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Canada Goose Direct-to-Consumer Plan Pays Off

  • Luxury parka maker boosts forecasts for sales, profit
  • Company on track to have seven retail stores this quarter

Banking on e-commerce and a few flagship stores is paying off for luxury parka maker Canada Goose Holdings Inc.

The Toronto-based company on Thursday raised its earnings forecasts for the fiscal year while reporting quarterly sales that beat estimates after its direct-to-consumer strategy helped boost margins. The stock posted its biggest gain in five months.

The 60-year-old company, which went public in March, is reducing its reliance on struggling retailers that accounted for all of its sales just three years ago. It launched e-commerce sites in seven new markets and recently added Chicago and Tokyo to its Toronto and New York brick-and-mortar stores, with more openings planned in North America and Europe.

Profit, excluding some items, rose to 29 cents a share in the period ended Sept. 30, more than the highest analyst estimate. While wholesale revenue still accounted for the bulk of sales, the direct-to-consumer segment, which comes with higher margins, rose almost fourfold to C$20.3 million ($16 million). Overall margins rose to 50.5 percent, the company said in a statement Thursday.

In new forecasts:

  • Canada Goose sees annual sales growth of at least 25 percent instead of “mid-to-high teens”
  • Expects earnings before interest, taxes, depreciation and amortization margin growth of at least 50 basis points
  • Adjusted per share profit growth of at least 35 percent, from the previous estimate of 20 percent.

Shares have risen 85 percent since the initial public offering as investors bet consumers will be eager to pay as much as $1,495 for its made-in-Canada parkas. The stock jumped 15 percent to C$31.93 at 9:38 a.m. in Toronto.