Canada Goose Holdings saw revenues for its second fiscal quarter ended on Sept. 29 jump by 27.7 percent from the year-ago quarter to 294.0 million Canadian dollars (€201.1m-$222.4m), or by 28.3 percent on a constant currency basis. However, it said that part of the growth was due to orders for parkas being brought forward from the fiscal third quarter to this quarter, and warned that wholesale revenues in the next quarter would be down by mid-teens.
Coupled with the fact that the company faced sluggish retail sales in Hong Kong due to the anti-government protests, the statement sent the company's shares down by 13 percent.
Like Moncler, Canada Goose continues to move upmarket. The management highlighted the successful introduction during the quarter of Branta, a limited-edition collection marrying technical innovation with inventive silhouettes. It added that this line is an interpretation of Canada Goose's heritage, designed to inspire loyal brand fans and reach new audiences with luxury fabrics such as Loro Piana wool.
In constant currencies, revenues from the wholesale business rose at Canada Goose by 22.9 percent to C$ 219.8 million (€150.4m-$166.3m). This performance was attributed mainly to requests by certain customers for earlier shipments. Canada Goose also benefited from the acquisition of Baffin, the Canadian footwear producer, sealed in November 2018. The wholesale gross margin dropped by 2.9 percentage points to 47.5 percent, and the management explained this with a normalization relative to the year-ago period, which was elevated due to the timing of production efficiencies and reductions in import duties on goods sold in Europe.
Revenues from the direct-to-consumer (DTC) segment, which includes e-commerce, increased by 47.4 percent in constant currencies to reach a level of C$ 74.2 million (€50.8m-$56.1m), driven by new store openings. The gross margin in the segment inched up by 0.4 percentage points to 75.6 percent.
Overall, the company reported a sales increase of 29.9 percent in Canada. In constant currencies, revenues were up by 35.0 percent in the U.S, and by 83.5 percent in Asia, with a good performance in Japan and the incremental contribution of DTC operations in Greater China, which were launched at the start of the year.
However, sales declined by 3.4 percent in Europe and the rest of the world, hit by earlier wholesale shipments in the first fiscal quarter. The management mentioned the very high growth rate of 79.7 percent reached in these territories in the first quarter as the reason.
Overall, the company's gross margin fell by 1.2 percentage points to 54.6 percent, while the operating margin contracted by 2.6 percentage points to 25.6 percent.
The adjusted operating profit (Ebit) improved by 19.1 percent to C$ 79.2 million (€54.2m-$59.9m), and net income jumped by 24.5 percent to C$ 60.6 million (€41.5m-$45.9m).
Canada Goose maintained its guidance for revenue growth of 20 percent and earnings growth of 25 percent in the current financial year.