Canada Goose lowers reliance on department stores to sell products
Canada Goose Holdings Inc said on Wednesday it would limit shipments to department stores and focus on its own outlets and website to shore up profit margins, as it looks to cushion the blow from the COVID -19 pandemic.
As fashion capitals across the world start to reopen amid easing of coronavirus-led restrictions, the luxury winterwear maker said it would base its recovery at its own retail outlets for the rest of the year as the company can sell coats and down jackets at triple the profit.
The company’s shares, which have fallen over 40 per cent this year, closed up more than 17 per cent on Wednesday on the Toronto Stock Exchange, despite a projection of little revenue in the current quarter.
Department stores have been crushed by forced closures as countries looked to curb the spread of the coronavirus.
With a deep recession on the horizon, demand is not expected to bounce back any time soon.
One of the company’s most high-profile retail customers, Neiman Marcus Group, filed for bankruptcy protection last month.
Canada Goose, whose red parkas are worn by everyone from Arctic scientists to Hollywood celebrities, said shipments to department stores have been largely shutoff since March and it expects lower orders in the coming months compared to last year, given the piling up of inventory during closures.
However, chief executive officer Dani Reiss emphasized the shift in focus was because Canada Goose’s own stores and online business would see a faster recovery than its wholesale channels.
Wholesale revenue made up about 44 per cent of the company’s total revenue in the previous fiscal year.
In the fourth quarter ended March 29, Canada Goose’s revenue fell nearly 10 per cent to $140.9 million, but beat analysts’ estimates of $128.1 million, according to IBES data from Refinitiv.