Wednesday, December 7

Canada Goose lowers outlook as China’s zero-COVID policy hits sales

Retailer brought in $277.2 million in its second quarter

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Canada Goose Holdings Inc. said on Wednesday that revenues grew in the second quarter but revised its full-year outlook down amid a hit to sales in China, one of its key markets.

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The luxury parka retailer brought in $277.2 million for its second quarter ended on Oct. 2, a 19 per cent increase from the same time a year ago. Adjusted earnings before interest and tax grew 70 per cent to $29.6 million and earnings per share decreased nearly 67 per cent, down to three cents per share.

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“We are encouraged by our performance in the second quarter,” chief executive Dani Reiss said in a press release. “Given the extent of COVID disruptions in mainland China as well as an uncertain global macroeconomic backdrop, we have revised our fiscal 2023 outlook. “

Canada Goose expects total revenue between $1.2 billion and $1.3 billion, compared to original guidance of $1.3 billion to $1.4 billion. It also provided guidance for the third quarter, with sales expected to ring in between $580 million to $660 million.

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China’s zero-COVID policy has had a material impact on the Toronto-based company. Revenues in all other geographies — Canada, the United States and Europe — grew in the quarter but dropped 4.2 per cent in the Asia Pacific region to $56.4 million.

Canada Goose generates the majority of its wholesale revenue in the second and third quarter of its fiscal year, while the majority of direct-to-consumer (DTC) sales get booked in the third and fourth quarter. In fiscal 2022, the middle quarters generated more than 82 per cent of annual wholesale revenues while the third and fourth quarters brought in 85 per cent of DTC revenues for the year.

In the second quarter, the parka maker booked higher revenues in its wholesale segment, up more than 21 per cent to $180.7 million, and growth in the DTC segment, up 15.2 per cent to $94.8 million.

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