Canada Goose Quickens China Growth to Reach Stuck-at-Home Buyers
(Bloomberg) -- Canada Goose Holdings Inc. stores in North America and Europe used to be a magnet for Chinese travelers before the pandemic brought global tourism to a halt. The company is now banking its recovery on bringing stores to them.
The Toronto-based parka maker said Tuesday it is doubling its footprint in mainland China this fiscal year by adding four stores, out of seven planned openings globally. After suffering the world’s first Covid-19 outbreak, China’s economy is now rebounding faster than North America.
“The retail recovery in mainland China is ahead of other regions,” Chief Executive Officer Dani Reiss told analysts Tuesday. As a result, he said it’s “increasingly crucial” to serve the world’s largest market for luxury goods in their home market.
Canada Goose first announced its expansion plans in the region in 2018 and had three stores in mainland China and two in Hong Kong at the end of its fiscal year in March. Still, its exposure to the country is smaller than brands such as Moncler SpA, a competing maker of high-end ski jackets, according to Bloomberg Intelligence analyst Maxime Boucher.
“Favoring mainland China for near-term store openings could bolster a winter recovery,” Boucher said. “Two-thirds of Chinese luxury purchases were made abroad prior to the pandemic, so reaching these consumers while tourism remains heavily clipped will be key for all global brands.”
While a political crisis is Hong Hong continues to hurt business there, the company said the first of its four new stores, which opened in Chengdu in June, is doing better than expected. Reiss said the company is seeking to capture Chinese tourists who travel in their own country.
Canada Goose has been decreasing its reliance on wholesalers as it focuses on its own stores. Shipments to wholesalers are “materially lower” and will generate lower revenue this year, the company said Tuesday as it released earnings for the quarter that ended June 28. The wholesale channel represented 74.2% of sales in the second quarter last year.
Canada Goose shares fell 2.2% to $24.27 at 12:49 a.m. in New York trading.
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