- Prachi Singh |
Canada Goose Holdings Inc. reported strong international growth led by a standout performance in Asia, where revenue doubled to 94.7 million Canadian dollars (71.1 million dollars). Total revenue increased by 13.2 percent to 452.1 million Canadian dollars (339.4 million dollars) or 13.7 percent on a constant currency basis. The company’s net income was 118 million Canadian dollars (88.6 million dollars) or 1.07 Canadian dollars (80 cents) per diluted share, compared to 103.4 million Canadian dollars or 0.93 Canadian dollar per diluted share. Adjusted EBIT was 163.8 million Canadian dollars (123 million dollars), while adjusted net income was 119.7 million Canadian dollars (89.8 million dollars) or 1.08 Canadian dollars (81 cents) per diluted share, compared to 107.2 million Canadian dollars or 0.96 Canadian dollare per diluted share.
“We delivered robust growth in the third quarter, notwithstanding geopolitical headwinds and an expected revenue timing shift in our wholesale business,” said Dani Reiss, the company’s President & CEO, adding, “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.”
Third quarter business highlights of Cana Goose’s performance
The company said in a statement that Canada Goose was the top performing brand by revenue on Tmall’s Luxury Pavilion during the Singles Day and Double 12 shopping festivals. E-commerce traffic and revenue grew significantly in Mainland China relative to last year.
The company’s DTC revenue increased to 301.8 million Canadian dollars (226.6 million dollars), driven by incremental revenue from new retail stores. The company added that retail revenue in Hong Kong was severely impacted by disruptions to tourism and retail traffic, together with frequent reductions to regular store operating hours and unplanned store closures.
Wholesale revenue decreased to 150.3 million Canadian dollars (112.8 million dollars) due to a higher proportion of total order shipments occurring in the first half of fiscal 2020 relative to last year.
Gross profit was 298.4 million Canadian dollars (224 million dollars), a gross margin of 66 percent, a 150bps increase compared to the previous year. Operating income was 161.4 million Canadian dollars (121.2 million dollars), an increase of 21.5 million Canadian dollars driven by revenue growth.
Canada Goose revises fiscal 2020 outlook on coronavirus outbreak
The company further said that the coronavirus outbreak is having a material negative impact on performance in the current fiscal quarter ending March 29, 2020. The health crisis has resulted in a sharp decline in customer traffic and purchasing activity and 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 believes that this is a temporary change in consumer behaviour due to health precautions in extraordinary circumstances, however, the extent and duration of the disruptions remain uncertain and prolonged disruptions may also negatively impact future fiscal periods. Canada Goose’s brand and business momentum in Greater China remain strong, as reflected in the doubling of revenue in Asia in the fiscal third quarter prior to the outbreak.
For fiscal 2020, the company currently expects annual revenue growth of 13.8 percent to 15 percent implying revenue of 945 million Canadian dollars to 955 million Canadian dollars, compared to at least 20 percent earliar, adjusted EBIT margin contraction is expected of 330 basis points to 280 basis points implying adjusted EBIT margin of 21.6 percent to 22.1 percent, compared to previous outlook of expansion of at least 40 basis points, annual decline in adjusted net income per diluted share of 2.2 percent to 0.7 percent implying adjusted net income per diluted share of 1.33 dollars to 1.37 dollars, compared to at least 25 percent.
The company said, key assumptions underlying the fiscal 2020 outlook include wholesale revenue growth of 9 percent to 11 percent on a percentage basis, compared to high-single-digits.