Shares of Canada Goose (GOOS 1.44%) were taking a dive today after the maker of winter coats and other outdoor gear slashed its earnings guidance for the year.
As a result, the stock was down 9.7% as of 12:13 p.m. ET.
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Canada Goose gets grounded
The maker of high-end parkas increased revenue just 1% to $281.1 million Canadian dollars, or down 3% on a constant-currency basis, showing the company is struggling in the current macro environment. That missed estimates at CA$288 million.
Direct-to-consumer revenue rose 15% to CA$109.4 million, while wholesale revenue was down 10%, in line with its strategy of optimizing its DTC business and streamlining wholesale revenue. Revenue rose 13% in Asia-Pacific and 6% in Europe, but fell 7% in North America.
Gross margin improved from 59.8% to 63.9% from the mix shift to direct-to-consumer, but selling, general, and administrative costs also soared due in part to one-time investments. As a result, operating income was CA$2.3 million, down from CA$21.5 million. As a result, adjusted earnings per share fell from CA$0.19 to CA$0.16. Still, that was much better than the consensus at a loss of CA$0.16.
Despite the challenging retail environment, CEO Dani Reiss said, "The quarter saw us advance each of our priorities, including a favorable response to our investments in emerging categories such as rainwear, apparel, and footwear; a new channel launch with the opening of our first travel luxury location."
NYSE: GOOS
Key Data Points
Guidance takes a cut too
Citing challenging macro and geopolitical environments, the company dialed down its revenue forecast from CA$1.4 billion-$1.5 billion to CA$1.2 billion-$1.4 billion, and cut its adjusted EPS guidance from CA$1.20-$1.48 to CA$0.60-$1.40.
If Canada Goose's challenges are indeed cyclical, the stock could be a good buy at the moment, trading at a forward P/E of 14. The business is volatile at the moment, but there's still a significant growth opportunity ahead. Risk-tolerant investors should consider the stock for their watch lists.
