TORONTO — Canada Goose Holdings Inc. cut its financial guidance for its full year as it warned an “uncertain” and “increasingly challenging” global landscape along with an unseasonably warm September could hamper sales.
“The first cold snap prompts business,” chief financial officer Jonathan Sinclair said on a Wednesday call with analysts.
“It sort of reminds the consumer that this is the time that they should go and buy cold weather gear, so the longer you wait for that, the later (the sales period) starts, and I think that is what we’ve experienced this year.”
Sinclair’s comments allude to just one of the headwinds facing the Toronto-based luxury apparel company best known for its parkas.
Inflation has remained high, pushing many consumers to rethink their spending and perhaps, put off or nix any plans to purchase pricey coats. At the same time, geopolitical tensions are flaring between Canada and China, a market the company has long targeted for expansion.
Canada Goose has 21 stores in the region and celebrated the fifth anniversary of its Chinese presence recently with a big bash, which coincided with rising sales there as COVID-19 restrictions lifted and led to a rebound in domestic spending.
Despite the increased spending, the company still warned its woes in the Chinese market have not completely cleared.
“When it comes to China, we’re seeing an environment which is still somewhat challenged,” Sinclair said.
As a result, Canada Goose now expects total revenue for its 2024 financial year between $1.2 billion and $1.4 billion, compared with its earlier guidance for between $1.4 billion and $1.5 billion.
The company also said it expects adjusted net income per diluted share between 60 cents and $1.40 for its full year, compared with its earlier guidance for between $1.20 and $1.48.
Canada Goose arrived at that guidance because it saw momentum around its business slow noticeably in September.
“While we began to see some improvement in late October, visibility remains reduced to reflect the increased uncertainty in the macro environment,” Sinclair said.
Canada Goose’s reduced financial guidance comes after the company’s stock fell to a record low last month as analysts downgraded the business over concerns that warm weather and high inflation would weigh on sales.
The stock price fell $1.59 or roughly 13 per cent to $13.79 by mid-morning Wednesday.
To counter some of the headwinds, chief executive officer Dani Reiss said the company would focus on three goals: driving consumer-focused growth, building out its direct-to-consumer network and expanding product categories.
In recent months, it noticed rainwear was among its fastest-growing category, though knit jackets were its most popular pieces of apparel, and sneakers — a rather new category for Canada Goose — were performing well.
Those successes helped the company report a second-quarter profit attributable to shareholders of $3.9 million, up from $3.3 million a year earlier.
Canada Goose earned four cents per share for the quarter ended Oct. 1 compared with three cents per share in the same quarter last year.
Revenue for the quarter totalled $281.1 million, up from $277.2 million a year earlier.
On an adjusted basis, the company said it earned 16 cents per share in its latest quarter compared with an adjusted profit of 19 cents per share for the same quarter last year.
This report by The Canadian Press was first published Nov. 1, 2023.
Companies in this story: (TSX:GOOS)
