The luxury industry is in turmoil
The "big goose" that used to queue up to buy
Now I have to lose weight to survive
On March 26, local time, Canada Goose, a luxury down jacket brand, announced that it would lay off 17% of its workforce, saying that the layoff decision is part of its transformation plan, which is expected to immediately save costs, simplify organizational structure, speed up decision-making and improve the efficiency of the entire operating platform.
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The price is often tens of thousands of yuan
At one point, there was a queue to sell out
This luxury brand from the land of maple leaves has entered the Chinese market since 2018 and pushed up the ceiling of the domestic down jacket market with a price of 10,000 yuan.
In the field of professional down jackets, the top market is basically dominated by foreign brands of more than 10,000 yuan, such as Canada Goose and Moncler, the mid-end market is mainly Bosideng, with a unit price of more than 1,500 yuan, and the mass market below 1,500 yuan, which is a relatively volatile track.
In China, Canada goose down jackets have been sought after by consumers in the past few years.
On December 28, 2020, the Canada Goose flagship store opened in Sanlitun, Beijing, with a long queue at the entrance of the store, and the queue lasted for more than half an hour. Even so, in the absence of discounts, the popular items were quickly sold out. At the Canada Goose store in the IAPM shopping mall of the Shanghai IFC, some people queued for 2 hours in the cold winter to buy a Canada goose.
In July 2023, Beijing DT51 Canada Goose Store will launch a mid-year event, and a variety of down jackets can be discounted up to 5%. Many consumers heard the news and went to the store. It can be seen from social media posts such as Xiaohongshu that consumers in the store are scrambling, and there are long queues of people outside the store, and the longest waiting time can reach 4 hours, and the police were once dispatched to maintain order.
According to Canada Goose's official website, of its existing 66 long-term stores, 18 are located in Chinese mainland, and there are 4 in Hong Kong, Macao and Taiwan.
Except for the Asia-Pacific region
Revenue in all other regions declined by double digits
According to Canada Goose's Q3 financial report for fiscal year 2024 released on February 1 this year, from 2023.9.31 to 2023.12.31, Canada Goose's revenue increased by 6% year-on-year to 610 million Canadian dollars (about 3.243 billion yuan), and the net profit attributable to the parent company decreased by 3.2% year-on-year to 131 million Canadian dollars (about 696 million yuan), and the gross profit margin increased to 73.7% This was mainly due to pricing, but higher product costs due to higher input costs partially offset the increase in gross margin, Canada Goose said.
Dani Reiss said in the financial report that Canada Goose has achieved strong growth in the Asia-Pacific region, especially in the apparel category. The reporter noted that the Asia-Pacific region surpassed the North American market (Canada and the United States) to become the largest region in Canada Goose revenue, and it is also the only region where Canada Goose's business in various regions has achieved positive performance growth, with Q3 of fiscal year 2023 accounting for only 29.1% of revenue, but Q3 of fiscal year 2024, accounting for 44.4%.
Specifically, revenue in the Asia-Pacific region increased 61.5% year-over-year to C$271 million, while sales in the remaining regions declined by double digits. Canada revenue decreased 13.1% to C$95 million, U.S. revenue decreased 13.8% to C$158 million, and EMEA (Europe, Middle East & Africa) revenue decreased 25.9% to C$87 million.
Screenshot of the financial report
Canada Goose said the strong performance in the Asia-Pacific region was due to the continued improvement in the region's tourism industry, which adversely affected the region's performance in FY2023 due to COVID-19-related restrictions due to reduced working hours and store closures. In addition, the strong performance of the e-commerce channel was positively impacted by Singles' Day in Greater China. The decline in revenue in other regions was mainly due to lower e-commerce and wholesale revenue, partially offset by the contribution of new store openings.
By channel, DTC revenue accounted for 84%, up 14.2% year-over-year to C$514 million, which Canada Goose said was due to higher in-store retail sales, wholesale revenue was down 28.9% year-over-year to C$82 million due to lower orders from existing customers, and C$14 million from other channels.
The luxury industry is cold
Sales of many brands plummeted
The luxury sector has been chilled by the recent uncertain global macroeconomic outlook and consumers becoming more cautious about shopping.
Previously, luxury giant Kering issued a profit warning, affected by the weakness of the Asia-Pacific market, the group's revenue in the first quarter may fall by 10%, and the sales of its largest core brand Gucci are expected to plummet by 20%, and the company's stock price fell more than 14% on the same day, the largest one-day decline since 1992.
The international beauty giant Estée Lauder is not having a good time. According to the financial report released by the Estee Lauder Group, from September to December 2023, the company's net sales and net profit both declined, down 7.38% and 20.56% respectively. The group's three flagship brands, Estee Lauder, Clinique and La Mer, saw net sales decrease by about $726 million in the second half of 2023. In February this year, the Estee Lauder Companies proposed a "profit recovery plan", which is expected to lay off 3%-5% of its workforce, and estimated a net loss of about 1,800-3,000 jobs worldwide.
In addition to Canada Goose, footwear and apparel companies such as Nike have also announced large-scale layoffs in recent months. Nike has announced a $2 billion cost-cutting plan that includes a 2% global layoff. On January 25, Levi Strauss & Co., the parent company of Levi's, a century-old denim brand in the United States, said in its fourth quarter report for fiscal year 2023 that it expects to lay off 10%-15% of its workforce in the first half of 2024.
Source: National Business Daily, Southern Metropolis Daily, Beijing Business Daily, Jiemian News
Editor: Miyoshi