Canada Goose cuts revenue growth outlook as coronavirus hits sales

Garments on display at the Canada Goose Inc. showroom in Toronto on Nov. 28, 2013. (Aaron Vincent Elkaim / THE CANADIAN PRESS)

Luxury parka maker Canada Goose Holdings Inc. slashed expected revenue growth for the year due to "material negative impact" from the new coronavirus outbreak.

The health crisis "has hit our biggest current growth market," said chief executive Dani Reiss during a conference call with analysts Friday after the company released its third-quarter financial results.

"As it is to everyone in the luxury industry, this is -- obviously -- a major near-term headwind," he said.

Canada Goose has seen significant reductions in revenue at retail stores and through online shopping across Greater China. Meanwhile, global travel disruptions, such as flight cancellations and restrictions on movement, have affected retail stores in international shopping destinations in North America and Europe.

"Understandably, people are staying home and avoiding shopping for their own health and safety in China and abroad," said Reiss.

Canada Goose now expects annual revenue for its 2020 financial year to grow between 13.8 per cent and 15 per cent -- down from the earlier expected figure of at least 20 per cent. That translates to revenue between $945 million and $955 million.

"While we expect this to have a material near-term impact, this is a temporary disruption," said Reiss. Though, the company noted in a statement that the disruption's extent and duration remain unknown, and a prolonged situation could impact future fiscal periods.

Reiss said the company expects any long-term supply chain impact to be offset by inventory Canada Goose built up over the last year.

The chief executive also said the company's "hearts go out to everyone who has been affected" and that Canada Goose donated roughly $190,000 (or 1,000,000 Chinese Yuan Renminbi) to the Wuhan Charity Foundation to help fight the battle against coronavirus.

"The health and safety of our team in Greater China is our top priority, and we are closely watching the situation and adjusting our operations as needed in co-operation with the local authorities," he said.

Coronavirus originated in Wuhan, China. In late January, the World Health Organization declared it a global health emergency.

There are now at least 31,211 confirmed cases in China and 637 deaths, according to the WHO. Beyond China's borders, there are 270 confirmed cases in 24 countries, and one death. There are several confirmed cases in Canada -- situated in Ontario and B.C.

Canada Goose has 21 stores, according to its website, including one each in Beijing, Shenyang, and Shanghai, China, as well as two in Hong Kong. It also operates locations in London, Tokyo, Milan and Paris, as well as several in Canada and the U.S.

The revised outlook came as the company reported its third-quarter financial results.

Canada Goose had a net income of $118 million, or $1.07 per diluted share, up from $103.4 million or 93 cents for the same quarter last year. Adjusted net income for the quarter ending Dec. 29 was $119.7 million, or $1.08 per share, up from $107.2 million or 96 cents per share last year.

Revenue came in at $452.1 million, up from $399.3 million for the same quarter last year.

Analysts had expected revenue of $448.2 million and adjusted net income of $1.07 per share according to financial markets data firm Refinitiv.

Canada Goose's shares were down $1.97 or 4.5 per cent at $42.18 in early afternoon trading on the Toronto Stock Exchange.

This report by The Canadian Press was first published Feb. 7, 2020