Persistent lower traffic trends and dampened consumer sentiment in China have forced Canada Goose to lower its FY revenue and profit outlook despite strong brand sales performance in other global geographies. The group has dropped its annual revenue outlook by more than 7 percent to a range of C$1.2-1.3 billion (€891.2-965.5m), with the adjusted net income per share forecast lowered by 14-18 percent to C$1.31-1.62 a share. Annual gross margins are still expected to hit the high 60s with expansion driven by a direct-to-consumer (DTC) mix shift.
In late August, Canada Goose named Larry Li, based in Shanghai, as the president of its business in China. But tight Covid-related restrictions, particularly nearly Beijing, have contributed to lower retail traffic trends and consumer demand during recent weeks, the company said.
Elsewhere in the world, particularly in the EMEA and the U.S., Canada Goose sales have shown recent strength, helped by the company’s ability to ship winter orders earlier than prior seasons and open the possibility of subsequent re-orders. In the EMEA specifically, where second quarter constant-currency revenues rose 44 percent to C$87.9 million (€65.3m), results were driven by higher unit sales and prices. There has been no material impact on market demand for Canada Goose products, the company said, despite broad inflationary and economic concerns.
In the U.S., second-quarter sales were up 19.3 percent on a constant-currency basis to C$74.2 million (€55.1m) and down 0.7 percent in Asia-Pacific at C$56.4 million. There are plans underway to broaden the brand’s penetration in key western U.S. markets, including new doors in Las Vegas and Denver and temporary locations in Aspen, Colorado, and Detroit.
Overall, second quarter operating income at Canada Goose fell 63 percent to C$4.7 million (€3.5m) from C$12.6 million, with the operating margin coming in at 1.7 percent versus 5.4 percent in the year-ago period. Net income declined 50 percent to C$5.0 million (€3.7m) from C$9.9 million for the period ended Oct. 2. Total revenues rose 19 percent to C$277.2 million (€205.9m) from C$232.9 million. Gross margin improved to 59.8 percent from 58.0 percent. DTC sales increased 28 percent during the period, and comparable store sales were up 3.2 percent, excluding China. Period-end inventories were up nearly 23 percent at C$511.5 million, with more than 5 percent of the total related to the new joint venture in Japan. A store was recently opened in Osaka, and another will open in Tokyo’s upscale Ginza shopping district in December.
