Canada Goose’s third-quarter performance highlights a calculated gamble: sacrifice near-term profitability to build long-term brand equity and market presence. With operating income down despite double-digit revenue growth, the company is betting that aggressive investment in retail infrastructure and marketing campaigns will pay off by fiscal 2027.
Canada Goose’s third-quarter results for fiscal 2026 present a classic luxury sector dilemma: robust top-line momentum countered by a tightening bottom line. While the Toronto-based outerwear specialist saw total revenue climb 14.2 percent to CA$694.5 million (€472.3m), a heavy investment phase and external financial headwinds pulled adjusted EBIT margins down to 29.3 percent, compared to 33.8 percent in the previous year.
Canada Goose is executing what CFO Neil Bowden describes as a phased approach – first stabilizing demand, then preparing for margin recovery starting fiscal 2027. Whether this investment cycle delivers sustainable returns will determine if the strategy validates management’s confidence or exposes vulnerability in a business model generating 85 per cent of revenue through owned channels.
Heavy spending drives traffic but erodes profitability
Selling, general and administrative expenses surged 26.6 percent to CA$313.6 million (€213.2m), outpacing revenue growth by nearly two to one. The cost spike reflects multiple pressures: expanded marketing campaigns, personnel additions for retail operations, four new store openings bringing the global count to 81 locations, and a bad debt charge from an unnamed US wholesale customer.
President of Brand & Commercial Beth Clymer defended the expenditure during the earnings call, noting that staffing investments in stores produced tangible results. Conversion rates stabilised globally after four quarters of targeted hiring, with North America and Asia showing particular improvement. Europe, the Middle East and Africa lagged expectations.
Canada Goose - Income |
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| 2025 | 2024 | Change | |
| Q3 (CAD million) | |||
| Revenue | 694.5 | 607.9 | 14.2% |
| Cost of sales | 180.7 | 155.9 | 15.9% |
| Gross profit | 513.8 | 452.0 | 13.7% |
| SG&A expenses | 313.6 | 247.7 | 26.6% |
| Operating income | 200.2 | 204.3 | -2.0% |
| Net interest, finance and other costs | 11.4 | 14.3 | -20.3% |
| Income (loss) before income taxes | 188.8 | 190.0 | -0.6% |
| Income tax expense | 50.8 | 46.4 | 9.5% |
| Net income | 138.0 | 143.6 | -3.9% |
| Diluted EPS (1) | 1.36 | 1.42 | -4.2% |
| 9M (CAD million) | |||
| Revenue | 1,074.9 | 963.8 | 11.5% |
| Cost of sales | 324.8 | 295.1 | 10.1% |
| Gross profit | 750.1 | 668.7 | 12.2% |
| SG&A expenses | 726.2 | 559.7 | 29.7% |
| Operating income | 23.9 | 109.0 | -78.1% |
| Net interest, finance and other costs | 28.3 | 26.0 | 8.8% |
| Income (loss) before income taxes | -4.4 | 83.0 | -105.3% |
| Income tax expense | 0.5 | 7.1 | -93.0% |
| Net income | -4.9 | 75.9 | -106.5% |
| Diluted EPS (1) | -0.06 | 0.69 | -108.7% |
| (1) Subordinate voting shares issuable on exercise of stock options are not treated as dilutive if including them would decrease the loss per share. Accordingly, for the third and three quarters ended December 28, 2025, nil and 1,908,126, respectively, potentially dilutive shares have been excluded from the calculation of diluted loss per share because their effect was anti-dilutive (third and three quarters ended December 29, 2024 – nil and nil shares, respectively). | |||
| Source: Canada Goose | |||
Direct channels deliver growth, wholesale presents risk
The company’s owned retail and e-commerce operations generated CA$591 million (€401.9m), a 14.1 percent increase that accounted for 85 percent of total revenue. Comparable sales across stores and digital properties rose 6.3 percent, extending a positive streak to four consecutive quarters.
This performance underscores the strategic shift toward direct consumer relationships, which offer higher margins and brand control compared to traditional wholesale distribution. Yet the bad debt provision – disclosed without dollar amount or partner identification – demonstrates that even companies minimizing wholesale exposure cannot fully eliminate third-party risk.
Wholesale revenue itself grew 16.6 percent to CA$88.3 million (€60m), though management characterized this as timing-related, with delayed prior-quarter shipments fulfilled in Q3 rather than genuine demand acceleration.
Geographic divergence: Americas and China rise, Europe contracts
Regional results showed stark variation. North America delivered the strongest performance, with constant-currency growth of 20.2 percent to CA$303.1 million (€206m). The United States specifically jumped 23.7 percent on the same basis, indicating successful market penetration beyond Canadian home territory.
Greater China—comprising mainland China, Hong Kong, Macau and Taiwan—contributed CA$248.3 million (€168.7m), up 13.2 percent in constant currency. This 36 percent share of total revenue positions Canada Goose alongside other luxury players benefiting from Chinese consumer recovery.
Europe, Middle East, Africa and Latin America, grouped as EMEA, contracted 3.3 percent in constant currency to CA$89.8 million (€61m). The region represented just 13 percent of revenue, down from mid-teens a year earlier, with management acknowledging execution shortfalls without providing remediation specifics.
Canada Goose - Revenue |
||||||||
| Q3 (CAD million) | ||||||||
| 2025 | 2024 | As reported | Foreign exchange impact | $ change (constant currency) | As reported | % change (constant currency) | ||
| Channels | ||||||||
| DTC | 591.0 | 517.8 | 73.2 | -4.8 | 68.4 | 14.0% | 13.2% | |
| Wholesale | 88.3 | 75.7 | 12.6 | -2.1 | 10.5 | 16.6% | 13.9% | |
| Other | 15.2 | 14.4 | 0.8 | 0.7 | 1.5 | 5.6% | 10.4% | |
| Total revenue | 694.5 | 607.9 | 86.6 | -6.2 | 80.4 | 14.2% | 13.2% | |
| Regions | ||||||||
| Canada | 103.9 | 91.1 | 12.8 | – | 12.8 | 14.1% | 14.1% | |
| United States | 199.2 | 161.5 | 37.7 | 0.6 | 38.3 | 23.3% | 23.7% | |
| North America | 303.1 | 252.6 | 50.5 | 0.6 | 51.1 | 20.0% | 20.2% | |
| Greater China1 | 248.3 | 219.6 | 28.7 | 0.2 | 28.9 | 13.1% | 13.2% | |
| Asia-Pacific, Greater China (1) excl. | 53.3 | 50.9 | 2.4 | 0.8 | 3.2 | 4.7% | 6.3% | |
| Asia-Pacific | 301.6 | 270.5 | 31.1 | 1.0 | 32.1 | 11.5% | 11.9% | |
| EMEA (2) | 89.8 | 84.8 | 5.0 | -7.8 | -2.8 | 5.9% | -3.3% | |
| Total | 694.5 | 607.9 | 86.6 | -6.2 | 80.4 | 14.2% | 13.2% | |
| (1) Greater China comprises Mainland China, Hong Kong, Macau, and Taiwan. | ||||||||
| (2) EMEA comprises Europe, the Middle East, Africa, and Latin America. | ||||||||
| Source: Canada Goose | ||||||||
Year-round expansion and cultural positioning
The company is deliberately moving beyond seasonal outerwear dependency. Sales of non-core products – lighter-weight items, different fabrications, and extended seasonal offerings – doubled year-over-year according to management comments, though absolute contribution was not quantified.
Campaigns branded “New Heirlooms” and an enhanced “Snow Goose” platform aim to reposition the brand from functional cold-weather specialist to lifestyle statement. CEO Dani Reiss emphasized that repeat purchase rates are rising as product breadth increases, though this category expansion introduces margin complexity since lighter garments typically generate lower gross profit than signature parkas.
Balance sheet strength provides strategic flexibility
Financial position improved despite operating headwinds. Inventories held flat at CA$408.7 million (€277.9m) while net debt declined to CA$413 million (€280.8m) from CA$546.4 million (€371.6m) a year earlier – a reduction of CA$133.4 million (€90.6m) through tighter working capital management and reduced credit facility utilization.
This balance sheet improvement gives management room to continue investing in growth initiatives without triggering leverage concerns, though nine-month results showed operating income down 78 percent and the company reporting a small net loss for the year-to-date period.
The margin recovery question
Management’s multi-stage framework positions fiscal 2026 as the investment year and fiscal 2027 as the efficiency phase, with planned initiatives including marketing optimization, retail network rationalization, and gross margin improvement through unspecified levers.
The strategy carries execution risk: costs may prove stickier than anticipated, competition could intensify requiring sustained promotional spending, or consumer demand may not scale proportionally with distribution expansion. The nine-month operating loss underscores how aggressively the company is prioritizing top-line growth over near-term profitability.
Conversely, if Canada Goose successfully converts expanded brand awareness and retail presence into operating leverage, the current margin sacrifice could appear strategic rather than concerning when viewed retrospectively from 2027. For now, the results demonstrate a company deliberately trading short-term profitability for market position, betting that investments in brand building, retail infrastructure and product diversification will generate returns once the cost base stabilizes.
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