Dive Brief:
- Luxury apparel brand Canada Goose’s total revenue during the second quarter increased 1% year over year to 281.1 million Canadian dollars (about $203 million), according to a Wednesday press release. The company’s operating income dropped more than 89% to CA$2.3 million, while its net income decreased 18% to CA$4.1 million.
- Canada Goose lowered its fiscal 2024 outlook to a total revenue range of CA$1.2 billion to CA$1.4 billion instead of the previously predicted CA$1.4 billion to CA$1.5 billion. Direct-to-consumer revenue during the quarter grew 15% to CA$109.4 million thanks to in-store retail sales, while wholesale revenue decreased 10% due to Canada Goose’s planned streamlining of the channel as it focuses on DTC.
- The brand also announced that current CFO Jonathan Sinclair will step away from the position to become president of the Asia Pacific region effective April 1. Current deputy CFO Neil Bowden will replace the executive as chief financial officer. Larry Li, current president of Mainland China, has been named COO of the APAC region, effective Jan. 1.
Dive Insight:
Canada Goose’s latest earnings come amid macroeconomic challenges across the regions it operates in.
“We delivered solid second quarter results, with earnings exceeding our expectations and gross margin expansion despite operating in a challenging retail environment,” Dani Reiss, chairman and CEO of Canada Goose, said in a statement. “While we are operating in an uncertain macro landscape, we are confident in the power of our brand, the quality of our products, and the ongoing execution of our strategy has us poised to create long-term value for our stakeholders.”
The luxury brand opened six new stores during the quarter, three of which were in the U.S., bringing Canada Goose’s total store count to 62 at the end of the period. On a call with analysts Wednesday, Sinclair said U.S. DTC sales grew low double digits due to new store sales and traffic was substantially higher year over year as it more than doubled its store count.
Canada Goose’s full-year outlook change comes after analysts with Cowen and Wells Fargo downgraded the brand last month, both citing headwinds in China and the impact weather temperatures can have given the brand’s historical focus on heavyweight down.
The brand’s non-heavyweight down category grew in the second quarter, expanding its share of revenue within the overall mix. Within the category, Canada Goose said rainwear was its fastest-growing category, followed by apparel.
“Obviously we were coming out of the very unseasonally warm September,” Sinclair said on the call. “Weather impacts this business in the sense that the first cold snap prompts business, it sort of reminds consumers that this is the time that they should go and buy cold weather gear. So the longer you wait for that, the later it starts, and I think that is what we've experienced this year.”
The executive added that for the full year, heavyweight down is still expected to be over half the business by value. The category was about 63% of the business last year and is expected to be around the high 50s and low 60s as Canada Goose grows its non-heavyweight offerings.
