Canada Goose stock jumps as it bucks trend, hikes outlook
As some retailers – including Walmart and Target – cut profit expectations in the wake of soaring inflation, one Canadian retailer is forecasting an annual sales profit above analyst expectations.
Canada Goose (GOOS.TO)(GOOS) said on Thursday that it is "uniquely insulated" against the supply chain and inflationary issues that have been wreaking havoc for many retailers around the world, prompting it to hike its sales and profit outlook for the upcoming fiscal year.
The luxury parka maker says it expects total sales over the next year to hit between $1.3 billion and $1.4 billion, above the $1.3 billion target analysts were expecting, according to Refinitiv. The company also expects adjusted net income to be between $1.60 and $1.90 per diluted share, surpassing the analysts' average estimate of $1.61.
While some retail stocks have been slammed in recent days – Walmart (WMT) and Target (TGT) are down 19 per cent and 29 per cent this week, respectively – Canada Goose was up nearly 11 per cent midday on Thursday.
"Recently, many peers have pointed to continued production and supply chain challenges as well as logistical delays," Canada Goose chief executive Dani Reiss said on a conference call with analysts on Thursday.
"This was not a factor for us in the quarter, nor do we expect it to affect the year ahead. We continue to be uniquely insulated against supply chain issues due to our Canadian manufacturing, which accounted for 84 per cent of our total units in 2021."
Canada Goose says luxury shopping has returned to pre-pandemic trends, particularly in North America, which was the biggest driver of growth for the company in its most recent quarter. The retailer says the only region that saw traffic decline in its most recent quarter was the Asia-Pacific market, due to lockdowns in China. Canada Goose says four of its stores in China are currently closed, while traffic levels at the locations that are still open have been "significantly impacted."
China has been a key market at the centre of an aggressive international expansion strategy for Canada Goose in recent years. The Asia-Pacific market accounted for 30 per cent of the company's total sales in the fiscal year ending April 3.
Still, the company does not appear to be too concerned.
"We believe that this is a transitory headwind in a very low-impact trading period," chief financial officer Jonathan Sinclair said Thursday.
"Underlying brand demand remains robust. Our experience in the first wave also shows how quickly and significantly mainland China has rebounded from disruption."
The company reported a net loss in the fourth quarter ending April 3 of $9.1 million, down from a profit of $2.5 million during the same time last year. It reported a loss of nine cents per diluted share, down from a profit of two cents per diluted share in 2021.
With files from Reuters
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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