Canada Goose Heats Up, Topping Sales Estimates
Canada Goose Holdings gained momentum headed into the summer and Dani Reiss sees that as a sign of what’s to come as the weather cools.
“So far, we’ve not seen any slowdown in demand from our consumers whatsoever,” the chairman and chief executive officer told WWD while detailing fiscal first-quarter results, which showed stronger-than-expected sales gains.
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While consumers lower down the price scale are feeling the pinch of inflation and fretting over the economy, the luxury consumers who buy Canada Goose gear are pressing ahead.
“People are really excited to go back to stores and to have the in-store experience and just to be out and to be shopping and to be living their lives,” Reiss said.
Canada Goose’s revenues for the three months ended July 3 grew by 24.2 percent to 69.9 million Canadian dollars, well ahead of the 48 million Canada dollars analysts were betting on.
Net losses — which are typical for this time of year — widened slightly in the quarter to 62.4 million Canadian dollars from 57.5 million Canadian dollars a year earlier.
Reiss said first-quarter sales tend to be a “leading indicator of the year ahead” and saw them as “very promising.”
Direct-to-consumer sales rose 19.6 percent to 34.8 million Canadian dollars while wholesale sales increased 27.2 percent to 33.2 million Canadian dollars.
However, revenue from Japan was minimal compared with 9.3 million Canadian dollars a year ago due to an accounting shift tied to the creation in April of the Canada Goose Japan Joint Venture with Sazaby League Ltd. on April 4.
Reiss said that if the accounting hadn’t changed, wholesale sales would have been up 97 percent.
The gain underscores the continuing importance of wholesale despite the long march in the fashion industry toward direct-to-consumer.
“What I read out of this [wholesale sales gain] is that there’s more demand sooner,” Reiss said. “Consumers want to buy our brand now and our wholesale partners are requesting their orders sooner and that’s a great, strong leading indicator.”
All that counts as more optimism than caution, while many in the industry are projecting the opposite.
Just as catering to a higher-end shoppers shields Canada Goose from some consumer worries, Reiss said the brand’s Made in Canada approach also insulates it from cost inflation and supply chain woes.
Gross margins in the first quarter rose to 61.1 percent from 54.5 percent a year ago.
“We’re seeing gross margins go up, which seems to be atypical in our category these days,” the CEO said. “That’s a lot to do with the way we run our business. We manufacture our products in Canada, so we’ve been relatively insulated.
“We have successfully grown through ever recession for the last 20 years, save for that one COVID year,” he said. “We have a product that withstands the test of time, has a lifetime warranty on it. The very nature of the functionality of our product, it transcends cyclical patterns in the economy.”
And Reiss said there’s plenty more room to grow — through more stores, expansion in China, warmer weather categories and in women’s.
“One huge opportunity for us is the women’s category,” he said.
Investors were also seeing opportunity and sent shares of Canada Goose up more than 12 percent on Thursday, before the market cooled and left the stock up 1.8 percent to $22.07 for the day.
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