Canada Goose Rides on China Luxury Recovery to Forecast Strong Quarter

Canada Goose Holdings forecast fourth-quarter revenue above analysts’ estimates on Thursday, as the luxury goods maker bets on a sharp rebound in crucial market China to help ride out a slowdown in the US

US-listed shares of the company, whose luxury parkas retail for over $1,000, jumped 11 percent in premarket trading.

Luxury brands such as LVMH and Cartier owner Richemont also signaled a bounce back in China in their latest reports, easing investor worries about demand in the region that has emerged as a key growth driver.

Canada Goose’s revenue in Asia-Pacific surged 62 percent in the third quarter, driven by an improvement in tourism and strong sales during the Singles’ Day in Greater China.

This compares to the 13 percent rise in the prior quarter when a post-pandemic spending spree failed to materialise.

“In terms of the Asia recovery, I think that there is a lot of volatility in the number,” said Javier Gonzalez Lastra, luxury-focused portfolio manager at Tema ETFs.

He added although other companies also pointed to relatively resilient demand, management commentaries have noted “underlying demand is probably not as strong as they would have hoped and there is a clear issue impacting the Chinese consumer in the short term.”

Revenue from North America fell 14 percent to C$252.4 million. Luxury goods demand in the US has waned as pandemic-era savings depleted and living costs remained elevated.

Canada Goose was pinched by US retailers reducing wholesale orders, with wholesale channel revenue slumping 29 percent.

The Ontario-based company forecast fourth-quarter revenue between C$310 million and C$330 million, compared to expectations of C$301 million, according to LSEG data.

Current-quarter adjusted profit is projected to be between 2 Canadian cents and 13 Canadian cents per share. Analysts were expecting 8 Canadian cents.

Third-quarter revenue rose 5.8 percent to C$609.9 million ($453.5 million), missing expectations of C$620.1 million.

Adjusted profit of C$1.37 per share edged past estimates of C$1.36.

By Aatrayee Chatterjee and Ananya Mariam Rajesh; Editing by Sriraj Kalluvila

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