Canada Goose Holdings Inc., the renowned luxury outerwear brand known for its top-notch parkas and footwear, has had to revise its full-year revenue and profit forecasts due to the impact of the Omicron variant of COVID-19. Unfortunately, this news has caused the company’s shares to plummet by nearly 20%.

The implementation of restrictions related to the Omicron variant, primarily in crucial markets such as Canada, Germany, and China, has resulted in the closure of stores and a decline in retail traffic. As a consequence, Canada Goose’s sales have been significantly dampened, with consumers preferring to stay indoors and reducing their demand for luxury parkas. Although Chief Executive Officer Dani Reiss remains uncertain about the timeline for recovery, he did mention that there is still strong demand for the company’s products.

To counteract the effects of store closures and the decrease in footfall, Canada Goose has heavily invested in its online platforms. This strategy has paid off, as evidenced by the 28.1% increase in global e-commerce revenue reported in the third quarter. However, the company experienced difficulties in its China business due to a dispute over return policies. While direct-to-consumer sales, including those from retail outlets and online channels, saw a 35.1% rise, it was considerably lower than the 85.9% growth seen in the previous quarter. The Chief Financial Officer Jonathan Sinclair attributed this slowdown in China to a decrease in store traffic in December, which has persisted into the current quarter.

The downgraded forecasts and prevailing negative sentiment in the market have resulted in a sharp decline in Canada Goose’s share prices, reaching their lowest point in more than a year. Analyst Brian McNamara from Berenberg expressed concerns about the company’s weakening performance in China and the pessimistic fourth-quarter guidance as factors contributing to the market’s reaction.

Canada Goose now forecasts its revenue for fiscal 2022 to range between C$1.090 billion and C$1.105 billion, compared to its previous estimate of C$1.125 billion to C$1.175 billion. Similarly, the company has revised its adjusted profit forecast for fiscal 2022 to a range of C$1.02 to C$1.11 per share, down from the previous range of C$1.17 to C$1.33.

Despite the notable challenges presented by the Omicron variant and the ongoing uncertainties in the retail industry, Canada Goose remains committed to meeting customer demand and adapting to changing market conditions. The company will continue to leverage its online platforms and explore new strategies to drive sales and facilitate recovery in the months to come.

Useful links:
1. Canada Goose Official Website
2. Reuters Article on Canada Goose’s China Sales