Canada Goose sees Asia revenue soar despite Hong Kong tensions
The luxury parka retailer reported a $60.6 million second-quarter profit
Shares of Canada Goose Holdings Inc. sank even though it beat expectations as revenue grow more than 25% in its most recent quarter partly as a result of a jump in Asia despite ongoing tensions in Hong Kong.
Canada Goose shares lost $4.96 or 9.6% at $46.82 in afternoon trading on the Toronto Stock Exchange.
The shares fell as the company warned Wednesday that wholesale revenues are expected to decrease in the third quarter because orders were advanced leaving fewer remaining winter orders to come.
The luxury parka retailer reported a $60.6 million second-quarter profit, amounting to 55 cents per diluted share for the period ending Sept. 29. That’s compared with a $49.9-million profit, or 45 cents per diluted share, in the same quarter the previous year.
On an adjusted basis, the company said it earned $63.6 million or 57 cents per diluted share, up from $51.1 million or 46 cents per diluted share a year ago.
Analysts on average had expected a profit of 43 cents per share and $267.3 million in revenue, according to financial markets data firm Refinitiv.
Revenue totalled $294.0 million, up from $230.3 million.
In Asia, revenue nearly doubled from $26.2 million in the second quarter of 2018 to $48.9 million this year.
The increase was realized even though the performance at the company’s store in Shanghai’s IFC Mall and Hong Kong’s Ocean Center have “been impacted significantly” by a reduction in tourism and retail traffic that intensified over the quarter, CEO Dani Reiss said in a conference call.
Hong Kong, which is part of China but has its own legal system and greater freedoms than the mainland, has seen increasingly violent protests as some say their freedoms are threatened. They accuse the city government of being beholden to Beijing.
The protests started in June to oppose a now-withdrawn extradition bill. Chinese authorities have called protesters “rioters,” as well as “murderers” more recently.
Reiss said strong performance in other markets offset the impact in Hong Kong.
The company is watching the situation closely and evaluating actions to streamline its cost base on the ground, including negotiating accommodations from landlords.
“Although … we wish that the situation was different today, we are developing markets and building stores for decades, not just for the next quarter,” he said.
– With files from The Associated Press