TORONTO – Canada Goose Holdings Inc. trimmed its financial guidance as it reported its second-quarter revenue fell compared with a year ago, thanks in part to weaker consumer confidence.
The luxury clothing company’s direct-to-consumer (DTC) business came under more pressure than anticipated, said Dani Reiss, chairman and CEO.
“We face an increasingly challenging consumer environment,” said Reiss on a call with analysts to discus their results. DTC revenue decreased five per cent during the quarter, with comparable sales down 13 per cent.
The company says revenue for the quarter ended Sept. 29 totalled $267.8 million, down from $281.1 million in the same quarter last year.
However, store traffic was likely also dampened by quieter marketing than usual, said Neil Bowden, chief financial officer.
The company shifted its marketing spend toward the second half of its fiscal year ahead of the launch of the first capsule collection from its first-ever creative director Haider Ackermann, said Reiss.
“While this shift impacted Q2 results, we expect to see benefits of this activity over the second half of the fiscal year,” he said, adding that about three-quarters of the company’s annual revenue opportunity lies in the next two quarters as the company’s peak selling season approaches.
As the company began to ramp up marketing investments toward the end of September, “we began to see some improvement,” said Bowden.
“Hopefully, you know, with the influx of more marketing, we’re going to see a little bit more traffic,” added Carrie Baker, president of brand and commercial at the company.
Net income attributable to shareholders amounted to $5.4 million or six cents per diluted share, up from $3.9 million or four cents per diluted share a year earlier.
On an adjusted basis, Canada Goose says it earned five cents per diluted share in its latest quarter compared with an adjusted profit of 16 cents per diluted share a year earlier.
In its outlook, Canada Goose says it now expects total revenue for its full financial year to show a low-single-digit percentage decrease to low-single-digit percentage increase compared with earlier guidance for a low-single-digit increase.
It also says it now expects its adjusted net income per diluted share to show a mid-single-digit percentage increase compared with earlier guidance for a percentage increase in the mid-teens.
As part of Canada Goose’s efforts to simplify its business and improve cost effectiveness, president of finance, strategy and administration Beth Clymer said the company has made “significant progress” on right-sizing its inventory levels.
Inventory at the end of the quarter was down nine per cent year over year, said Clymer, marking the company’s fourth consecutive quarter of decreasing its year-over-year inventory balance.
“We realized this by temporarily lowering production levels with both our third-party contract manufacturing partners and in our own facilities,” she said, supplemented with friends and family sales.
Canada Goose has also been “aggressively reviewing” its third-party vendors, said Clymer. She said that has resulted in the renegotiation or cancellation of numerous contracts during the first half of the year and yielded significant savings.
Since implementing workforce reductions at the end of the last fiscal year, the company has been judicious about hiring, added Clymer, “hiring for only the most critical roles.”
This report by The Canadian Press was first published Nov. 7, 2024.
Companies in this story: (TSX:GOOS)
