Canadian luxury parka maker Canada Goose Holdings Inc. trimmed its financial guidance for the year as COVID-19 restrictions in China and worries about the global economy weigh on the company.
"There is no doubt that the macroeconomic backdrop continues to present challenges," Dani Reiss, Canada Goose's chairman and CEO, told a conference call with financial analysts Wednesday.
'We are not seeing the level of improvement we had assumed in mainland China," he said. "COVID-related disruptions, including mall closures, lockdowns and travel restrictions, continue to impact traffic."
As the company heads into its most lucrative quarter, Reiss said the disruptions are beginning to affect an increasing number of cities where Canada Goose operates.
The upscale outdoor apparel maker now expects total revenue for its current financial year to be between $1.2 billion and $1.3 billion, down from earlier expectations of between $1.3 billion and $1.4 billion.
The company also reduced its guidance for adjusted net income per diluted share for the full year to between $1.31 and $1.62 compared with its original forecast of between $1.60 and $1.90.
The revised outlook came despite the company's second-quarter performance beating analysts' expectations, according to financial markets data firm Refinitiv.
Canada Goose reported a profit of $3.3 million or three cents per diluted share in its most recent quarter, down from $9.9 million or nine cents per diluted share in the same quarter last year.
Revenue for the three months ended Oct. 2 totalled $277.2 million, up from $232.9 million a year earlier.
On an adjusted basis, Canada Goose said it earned 22 cents per share in its latest quarter, up from an adjusted profit of 13 cents per diluted share a year ago.
Reiss said the headwinds Canada Goose is facing are temporary.
"Our brand remains strong in mainland China, regardless of the temporary headwinds," he said. "We saw this brand strength during the holiday period Golden Week in October and more recently leading up to Singles Day in November, where both traffic and sales trended positive across our network."
CIBC Capital Markets analyst Mark Petrie said Canada Goose's revenue in its latest quarter came in ahead of expectations driven by strength in wholesale and partially offset by softer direct-to-consumer sales.
As for the company's lowered outlook, he said the key driver is COVID restrictions in China.
"The revised outlook also factors in broader macroeconomic and political uncertainty," Petri said in a client note.
This report by The Canadian Press was first published Nov. 2, 2022.
Companies in this story: (TSX:GOOS)
Brett Bundale, The Canadian Press
