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Canada Goose Stock Drops After Disappointing Results

Canada Goose estimates low double-digit wholesale revenue growth for the current quarter. In the last quarter, gross margin disappointed.
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Canada Goose  (GOOS) - Get Canada Goose Holdings, Inc. Report shares skidded Wednesday, after the upscale apparel seller reported a disappointing gross margin for the quarter ended June 27 and mixed sales guidance for the current quarter.

In the fiscal 2022 first quarter, the company’s gross margin was 55%. For the second quarter, Canada Goose estimates low double-digit wholesale revenue growth, and direct-to-consumer revenue of roughly 1.5 times last year’s level.

The company also predicted flat gross margin for the full fiscal year on its earnings call, Bloomberg reports.

Canada Goose shares on Wednesday closed down 13% at $38.71, leaving it down about 5% for the last six months.

CIBC analyst Mark Petrie rates the stock outperform with a target price of C$59 ($47.18). It recently traded at C$49.09 on the Toronto Stock Exchange.

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“While the wholesale guidance is disappointing, we place greater emphasis on DTC trends given their strategic importance and materiality to results,” he wrote, according to Bloomberg.

In June, Canada Goose said it would stop using animal fur in all its products, as animal-rights activists have urged for years.

“This announcement is driven by its focus on its purpose-based platform, Humanature, relentless innovation, and expanding lifestyle relevance,” the company said.

The Toronto company said it would end fur purchases by year-end and cease manufacturing with fur by the end of 2022.

“Our focus has always been on making products that deliver exceptional quality, protection from the elements, and perform the way consumers need them to,” Chief Executive Dani Reiss said in a statement. “We are accelerating the sustainable evolution of our designs.”