Shares of Canada Goose Holdings Inc. (GOOS) - Get Report got the cold shoulder from investors on Friday after the company said it was delaying opening its first store in China - seen by many as a response to current political tensions related to the recent arrest of Huawei Technologies Co. Chief Financial Officer Meng Wanzhou.
Canada Goose on Friday said it cancelled the opening of its flagship Beijing store, which was scheduled for Saturday, due to construction delays. However, the cancellation comes as the luxury coat and clothing maker faces backlash from Chinese consumers who are displeased about Meng's recent arrest, and agreement to allow for her extradition to the U.S.
Canada Goose stock fell as much as 6.35% on the New York Stock Exchange before recovering. As of mid-afternoon, the company's shares were down 4.85%, or $2.65, at $52.04.
The Winnipeg, Canada-based company has seen its stock fall more nearly 20% in the past week amid the unfolding diplomatic crisis between China and Canada that began after Canadian authorities arrested Meng, who is also the daughter of Huawei founder and current head Ren Zhengfei. Meng was released on bail on Tuesday.
The arrest has further complicated the prospects for the 90-day trade "truce" recently reached between the U.S. and China. Meng is sought by U.S. for two charges of fraud relating to Huawei's alleged breaching of U.S. sanctions against Iran.
It has also stirred up feathers between China and Canada. Since last week's arrest, Chinese media have reportedly been encouraging consumers to boycott Canadian products, including Canada Goose.
Earlier this week, the hashtag "Canada Goose share plunge" became the second-most trending topic on the Twitter-like Chinese microblogging website Weibo, with 1.15 million mentions, after Chinese media reports on how the Huawei dispute had hammered the company's shares.
"In a bad market environment, investors look for reasons to sell, and they have one in Canada Goose," said Norman Levine, managing director and portfolio manager with Toronto-based Portfolio Management Corp., which oversees $600 million in assets. "Not helping is GOOS's high price-earnings ratio."
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