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Nov 5, 2021

Canada Goose soars on outlook; CEO says supply chain is healthy

Alex Ruus discusses Canada Goose


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Parka maker Canada Goose Holdings Inc. posted better-than-expected earnings for the quarter that ended Sept. 26 and raised projections for the full year. The shares jumped 12 per cent during pre-market trading in New York.

Supply-chain bottlenecks that are slowing the global economy aren’t affecting Canada Goose, Chief Executive Officer Dani Reiss said in an interview. The company has “all the finished goods and all the raw materials that we need to satisfy all of demand for this year” and enough to make inventory for next year, he said.

Reiss said he expects an “outstanding fiscal 2022.” as the company raised its full-year forecast to CUS$1.17 to CUS$1.33 in adjusted earnings per share, higher than analysts’ forecasts for CUS$1.16.

Key Insights

  • The Toronto-based company posted adjusted earnings per share of 12 Canadian cents in the second fiscal quarter, while analysts had expected a loss of 10 cents per share. Revenue of CUS$232.9 million also beat forecasts.
  • Reiss said the manufacturer doesn’t expect “any material revenue headwinds relating to supply or shipping constraints this fall or winter.”
  • Canada Goose is in the midst of a strategic shift to rely less on third-party sellers, disrupting its business patterns as consumers tend to buy closer to the winter months. Still, revenue from wholesalers was up 25 per cent from last year, when the pandemic led them to delay orders.
  • In China, where Canada Goose has added several stores during the pandemic, direct sales climbed 86 per cent. A Shanghai’s market regulator’s fine for allegedly misleading consumers appears to have had little effect on the Goose brand’s appeal. Reiss said there has been no impact, adding sales in China have been accelerating.
  • Margins at its flagship stores and on the website slipped, in part because of the end of government wage subsidies linked to the COVID-19 crisis. Some price increases helped boost gross margins with wholesalers.
  • The brand has been expanding its product lines, most recently with first footwear collection, which it will roll out next week. David Beckham’s son Romeo is one of the celebrities hired to promote the new line.

Market Reaction

  • Canada Goose’s U.S.-listed shares were up 12 per cent during pre-market trading to US$45.31 as of 9:04 a.m. in New York.