Canada Goose Holdings, the renowned luxury goods manufacturer famous for its premium parkas, has announced a forecast of higher-than-expected revenue for the fourth quarter. The company is relying on a robust rebound in the Chinese market to counteract a slowdown in the United States. Following this news, shares of Canada Goose soared by 10% on the New York Stock Exchange and 8% in Toronto.

This positive prediction aligns with the experiences of other luxury brands, including LVMH and Richemont, who have also observed a recovery in the Chinese market. China has emerged as a vital growth catalyst for the luxury industry, and the resurgence in demand there is encouraging for Canada Goose.

During the third quarter, Canada Goose witnessed a surge in revenue in the Asia-Pacific region, achieving a remarkable 62% increase driven by improved tourism and strong sales during China’s Singles’ Day event. However, the company anticipates facing tougher comparisons in January, potentially resulting in slower business in the Asia-Pacific region.

Meanwhile, revenue from North America experienced a 14% decline, amounting to C$252.4 million. The demand for luxury goods in the U.S. has weakened due to the depletion of pandemic-era savings and the persistently high cost of living. Moreover, the wholesale channel witnessed a significant decline of 29% as U.S. retailers scaled back their orders.

Despite these challenges, Canada Goose remains confident about its performance in the fourth quarter. The company has projected revenue between C$310 million and C$330 million, surpassing the expectations of analysts, who estimated revenue at C$301 million. Additionally, the adjusted profit for the current quarter is expected to range between 2 and 13 Canadian cents per share, compared to analysts’ prediction of 8 Canadian cents per share.

Overall, Canada Goose holds an optimistic outlook for the fourth quarter, primarily due to the recovery in the Chinese luxury market. The company plans to leverage this significant growth driver while navigating the obstacles in the North American market. With strong revenue and profit forecasts, Canada Goose is well-positioned to sustain its success in the luxury goods industry.

Useful links:
1. LVMH’s Strong Sales Reflecting Chinese Luxury Market Growth
2. China’s Booming Luxury Sector and Its Impact on Brands