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Canada Goose Earnings: One Big Key to Look For

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Canada Goose (GOOS) - Get Free Report reports earnings Wednesday before the market opens. Investors will be looking to see encouraging signs on the company's direct-to-consumer e-commerce initiative. 

Analysts polled by FactSet are looking for earnings of 4 cents per share for the fourth quarter. Revenue is expected to come in at $118.9 million. 

But "Canada Goose -- they're shifting from being wholesale, that is, they're selling to the department stores to begin to do more in e-commerce and some of their own stores," John Morris, senior brand apparel retail analyst at D.A. Davidson & Co., told TheStreet. "They will probably continue to grow that business fairly significantly. Wholesale will continue to come down. As that happens, whether it's in store or online, that'll lift the margin for Canada Goose." 

Morris added, "As it does rise, that also contributes to a greater degree of margin expansion." 

Investors want to see the higher margin direct-to-consumer business scale as quickly as possible, and details of that initiative are sure to be revealed on the earnings call. Goose's latest earnings report showed that the DTC operating margin was 60% for the quarter, while the company's overall operating margin was 35%. This means that if Goose is able to continue expanding its DTC division faster than the overall company's business, operating profit and earnings should improve as well. 

Meanwhile, Lulu Lemon (LULU) - Get Free Report  reports earnings May 30. Morris notes Lulu is further ahead in digital initiatives than Goose. 

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