Canada Goose beat Wall Street's expectations in revenue and profit in its fourth quarter, benefiting from the economic recovery in North America and steady demand for high-priced down jackets in China, and the company's shares also rose 14% before the opening and 19.7% after the open, becoming the biggest gainer on Thursday's TSX index.
It is reported that revenue in North America increased by 24.5% in the fourth quarter, compared with a 14% decline in the previous quarter. Wholesale revenue was down 9 percent, compared to a 28 percent decline in the previous quarter.
Canada Goose has been plagued by poor sales of luxury down jackets, which retail for more than $1,000, as consumers cut back on spending on luxury goods. Retailers in the U.S. are also cutting back on excess inventory.
Javier Gonzalez Lastra, luxury portfolio manager at Tema ETFs, said investors had feared a larger reduction or a decline in wholesale volumes.
In addition to the recovery of the North American market, Canada goose sales in China increased by about 30%.
Cole Smead, CEO of Smead Capital Management in Phoenix, USA, said: "I think the luxury environment is very bad overall...... (Canada Goose's performance) shows a different character compared to other luxury goods. ”
Some luxury brands say demand for their products continues to slow in the key Chinese market.
Canada Goose expects fiscal 2025 revenue to grow by a low single-digit percentage from the same period last year. This compares to revenue growth of about 10% in FY2024.
Canada Goose has scrapped long-term growth targets announced last year, citing changes in business conditions, including a more challenging consumer spending environment.
Ontario-based Canada Goose Inc. reported fourth-quarter revenue of C$358 million, compared to analysts' expectations of C$315.5 million, according to the London Stock Exchange Group.
As of 9:05 a.m. on Thursday, Canada Goose was earning 19 plus cents per share, beating expectations of 7 plus cents.
In addition, the Canadian stock market's main measure, S&P/TSX, rose, as interest rate cut bets improved due to weaker-than-expected U.S. inflation data.
As of 10:21 a.m. ET (14:21 GMT), the TSX's S&P/TSX Composite Index was up 31.79 points, or 0.14%, at 22,316.55. Canada Goose led the gains, with the broader consumer durable goods index (. GSPTTCD) rose 0.4%. Interest rate-sensitive real estate indices (. GSPTTRE) rose 0.5%. Materials Division (. GSPTTMT), which includes precious and base metals miners and fertilizer companies, fell 0.3% on the back of lower gold prices, becoming the leader of the losing sector.
On the US side, the S&P 500 and the tech-heavy Nasdaq edged higher to record highs.