Canada Goose Defies Luxury Slowdown in China, Surpassing Quarterly Estimates – Reuters

By Ananya Mariam Rajesh

Canada Goose surpassed Wall Street’s expectations for quarterly revenue, driven by consistent consumer demand in China for its puffer jackets and sweatshirts, defying the broader slowdown affecting many luxury brands in the region.

The company’s strategy to branch out beyond winter offerings by introducing items such as rain gear and warm-weather apparel like fleece, t-shirts, and shorts significantly boosted sales in the Asia-Pacific area, leading to a third consecutive quarter of growth in China.

CEO Dani Reiss mentioned, "In China, we continue to open popup stores whenever opportunities arise at the right time, and our seasonally relevant spring and summer products have really propelled strong consumer demand."

Sales in Greater China increased by 2.4% during the first quarter, while the United States experienced a modest rise of 0.4%, even as wholesale demand faced challenges due to cautious consumer spending.

Despite these results, shares of Canada Goose listed in both the U.S. and Toronto dropped by 4%. The company also confirmed its annual profit and sales projections.

In the first quarter, wholesale revenue fell by 41%, while sales through its own retail outlets and online channels grew by 13% during the same period.

Canada Goose’s success in China stands in contrast to the performance of major luxury brands like LVMH, Burberry, and Hugo Boss, which reported decreased spending on their products by consumers in the region.

Cole Smead, CEO of Smead Capital Management, which holds shares in Canada Goose, noted, "Other luxury segments reached peak demand in China at some point or are just experiencing a slowdown… In Canada Goose’s case, they remain a fresh brand in consumers’ minds, and their performance in that market is attributed to that novelty."

The company’s revenue for the first quarter rose by 3.3% to C$88.1 million, outpacing estimates of C$86.1 million. Additionally, Canada Goose reported a smaller-than-anticipated quarterly loss of 79 Canadian cents, compared to analysts’ forecast of a loss of 80 Canadian cents.