Canada Goose announces profit jump; plans to open Montréal factory
today Feb 14, 2019
Canadian luxury outerwear brand Canada Goose reported third quarter results on Thursday, beating analyst estimates for its peak selling season thanks to higher sales of its signature parkas.
For the third quarter ended Dec.31, the company reported that total revenue rose by 50.2% to CA$399.3m (US$300.6m) from $265.9m the previous year, as customers purchased product earlier in the quarter compared to the previous year period.
Beating analyst forecasts, net income surged to $103.4m, up from $63m, driven by higher operating income and a lower effective tax rate, while adjusted EBITDA came in at $151.1m, compared to $94.7m in 2018.
In the direct-to-consumer channel, which includes company-operated retail outlets and its online stores, revenue increased to $235.3m from $131.7m.
“The increase was driven by incremental revenue from five new retail stores and one new e-commerce site [on T-Mall], as well as the strong performance of existing retail stores and e-commerce sites,” Canada Goose said in a statement.
The brand’s wholesale channel saw a rise in revenue to $164m from $134.2m in the same quarter last year, as a result of higher order values from existing partners and earlier shipment timing.
The company also attributed the growth to having placed new styles in “seasonally relevant” colors earlier in the season, as well as adding a lightweight down line to its year-round wholesale offering.
Gross margin in the wholesale channel also expanded to 50.4% from 47.5% due to production efficiencies in manufacturing and the reduction of duties on goods sold as a result of the implementation of the CETA Trade Agreement between Canada and the EU.
Sales from Baffin, the luxury shoemaker acquired by Canada Goose in November 2018, also had a positive incremental effect.
The luxury coat-maker has revised its predictions for revenue growth upwards to the mid-to-high 30s on a percentage basis.
Canada Goose said its results were helped by the expansion of its retail network from five stores last year to 11 this year, of which five were opened during the quarter including its first in mainland China.
It also cited the success of retail theatre initiatives including high-impact windows; visual installations; pop ups and outdoor events. The company noted a positive consumer response to its two cold rooms, launched in Short Hills and Boston Stores in 2018.
“The response … has been phenomenal,” commented president and CEO Dani Burke, in a conference call. “These fun moments [became] personalized stories, shared online, amplifying our reach and driving awareness.”
The company also announced plans to pursue local production with the establishment of a new factory in the Chabanel area of Montréal, Quebec.
The 115,000-square-foot facility, which will produce a full range of the company’s collection, is expected to employ more than 100 people by the end of March, expanding to accommodate 650 new positions as it reaches full capacity towards the end of 2020.
The factory will be its second in Québec and its eighth wholly-owned manufacturing facility in Canada.
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