Canada Goose Sales Beat With Mainland China Back to Growth
(Bloomberg) -- Parka maker Canada Goose Holdings Inc. posted better-than-expected revenue, showing the pandemic slump is easing just in time for the crucial winter period. “This is a strong backdrop as we head into peak Canada Goose season,” Chief Executive Officer Dani Reiss said in a statement.
- The Covid-19 crisis forced Canada Goose to temporarily close stores from Paris to Toronto earlier this year, and sales haven’t returned to pre-pandemic levels as department stores that sell the brand continue to languish. Revenue for the second quarter ended Sept. 27 fell 34% year on year to C$194.8 million ($149.4 million), above the average of C$166 million expected by analysts. That includes personal protection equipment it sold at cost.
- In an echo of luxury brands like Moncler SpA and LVMH, Canada Goose is getting a boost from China, which has been more successful in containing the virus and turned into one of the few bright spots of the world economy. Direct sales in China, where the company is already adding four new stores this fiscal year, climbed more than 30%. “Mainland China has already returned to growth and our digital business is accelerating in a meaningful way at the right time,” Reiss said.
- With Covid-19 cases flaring in Europe and North America, the brand may benefit from an increased push to stay outdoors as consumers use their porches and yards well into the winter. Still, the company said it still can’t forecast how the future looks. It cited “continued global uncertainties, including second-wave shutdowns and disruptions, the pace of retail traffic recovery, and the impact of economic developments and travel restrictions, all of which are unknown.”
- Online revenue grew 10%, with momentum continuing into October, Reiss said in an interview. Traffic at brick-and-mortar stores is down at some locations in North America and Europe while “people are shopping normally” in China. The company just expanded a store in Toronto and still sees brick-and-mortar locations as “a very important strategic pillar.”
- Canada Goose has been decreasing its reliance on wholesalers and focusing on its own online operations and physical stores, which are more lucrative. This year, it’s also shipping parkas later in the season, to limit risks of discounts. Revenue from wholesale was cut almost in half, representing about 61% of sales, down from 75% a year earlier, as it focuses more on direct-to-consumer sales.
- Canada Goose U.S.-listed shares rose 3.1% at 9:37 a.m. in New York. They fell 9.2% this year through Wednesday’s close. The stock has more than doubled from a March 16 low of $14.86.
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