Canada Goose to open new factory in Montreal, reports Q4 profit up from year ago [UPDATED]
The luxury parka maker has also raised its guidance for revenue and profit for its 2019 financial year
TORONTO—Canada Goose Holdings Inc. will expand its network of eight Canadian manufacturing facilities with a new factory in Quebec—its second in the province.
The Toronto-based luxury apparel company said Thursday that the Montreal factory will create 300 jobs and accommodate about 650 workers when it is running at full capacity by the end of 2020.
“Montreal’s Chabanel district was once a central part of apparel manufacturing in Canada, but this has been eroded by the shift offshore in pursuit of margins. Some brands only have their headquarters in the city and they are missing the great history and potential this area has,” Canada Goose chief executive Dani Reiss told a conference call with financial analysts.
“This is the perfect opportunity for us to rebuild and revitalize the cut-and-sew industry there and have a lasting impact on the community.”
While Canada Goose makes the majority of its offerings, including parkas, in Canada, third-party facilities in Italy and Romania are often used to produce knitwear.
Reiss, whose company purchased footwear-maker Baffin Inc. in November and announced Canada Goose would explore making boots, would not commit to a timeline or production location for the product category in an interview with The Canadian Press.
“As we get into new categories, we will make them in the right place to make them. Sometimes it might be Canada. Sometimes it might not.”
The factory announcement came as Canada Goose reported a better-than-expected profit for its latest quarter and raised its financial guidance for the year.
The company said it earned $103.4 million or 93 cents per diluted share for the quarter ended Dec. 31, up from a profit of $63 million or 56 cents per diluted share in the same quarter a year earlier.
Revenue in what was the company’s third quarter totalled $399.3 million, up from $265.9 million.
Analysts on average had expected a profit of 81 cents per share for the quarter, according to Thomson Reuters Eikon.
Reiss attributed some of the increases to the strength of the company’s e-commerce offerings, including its presence on the popular Tmall platform operated by Chinese company Alibaba Group.
Reiss said that despite not offering any promotions, Canada Goose ranked within the top 10 brands in its space on the platform on Singles Day _ a Nov. 11 holiday in China that was started in the nineties by Nanjing University students rebelling against Valentine’s Day and has since been declared the biggest shopping day of the year in the country.
In recent years, Canada Goose has zeroed in on the Asian market to spur growth, opening stores in Beijing and Hong Kong and a regional office in Shangai.
The Beijing store opening came at the end of last year as anti-Canadian sentiment was reportedly growing in China, following the arrest of Huawei Technologies chief financial officer Meng Wanzhou in Vancouver. In the two weeks following her arrest, Canada Goose’s stock dropped by about 20 per cent.
But Reiss insisted the company’s Chinese expansion has gone well and the brand’s reputation is still in tact overseas.
He wasn’t on hand for the Beijing store opening, which had been delayed by construction, but said it produced long line-ups, that he knows Canada Goose is generating “tremendous” demand in Asia and that the company remains both “bullish and excited” about the market.
He said it was a “reasonable expectation” that Canada Goose would open more locations in the country, but stressed he wouldn’t “irresponsibly” open locations.
Reiss added that Canada Goose has yet to see any negative reaction to the brand in China, despite stock woes and the tensions between the country and Canada.
“There is a lot of speculation out there and geopolitical commentary and I will leave the noise and politics to the politicians…We are just getting started in greater China and our results are really encouraging. The Canadian brand is really strong,” he said.
“We don’t look at the stock prices day to day or week to week or month to month because we know we are great long-term shareholder value by being a brand that will stand the test of time. For whatever reason people had to do what they did, (but) we don’t concern ourselves with that. We just focus on the long-term.”
Canada Goose’s stock was down over eight per cent in mid-morning trading on the Toronto Stock Exchange Thursday.
Meanwhile, the company raised its guidance for revenue and profit for its 2019 financial year.
It now expects revenue growth in the mid-to-high 30s on a percentage basis, compared with earlier expectations for at least 30 per cent.
Annual growth in adjusted net income per diluted share is also now expected to grow in the mid-to-high 40s on a percentage basis, compared with earlier expectations for at least 40 per cent.