Canada Goose shares up 16% after reporting $2.5 million profit for Q4

TORONTO — Canada Goose Holdings Inc. shares jumped more than 16 per cent Wednesday after the company beat analyst expectations for revenue in its most recent quarterly earnings and said the biggest impacts of the COVID-19 crisis seemed to be behind it.

The luxury parka retailer's shares rose $4.81 or 16.51 per cent to $33.94 on the Toronto Stock Exchange in afternoon trading.

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"The first quarter is likely to be the most heavily impacted, and it is our smallest quarter," said CEO Dani Reiss during a conference call with analysts after the company released its fourth quarter financial results.

Most of the company's stores and wholesale partner stores have been closed since late March due to the pandemic. In North America and Europe they are starting to reopen, he said, while the recovery also continues in Asia.

"This means the high point for suspended revenue will soon be past us," he said, noting Canada Goose typically sees its lowest revenues during the first quarter.

"This reduces the impact and gives us a long runway before we hit our peak selling season in the winter."

As the company moves toward reopening stores as regulations allow, it will increase its focus on its direct-to-consumer business rather than wholesale, said chief financial officer Jonathan Sinclair.

This allows Canada Goose to control the customer experience, as well as earn double the revenue and triple the profit on a unit-for-unit basis, he said.

The commentary came as the retailer announced a profit of $2.5 million or two cents per diluted share in its fourth quarter ended March 29. That compared with a profit of $9 million or eight cents per share in the same quarter a year earlier.

Revenue in the fourth quarter totalled $140.9 million, down from $156.2 million in the same quarter last year.

Analysts had expected revenue to total $128.08 million, according to financial markets data firm Refinitiv.

On an adjusted basis, Canada Goose lost 12 cents per share for the quarter compared with an adjusted profit of nine cents per share a year ago.

The company said it reduced cash expenses and investments by about $90 million in its first quarter as it deals with fallout from the pandemic. The executive team has taken voluntary salary reductions of 20 per cent, while Reiss is foregoing his salary. Costs are down due to closures of its stores and down-filled jacket manufacturing, among other things.

This report by The Canadian Press was first published June 3, 2020.

Companies in this story: (TSX:GOOS)

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