Strength in Mainland China steered Canada Goose back into the “black” in the second quarter, following a first-quarter loss.
In a Nutshell: The purveyor of premium parkas said direct-to-consumer revenue in Mainland China rose by over 30 percent in the quarter, as global e-commerce revenue rose climbed more than 10 percent and accelerated in September. Performance at four newly opened stores in the region has been “very encouraging,” said Dani Reiss, president and CEO of the luxury outerwear company.
“This is a strong backdrop as we head into peak Canada Goose season,” Reiss added.
“With consumers spending more time outdoors this winter both recreationally and professionally, we believe this will create an elevated demand for functional, authentic and protective apparel,” Reiss noted in a call with Wall Street analysts. “As a brand, we have never been more relevant and more universally needed.”
During the quarter, Canada Goose completed a third-party logistics transition to enhance the scalability of its distribution and e-commerce service levels globe, chief financial officer Jonathan Sinclair told analysts. “The first phase of our digital cross-border initiative is complete with 18 new countries turned on during the second quarter,” he said. “We’re excited to continue expanding the global campus of our in-house e-commerce business. In-store omni shopping is also going live as we speak in U.S. retail. We expect this to be a real needle mover for experience and for conversion.”
Though many retail partners have resumed reordering wholesale product, Sinclair noted that Canada Goose is “not focused on chasing” the wholesale channel but is prioritizing direct-to-consumer opportunities instead.
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Net Sales: Revenue for the quarter ended Sept. 27 was down 33.7 percent to 194.8 million Canadian dollars ($149.4 million) from 294.0 million Canadian dollars ($225.5 million).
Wholesale revenue fell 45.7 percent to 118.5 million Canadian dollars ($35.1 million) due to the continued impact of the Covid-19 as the planned order book saw reductions and requests from partners and international distributors for later shipment. Direct-to-consumer revenue declined 37.7 percent to 46.2 million Canadian dollars ($35.4 million), with the decrease driven by lower retail traffic from Covid-19 disruptions globally. Revenue from e-commerce was higher than the year-ago total. For the quarter this year, the company saw other revenue climb to 30.1 million Canadian dollars ($23.1 million) from 1.7 million Canadian dollars ($1.3 million) a year ago, driven by personal protection equipment sales to support Covid-19 response efforts.
Gross margin for the second quarter was 48.4 percent.
For the six months, revenue fell 39.5 percent to 220.9 million Canadian dollars ($169.4 million) from 365.1 million Canadian dollars ($280.0 million).
Earnings: Net income fell 78.4 percent to 12.5 million Canadian dollars ($9.6 million), or 9 Canadian cents ($0.07) from 58 million Canadian dollars ($44.5 million), or 55 Canadian cents ($0.42), a year ago.
For the six months, the company posted a net loss of 35.6 million Canadian dollars ($27.3 million), or 36 Canadian cents ($0.28), against net income of 32.5 million Canadian dollars ($24.9 million), or 28 Canadian cents ($0.21) a year ago.
CEO’s Take: “We have accelerated our best strategic opportunities in today’s environment. Mainland China has already returned to growth and our digital business is accelerating in a meaningful way at the right time,” Reiss said.
Additional reporting by Jessica Binns.