Canada Goose on Friday became the latest firm to revise fiscal 2020 guidance, warning that the coronavirus outbreak is “having a material negative impact on performance” in its current fourth quarter.
In a Nutshell: The guidance update was disclosed as part of its outlook forecasts after the outerwear firm posted third-quarter results.
“The health crisis has resulted in a sharp decline in customer traffic and purchasing activity. Retail stores and e-commerce across Greater China have and continue to experience significant reductions in revenue. Due to global travel disruptions, retail stores in international shopping destinations in North America and Europe are also affected,” the company said.
Canada Goose also emphasized that “no supply chain interruptions have occurred.”
Looking ahead, the outerwear firm did note that it believes the situation reflects a temporary change in consumer behavior due to health precautions. “However, the extent and duration of the disruptions remain uncertain and prolonged disruptions may also negatively impact future fiscal periods,” Canada Goose cautioned.
Net Sales: Revenues for the three months ended Dec. 29 jumped 13.2 percent to 452.1 million Canadian dollars ($339.9 million) from 399.3 million ($300.2 million).
By channel, DTC revenue rose 28.3 percent to 301.8 million Canadian dollars ($226.9 million) from 235.3 million ($190.4 million). Disruptions to tourism and retail traffic sent Hong Kong retail sales down, in addition to frequent reductions in regular store operating hours and unplanned store closures. Wholesale revenue fell 8.4 percent to 150.3 million Canadian dollars ($113.0 million) from 164.0 million ($123.3 million).
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International growth was led by a “standout performance” in Asia, where revenue doubled to 94.7 million Canadian dollars ($71.2 million) from $46.4 million ($34.9 million), the company said. Canada Goose also said it was the top-performing brand by revenue on Tmall’s Luxury Pavilion during Singles Day and Double 12 shopping festivals.
During the quarter, the company opened a new experiential concept store–dubbed The Journey at Toronto’s CF Sherway Gardens–designed to showcase the product line while immersing visitors in an environment showcasing the sights of nature, sounds of the Arctic and touch of real snow.
More recently in the current fourth quarter, the company launched the latest collection for Project Atigi, which features hand-crafted parkas by Inuit designers and named Polar Bears International ambassador Kate Upton a “Goose Person,” what the Canadian company calls its brand ambassadors.
Earnings: Net income rose 8.9 percent to 118.0 million Canadian dollars ($88.7 million), or 1.07 a diluted share (80 cents), from 103.4 million ($77.7 million), or 93 cents (69.9 cents). On an adjusted basis, diluted EPS for the quarter was 1.08 Canadian dollars (81 cents).
For fiscal 2020, the company guided annual revenue growth of 13.8 percent to 15 percent, or a revenue range of 945 million to 955 million Canadian dollars ($710.4 million to $717.9 million). The guidance includes wholesale revenue growth estimated at between 9 percent to 11 percent.
CEO’s Take: “We delivered robust growth in the third quarter, notwithstanding geopolitical headwinds and an expected revenue timing shift in our wholesale business. Our DTC expansion continues to unlock and accelerate our development in major international markets,” president and CEO Dani Reiss said.
Citing frequent long lines outside its stores in response to new experiential innovations, Reiss said consumer engagement has been consistently strong across all geographies. “While we recognize that we are now navigating a period of heightened uncertainty due to the coronavirus health crisis, we remain confident in our strategy and long-term potential,” Reiss said.