Canada Goose Holdings cut its full-year revenue and profit forecasts on Thursday, amid pandemic restrictions that dampened demand for the company’s luxury outerwear and footwear and rising concerns rise over growth in its China business.
The company’s direct-to-consumer sales, which include sales from its own retail outlets and online business, in mainland China rose 35.1% in the third quarter, compared with an 85.9% jump in the second quarter.
However, “following a very strong November we observed a slowdown in store traffic [in China] in December, which carried through into the current quarter,” chief financial officer Jonathan Sinclair said.
In December, China’s top consumer protection organisation warned Canada Goose against “bullying” customers in China with its return policies, just three months after the Canadian brand was fined for false advertising.
Shut stores and weak retail traffic due to Omicron-related curbs in key markets, including Germany and China, are also weighing on the luxury parka maker’s sales as shoppers stay indoors.
The company said it now expects revenue for fiscal 2022 to be between C$1.09o billion ($854 million) and C$1.105 billion, compared with its prior estimate of C$1.125 billion to C$1.175 billion.
Uncertain About Recovery
Canada Goose said it expects an adjusted profit of C$1.02 to C$1.11 per share for fiscal 2022, down from its prior forecast of between C$1.17 and C$1.33.
Chief executive Dani Reiss said he was uncertain about a recovery timeline, but added that the company was still seeing strong demand.
Toronto-based Canada Goose has been ramping up investments in its online platforms to cushion the blow from store closures and reduced footfall, helping the company to post a 28% jump in global e-commerce revenue in the third quarter.
US- and Canada-listed shares of the company plunged to their lowest in more than a year.
The share move clearly reflects the market’s concerns of intensifying weakness in China and a downbeat fourth-quarter guidance, Berenberg analyst Brian McNamara said in a note.
- Reuters, with additional editing by George Russell