Canada Goose Flies Higher Driven By DTC Growth

Key Points

• Canada Goose is a luxury apparel brand selling $1,675 parkas, $425 hoodies and $750 boots to affluent hipsters and outdoorsy types.
• Canada Goose saw revenues climb 22% YoY in fiscal Q4 2024.
• Canada Goose has bulked up its higher margin direct-to-consumer (DTC) channel, as revenues rose 19% YOY while its legacy wholesale business sales slumped 9%.

Luxury apparel manufacturer Canada Goose Holdings Inc. NYSE: GOOS shares flew 15% on a strong fiscal Q4 2024 earnings report. The affluent brand is known for its high-priced goose-down parkas, which cost $1,675, $650 Killarney Jackets, $325 Killarney shorts, and $750 Journey Boots. In uncertain economic climates, one would assume consumers would be backing away from high-priced apparel, but the consumer discretionary sector company’s results say otherwise. The company saw revenues climb 22% YoY.

Canada Goose competes for consumer dollars with other luxury apparel makers like Tapestry Inc. NYSE: TPR, Capri Holdings Ltd. NYSE: CPRI and outerwear manufacturer V.F. Corp. NYSE: VFC.

Luxury Apparel Not for the Faint of Heart

Prices for Canada Goose apparel are not for the faint of heart. However, the quality of the craftsmanship and exceptional durability during harsh winter weather cannot be denied. The brand has become a status symbol and fashion icon. The company exclusively manufactures its products in Canada. The exclusivity and status of the brand also make it susceptible to counterfeits. Canada Goose provides authentication for purchases made within 30 days from an authorized retailer.  

Daily Descending Triangle Breakout

GOOS formed a descending triangle breakout pattern. While the parkas are expensive, the stock is priced cheap as they trade at 10x forward earnings. The descending triangle formed at the $12.51 swing high on April 1, 2024, capping bounces at lower highs towards the flat-bottom lower trendline at $10.87. Its fiscal Q4 2024 earnings report triggered a price gap to the $12.95 level. The daily relative strength index (RSI) climbed to the 70-band. Pullback support levels are at $12.51, $11.81, $10.87 and $10.50.

No Goose Egg Here

Canada Goose reported fiscal Q4 2024 EPS of 14 cents versus four cents consensus estimates, beating by 13 cents. Revenues surged 22% YOY to $262.9 million, beating $232.05 million consensus analyst estimates.

DTC revenues climbed 19% YOY to $199.38 million, driven by robust retail sales in Asia Pacific and North America. DTC comparable sales rose 3.5% YOY, driven by higher e-commerce sales. Wholesales revenues dived 9% YOY to $30.40 million due to a planned lower order book that resulted from fewer orders from existing customers. The company grew its footprint, adding three new stores, including one in Nanjing, China, while launching nine new collaborations and retail travel locations in South Korea and Germany. Canada Goose also trimmed its workforce by 17% on top of the 10% cut in summer 2023. The company announced its first Creative Director, Haider Ackermann.

Forecasts

Canada Goose expected non-IFRS adjusted net earnings per diluted share to rise by mid-teen percentage points for the fiscal full-year 2025 compared to 4% consensus estimates. Total revenues are expected to grow in the low single digits with a 25% and 75% distribution split between the first half and second half of fiscal 2025. The company expects DTC sales to rise in the low single digits while wholesale continues to decline by 20% YoY.

CEO Insights

CEO Dani Reiss noted that Canada Goose expanded its global retail footprint to 68 permanent stores, over three times the number it had five years ago. The company also expanded its sneaker line, realized cost savings, and reduced inventory.

Not Giving Up on Retail

Canada Goose President, Brand and Commercial Carrie Baker noted the company is not giving up on retail. For wholesale, the company is tightening up and reducing its number of partners and inventory to increase the exclusivity of its products. The company is slowing the pace of new store openings down to 3 this year versus 17 store openings last year. The company will be leveling up its retail operations and processes.

Baker concluded, "Our Canadian Warmth program is at the core of ensuring the in-store consumer journey feels distinctly luxury and Canada Goose to convert browsers into long-time repeat customers and brand advocates. Our focus in fiscal 2025 is to embed this at scale across our network. Our goal is a more consistent execution of Canadian Warmth achieved by stepping up our trading programs and implementing relevant and compelling incentives to generate conversion, cross-sell, and up-sell benefits.

Canada Goose analyst ratings and price targets are on MarketBeat.