Canada Goose Jumps Most Since 2018 as Online Sales Surge 39%

(Bloomberg) -- Parka maker Canada Goose Holdings Inc. soared as much as 28%, the most since 2018, after revenue and earnings for its key quarter came in well above analysts' estimates. E-commerce revenue surged 39%, compensating for the fact that seven of its 28 stores are closed because of the pandemic.

• Revenue for the fiscal third quarter ended Dec. 27 rose 4.8% to C$474 million ($370 million), a record, beating the C$413 million expected by analysts. The quarter marks the start of cold weather in the northern hemisphere and traditionally accounts for almost half of annual sales as consumers get equipped for winter.

Key Insights

• A new wave of Covid-19 infections forced Canada Goose and its retail partners to close a number of stores during the holiday season in cities including Toronto and Berlin. But e-commerce grew by double digits in every major market, with the U.K. up almost 100%, Chief Executive Officer Dani Reiss said in a phone interview. The momentum has accelerated in the current quarter, he said.
• The company continued to find growth in mainland China, where it's more than doubled the number of stores in recent months. Direct sales to customers increased 42% and stores are operating at pre-pandemic levels, Reiss said. “There's a ton more opportunity in China, both online and with bricks and mortar stores,” he added.

• As department stores and specialized retailers struggle, they asked Canada Goose to send shipments later than usual this year. That helped boost wholesale revenue 11% in the quarter. That positive surprise is making Canada Goose stand out compared with luxury rivals, according to Deborah Aitken, an analyst at Bloomberg Intelligence.
• The pandemic contributed to revenue as the company made and sold personal protective equipment. It has now stopped production, according to Reiss. The company also received C$4.8 million of government subsidies, which helped boost gross margins.
• Canada Goose posted C$1.01 in adjusted earnings per diluted share, beating analysts' calls for 86 Canadian cents. But it declined to give earnings guidance due to virus-related uncertainties.

Market Reaction

• Canada Goose shares jumped 25.6% to $44.17 as of 9:50 a.m. in New York trading, bringing the gain for this year to about 48%.

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