising, but higher marketing and retail costs are weighing on earnings. CEO Dani Reiss remains optimistic, however, and is investing in premium locations such as Paris.
Canada Goose is staying the course – even though the figures for the second quarter of the current fiscal year are less impressive than those for the spring. After a strong 22 percent jump in sales in Q1, the Canadian luxury outdoor equipment manufacturer grew only slightly, by 1.8 percent to 272.6 million Canadian dollars (€182.6m), from July to September.
Retail business remains growth driver
The company’s own retail business remained the growth driver: direct sales rose by around 22 percent to CA$126.6 million (€84.8m), while comparable DTC sales rose by a good 10 percent – a significant turnaround after the slight decline in the previous quarter. Wholesale business remained virtually stable at CA$135.9 million (€91.1m), and so the high-margin DTC channel now accounts for around 46 percent of total sales. The gross margin climbed to 62.4 percent, reflecting the stronger weighting of direct sales in the overall mix.
Red figures, clear course
Nevertheless, the bottom line was still a loss: with higher spending on marketing, new stores and staff training for the winter season, operating income slipped to minus CA$17.6 million (-€11.8m). Despite the quarterly loss, CEO Dani Reiss remained combative: “We’re exactly where we planned to be,” he said, referring to the implementation of the company’s strategy. He sees the above figures as confirmation of this: the DTC-business is performing significantly better than in the previous year, direct sales have increased, and comparable sales and gross margin have also risen. For the CEO, this is a clear signal that the focus on proprietary channels is paying off.
Investments: Paris as symbol of change
Operationally, the premium brand is more stable: inventories have been reduced by 3 percent, and store expansion (currently 77) is proceeding according to plan. In Paris, for example, Canada Goose has moved its flagship store to the Champs-Élysées – with a new design, art installations and curated product presentations to enhance the brand experience. At the same time, the company is investing in employee training and marketing in order to make the most of demand in the upcoming winter season. In short, the strategic adjustments – premiumization, retail push and lean processes – are already taking effect, even if they are not yet reflected in the bottom line. According to the earnings report, selling, general and administrative expenses (SG&A) rose by around 15 percent year-on-year to CA$187.7 million (€125.8m). Canada Goose cites extensive investments in the expansion of its global retail network as further reasons for this.
Change on the board – Wong takes on key role
There have also been personnel changes at the Canadian company. Stephen Gunn, a member of the board since 2017, has resigned and is leaving after eight years. His duties on the audit committee will be taken over by Belinda Wong, who has also been appointed financial expert. This reduces the size of the board to nine members.
Analysts disappointed, stock reacts
In addition, the Canadians fell well short of market expectations: While the official report for Q2 FY26 shows an adjusted loss per share of CA$0.14 (€0.09) – compared with a profit of CA$0.05 (€0.03) in the previous year – analysts had expected a small profit of around CA$0.02 (€0.013) on average. The result, in other words, was more than twice as bad as expected. This is one reason that the stock came under significant pressure after the figures were published.
