Canada Goose Holdings Inc. posted continued gains in the third quarter, but revised down its outlook for the year as traffic in Asia and Europe took a hit from COVID-19.
While investors hammered the company’s stock down 16.3 percent to $28.73 on Thursday, president and chief executive officer Dani Reiss told WWD the brand’s underlying momentum remains strong, with shoppers logging in to buy while they stayed away from stores.
“It’s a COVID-19 restriction story,” Reiss said. “Around various parts of the world, there have been different restrictions and that’s impaired traffic to stores. Some stores were closed in some areas.…Traffic was impaired just because people were guided not to leave their homes.”
“The areas where we’ve seen there are fewer restrictions, you see things are turning back to normal faster,” he said. “People are excited for the pandemic to end in general. I’m optimistic that it will.
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He pointed to the strength in North America as a proof point.
The company has also been building back without the benefit of tourists, growing local demand in the U.S., where the brand typically did about half of it business with international shoppers pre-pandemic. In New York, for instance, the company’s SoHo store is doing about the same volume it was doing before the pandemic but without the tourists.
Reiss said the company was going to be ready when people let loose and really start moving around the world again.
“We know [international travel] will return, we don’t know when it returns,” he said. “Whenever it does, we’re going to be ready and it’s a massive opportunity. We know how much of a positive impact it had on our stores when international travel was robust.
“What’s really important is that we’ve been able to perform as well as we have through these challenging times and our brand has continued to endure and to grow at 26.5 percent in this quarter and we continue to grow,” he said. “We’ve been a growth company since before we became a public company.”
Reiss plans to keep that positioning, focusing on building the parka brand out into a fuller lifestyle offering, launching footwear last year, expanding in apparel and more.
“Our lifestyle is resonating and this journey that we’re on, to build that global lifestyle brand, is showing up in our results,” the CEO said. “Our non-parka revenue grew by 75 percent this quarter. That’s a huge indication of momentum, that we’re headed in the right direction.
“It’s about having a collection, an assortment of product from different categories that all align with one another in terms of their functionality and authenticity — best-in-class products that work and meet expectations.”
The company’s third-quarter profits rose 36.1 percent to 143.6 million Canadian dollars as total revenues increased 23.6 percent to 586.1 million Canadian dollars (a growth rate that was depressed by sales of personal protective equipment a year ago when the company stepped up to boost supplies for the pandemic).
Canada Goose’s global e-commerce sales rose by 28.1 percent while direct-to-consumer revenues in mainland China increased by 35.1 percent, showing continued growth in a key market in the brand’s expansion plans. Reiss noted that digital sales in China grew by more than 60 percent.
But Wall Street seems focused on the outlook revision.
The company’s total revenues this year are set to increase to 1.09 billion to 1.105 billion Canadian dollars, down from the previous projection calling for a range of 1.125 billion to 1.175 billion Canadian dollars. Net income per diluted share was adjusted down to a range of 1.02 to 1.11 Canadian dollars from the 1.17 to 1.33 Canadian dollars previously projected.
And analysts on a conference call peppered Reiss with questions in particular on China.
The CEO said demand for Canada Goose was high in the country, as was the parka-maker’s brand equity.
“China is a really large market, and there’s room for lots of brands there, and there are lots of brands, both international and domestic,” Reiss said. “And amongst those brands, the demand for our brand is very strong, and we see that in all of our market research that we do in China. In addition to that, I think it’s very important that as an international brand that we also market specifically to China for China.
“So we have a team on the ground in China marketing, our entire team, including our marketing team is on the ground in China. And marketing to our consumers there, along with collaborations that we do in market with local designers — in that way, we continue to keep the demand for our brand from our Chinese fans very high.”
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