Canada Goose Sees 22.5% Summer Sales Gain
Canada Goose Holdings continued up the steep part of its growth curve in the first quarter — although the double-digit top-line increase was muddied somewhat by summertime losses that were worse than expected.
Revenues for the quarter ended June 29 jumped 22.5 percent to 107.8 million Canadian dollars.
Most of that came from the brand’s direct-to-consumer business, which rose 23.8 percent to 78.1 million Canadian dollars. Canada Goose converted two temporary stores into permanent locations during the quarter, bringing the brand’s door count to 76. Comparable sales gained 14.8 percent.
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And wholesale revenues rose by 11.9 percent.
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Dani Reiss, chairman and chief executive officer, told WWD that the company came into the quarter with some momentum and has been growing stronger in summer categories.
“We showed up with the season with fresh product, new marketing, a clear point of view — direct-to-consumer is really the driving engine,” Reiss said. “We’ve now seen seven straight months of positive comp sales, which speaks well to both our brand and our execution.”
And while many higher-end brands are struggling for purchase with the luxury consumer, Reiss said Canada Goose still has a hold on its consumers.
“We have some visibility into July and it’s looking really good as well,” he said. “The momentum is not slowing down and we’re really happy to be somewhat of an outlier actually.”
Operating losses expanded to 158.7 million Canadian dollars for the first quarter from 96.9 million Canadian dollars a year earlier.
That loss was driven by a one-time arbitration award to a former supplier totaling 43.8 million Canadian dollars, as well as costs to expand the company’s retail network and increased marketing spend behind the spring-summer and Snow Goose campaigns.
Adjusted net losses expanded to 91 cents a share — steeper than the 62 cent deficit analysts projected, according to Yahoo Finance.
Shares of Canada Goose slipped 6.3 percent to $11.95 in premarket trading.
But Reiss is one of the fashion CEOs least likely to be swayed by the minute-to-minute changes in the stock market.
His approach to growing the business has been very methodical, from expanding in newer categories like apparel and footwear to opening stores in China to launching the Snow Goose by Canada Goose collection with creative director Haider Ackermann.
The designer has helped keep the brand front of mind.
“We’re very much in that pop culture conversation now,” Reiss said. “That drives sales across all categories. His capsules are our cutting edge and are pushing the limits in some ways. I think that’s really good because I think that brings us into the conversation and they sell well.”
Overall inventories were down 9 percent from a year earlier. And net debt shrunk 29.3 percent to 541.7 million Canadian dollars, which the company attributed to “higher cash balances and lower borrowings from our credit facilities compared to the previous year.”
There could be some big changes ahead for Canada Goose.
Sources say Bain Capital, which controls the voting rights at the company, is considering selling its stake.
Reiss did not confirm that, but said: “Bain Capital have been tremendous partners to me and we’ve had a great partnership and we continue to have a great partnership and I have absolutely every expectation that they will continue to be great stewards of the brand and they will act responsibly if and when they ever do anything. I’m not worried at all.”
Chalk that up as more potential change in an ever-changing world.
At least, Canada Goose doesn’t have to worry too much about President Donald Trump’s trade war for now.
Most of its goods are made in Canada and are eligible for duty-free treatment under the United States-Mexico-Canada trade agreement.
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