Yahoo Finance Canada Goose stock plummets after it slashes full year outlook
Macroeconomic concerns are weighing on sales expectations for the company
Shares of Canada Goose fell nearly 9 per cent on Wednesday after the company slashed its full year financial forecast over macroeconomic concerns, slower sales growth and the impact of delayed cold weather.
The luxury parka maker's sales momentum slowed noticeably in September, and while it began to improve in late October, "visibility remains reduced", said chief financial officer Jonathan Sinclair. Canada Goose (GOOS) (GOOS.TO) now expects total sales for the 2024 fiscal year to be between $1.2 billion and $1.4 billion, down from a previous forecast of between $1.4 billion and $1.6 billion. It also expects net income to be between 60 cents and $1.40 per diluted share, down from its earlier expectation of between $1.20 and $1.48 per diluted share.
"We are taking a more conservative approach in regards to our expectations, given the macro environment we see across many of our markets today," chief executive Dani Reiss said on a conference call with analysts on Wednesday following the release of second quarter results.
"While this macro environment presents a headwind, we remain focused on building for the long term guided by our three strategic pillars: driving consumer focused growth, building our [direct-to-consumer network] and expanding our product categories."
Canada Goose's Toronto-listed stock fell nearly 12 per cent to a 52-week low of $13.61 in early trading on Wednesday, before paring the losses slightly. Shares of the company finished the trading day at $14.02, a decline of nearly nine per cent compared to Tuesday's close. So far this year, the stock is down about 43 per cent.
Shares of Canada Goose fell in mid-October after Wells Fargo analyst Ike Burochow downgraded the company and cut its price target over macroeconomic concerns in China and unfavourable holiday conditions.
China, the world's second largest economy, is a critical market for Canada Goose, where it now operates 21 retail stores. While sales increased year-over-year in China in the second quarter, due to a rebound in spending following the lifting of COVID-19 restrictions, Sinclair said the market "is still more challenged in terms of the economic impact on the Chinese consumers." He said the company expects to see sales growth out of China, but due only to favourable year-over-year comparisons. This time last year there was "very little business being done" in China due to COVID-19 restrictions.
"As we look forward, we're going to be open in November, we're going to be open in December, and these are critical months," Sinclair said.
"We believe we're well positioned to take advantage of the consumer demand and particularly as the cooler temperatures settle it, which is only just beginning to happen."
Unseasonably warm weather has also been weighing on the company's sales.
"Weather impacts this business in the sense that the first cold snap prompts business. It sort of reminds consumers this is the time that they should go and buy cold-weather gear," Sinclair said.
"The longer you wait for that, the later it starts, and that is what we've experienced this year."
Canada Goose said total sales in the second quarter hit $281.1 million, up from $277.2 million during the same period last year. The company reported an adjusted net income of 16 cents per share, down from 19 cents per share last year.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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