- Oops!Something went wrong.Please try again later.
Canada Goose (GOOS.TO)(GOOS) saw total sales increase 116 per cent to $56.3 million in the first quarter of the year, as the retail environment around the world improved and production normalized through the COVID-19 pandemic.
But the luxury parka maker's stock sank as much as 15 per cent on Wednesday as the company reiterated its fiscal outlook for the year, one that an analyst previously described as "lacklustre." The stock closed the trading day at $48.38, a decrease of 13 per cent.
Canada Goose reported a net loss in the three-month period ending June 27 of $56.7 million, or 51 cents per diluted share, compared to a net loss of $50.1 million, or 46 cents per diluted share, in 2020. The first quarter of the year is typically the company's smallest when it comes to profitability.
Overall sales were boosted by continued growth in e-commerce, which increased globally by 80.8 per cent. Despite some store closures in Canada, revenue grew by 126.1 per cent in the country versus the quarter before.
"The results we delivered in Q1 demonstrate the global demand for our products and our ability to operate in an improving yet still evolving retail environment," chief executive Dani Reiss said on a conference call with analysts on Wednesday morning.
"Our business has shifted from recovery to growth, and that has continued into this quarter."
The company previously forecast that it expects revenue in 2021 to exceed $1 billion, with direct-to-consumer sales making up 70 per cent of that figure. It left that guidance unchanged, despite beating quarterly estimates on Wednesday.
The surge in cases involving the highly infectious Delta variant of the virus has raised fears that potential new lockdowns could slam the brakes on a rebound in the global luxury goods industry.
Wells Fargo analyst Ike Boruchow said in a note to clients that the unchanged outlook means the company's stock is "likely to be held in the penalty box."
"The issue today is their outlook and near-term margins; the reiteration of the $1-billion annual outlook pushes even more of the full year into the winter/spring quarters and this has created a more difficult near-term setup," he wrote on Wednesday.
"We believe the brand heat and model has momentum, and thus we aren't overly concerned here."
No more fur for Canada Goose
The financial results come in the midst of a significant change for Canada Goose, as the company transitions away from using fur in its products. The company announced in June that it will stop purchasing fur by the end of the year, and will end manufacturing with fur no later than the end of 2022.
Reiss said the move to shift away from fur – something animal rights groups have called for for years – was not a sudden decision for the company.
“This is something that we have been considering and planning around for years. Our non-fur product offering has been growing at an outsized pace and makes up roughly half of the revenue base today, and that’s a trajectory that has been and will be continuing,” he said.
“We are at a stage now where we feel we can continue to offer the best in protection without using fur, and this decision has truly energized the company and I believe offers us a huge amount of increased opportunity in the future.”
Reiss also said the company “absolutely will not be using faux fur”, as it is not an environmentally sustainable alternative.
With files from Reuters
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.