Canada Goose shares plunge following slower revenue growth guidance
Revenue for the most recent quarter showed the slowest growth in eight quarters, missing analyst expectations
The chief executive of Canada Goose Holdings Inc. defended the luxury parka retailer’s growth plans as its shares lost nearly a third of their value in the wake of the company’s latest financial results and guidance.
In its outlook, the company said Wednesday it expects annual sales growth of at least 20 per cent this year, however Canada Goose posted revenue growth of 40 per cent in its most recent financial year as its sales totalled $830.5 million, up from $591 million in the previous year.
Revenue for the company’s most recent quarter also showed the slowest growth in eight quarters and missed analyst expectations, noted Cannacord Genuity Wealth Management in a morning market commentary.
Revenue totalled $156.2 million, up from $124.8 million, while analysts on average had expected $156.78 million, according to Thomson Reuters Eikon.
“It’s impossible to know what’s in people’s heads and why people react the way they do,” said CEO Dani Reiss in an interview, following a conference call with analysts where he was repeatedly asked about the revenue forecast.
“I don’t think our guidance suggests that our sales are going to slow down,” he said.
Reiss highlighted the company’s plans to grow its store count, which is currently at 11, by another eight this financial year. Three of those will be in China, he said. The company already operates one store each in Hong Kong and Beijing.
The company sees China as a big growth opportunity as it is the largest luxury market in the world, said Reiss, and there’s a lot of demand for its product there.
He also said the company plans to launch a footwear line in the coming years, which he sees as a natural extension for Canada Goose considering its reputation for warmth and protection from the elements.
The company acquired Baffin Inc., a Canadian footwear designer and manufacturer last year.
Canada Goose has not yet announced a date for the footwear launch, but Reiss said it likely won’t be next year.
In its financial report, the company said it earned $9 million in its fourth quarter ended March 31 – up from $8.1 million in the same quarter last year. The profit for the quarter amounted to eight cents per diluted share, up from seven cents per diluted share a year earlier.
On an adjusted basis, Canada Goose says it earned nine cents per diluted share in the quarter, the same as a year ago.
Analysts on average had expected a profit of six cents per share for the quarter, according to Thomson Reuters Eikon.
Shares on the Toronto Stock Exchange fell $20.69 or 31.05% to $45.94.