Updated 4:17 P.M. E.T. Aug. 1
Canada Goose Holding gained ground in China during the first quarter, despite difficulty in the country for many luxury brands.
“Our performance in mainland China was a highlight this quarter as we continue to capitalize on key shopping moments in this market,” Dani Reiss, chief executive officer, told analysts on a conference call.
Sales in Greater China rose 10.8 percent in constant currencies to 21.9 million Canadian dollars.
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But it’s a complicated picture.
Neil Bowden, chief financial officer, said: “Domestic shopping in mainland China and mainland Chinese tourists shopping at our stores in Japan were once again the primary drivers of DTC growth in the quarter, where consumers demonstrated strong demand for our in-season product.
“Solid store and online DTC performance in mainland China and Japan resulted in double-digit comp growth in these two markets in our first quarter this year,” he said. “That said, in total DTC comp sales were slightly down in the region as lower sales in Greater China, excluding mainland China, more than offset the strength in mainland China and Japan. Within Greater China, Hong Kong, Macao and Taiwan faced significant pressure as shoppers chose to spend their dollars, either domestically within mainland China or in Japan.”
Elsewhere, sales in Canada fell 6.8 percent to 21.9 million Canadian dollars and, in constant currencies, U.S. sales inched up 1.7 percent to 18.5 million Canadian dollars while sales in Europe, the Middle East and Africa fell 11.2 percent to 16.9 million Canadian dollars.
Overall revenues for the quarter ended June 30 increased 3.9 percent to 88.1 million Canadian dollars.
Direct-to-consumer sales grew by 13 percent to 63.1 million Canadian dollars — driven by new stores as comparable sales fell 4.4 percent.
After the quarter ended, Canada Goose opened two stores, one in Wuhan, China, and one in Cotai, Macao, bringing the company’s store count to 70.
Wholesale sales declined 41 percent to 16 million Canadian dollars as the company continued to tighten distribution and navigate a tough wholesale market.
Summer is a slow time for Canada Goose’s core parka business, but the company has been busy expanding into other categories to round out its offering.
Net losses narrowed to 74 million Canadian dollars from 85 million Canadian dollars. But adjusted losses expanded modestly to 76.1 million Canadian dollars from 73.1 million Canadian dollars.
Investors were looking for something more and traded shares of Canada Goose down 5.6 percent to $10.90 on Wall Street on Thursday.
Tom Nikic, an analyst at Wedbush, told clients in a research note that “The Goose hasn’t taken off just yet,” and pointed to the 4 percent comp decline in the direct-to-consumer business.
“Despite the fact that they got off to a tough start, Q1 is only 6 percent of the sales base, so it shouldn’t swing the year,” he said. “Plus, they were lapping a +29 percent comp from [a year earlier], which is easily the toughest compare of the year.”
Canada Goose stood by its guidance for the year, projecting that revenues would grow by a percentage in the low-single digits overall, with the second half accounting for about 75 percent of sales.
The direct-to-consumer business is slated to see a midsingle-digit increase. And wholesale sales are expected to fall 20 percent due to what the company described as a “tightening of our wholesale order book” while direct-to-consumer sales are slated to grow in the low-single digits.