Canada Goose rides on China luxury demand recovery to forecast strong quarter
By Aatrayee Chatterjee and Ananya Mariam Rajesh
(Reuters) -Canada Goose Holdings forecast fourth-quarter revenue above analysts' estimates on Thursday, as the luxury goods maker bets on a sharp rebound in crucial market China to help ride out a slowdown in the U.S.
Shares of the company, whose luxury parkas retail for over $1,000, jumped 10% on the New York Stock Exchange and 8% in Toronto.
Luxury brands including LVMH and Cartier owner Richemont had signaled a bounce back in China in their latest reports, easing investor worries about demand in the region that has emerged as a key growth driver for the industry.
Asia-Pacific revenue surged 62% in the third quarter, driven by an improvement in tourism and strong sales during the Singles' Day in Greater China.
This compares with a 13% rise in the prior quarter, when a post-pandemic spending spree failed to materialize.
Still, executives signaled the tough comparisons faced.
"China has not been immune to the soft macro-environment that we have seen globally," Chief Financial Officer Jonathan Sinclair said during the earnings call.
The company faces tougher comparables in January for Asia-Pacific and "therefore business was somewhat slower".
"In terms of the Asia recovery, I think that there is a lot of volatility in the number," said Javier Gonzalez Lastra, luxury-focused portfolio manager at Tema ETFs.
Revenue from North America fell 14% to C$252.4 million. Luxury goods demand in the U.S. has waned as pandemic-era savings depleted and living costs remained elevated.
Wholesale channel revenue slumped 29% as U.S. retailers cut back on orders.
The Ontario-based company forecast fourth-quarter revenue between C$310 million and C$330 million, compared to expectations of C$301 million, according to LSEG data.
Current-quarter adjusted profit is projected to be between 2 Canadian cents and 13 Canadian cents per share. Analysts were expecting 8 Canadian cents per share.
($1 = 1.3449 Canadian dollars)
(Reporting by Aatrayee Chatterjee and Ananya Mariam Rajesh in Bengaluru; Editing by Sriraj Kalluvila)
