Canada Goose Europe sales fall 13.9% as quarterly loss widens to $18.8 million

Canada Goose posted a net loss of $18.8 million for the quarter ended 27 September, deeper than the $15.2 million it lost a year earlier. Revenues climbed 5.9 percent to $274 million, a gain of 4.9 percent in constant currencies.

Adjusted losses came in at 20 cents a share, two cents steeper than the 18 cent deficit analysts had forecast, according to Yahoo Finance. The Toronto company reports results in Canadian dollars but trades in US dollars on the New York Stock Exchange, and per-share figures are reported on that basis.

Where the quarter went wrong

Sales in North America rose 7.5 percent in constant currencies, and Greater China was ahead 28.2 percent. Those gains were tempered by a 13.9 percent decline in Europe, the Middle East and Africa, where the company met both a heatwave and a softer luxury market.

Chairman and chief executive Dani Reiss attributed the weakness in that division partly to the market and partly to what he called temporary product availability issues while a new logistics network was implemented. "So that was a little self-inflicted," he said.

The heatwave matters because Canada Goose is a Canadian outerwear company known for high-performance jackets designed for extreme weather. A warm European autumn is the wrong backdrop for that reputation, even as the company has spent years adding lighter styles for warmer months.

Reiss nonetheless said the brand was as strong as ever, even if traffic was "a bit softer". He said that when customers came into stores and engaged, they bought more products and the company converted at a much higher rate.

E-commerce comparable sales were positive, Reiss said. In his words, customers are responding, and the products, service and experience are resonating. He conceded that driving more traffic is important and called the traffic problem a bit of a macro trend these days.

A year-round brand now

"We're a year-round brand now," Reiss said, pointing to growth in apparel as proof. Apparel, rainwear and wind wear all delivered strong double-digit growth and are becoming a much larger part of the product mix at Canada Goose.

The growth is not only technical product, according to Reiss. Casual categories such as hoodies and knitwear are resonating too, which moves the company further from the parka that made it famous and towards a wardrobe that is not tied to winter.

For the current year, Canada Goose is forecasting a low-single-digit increase in revenues. Margins on adjusted earnings before interest and taxes are expected to range from 11 to 12 percent, a guide that is alongside a quarter in which the company still lost money.

The geography of the quarter is lopsided. Greater China grew 28.2 percent against 4.9 percent for the whole group in constant currencies, while Europe, the Middle East and Africa shrank by 13.9 percent.

Reiss framed the logistics problem as transitory, tied to the rollout of the new network rather than to demand. The signals he cited, conversion, basket behaviour and e-commerce comparable sales, all pointed in the same direction, he said.

Canada Goose is a name we have followed through its people as well as its numbers. We reported that a Canada Goose veteran, Ana Mihaljevic, took the top job at Smythe, the Toronto label known for tailored blazers.

Smythe is planning a third store in early 2027, which keeps Canadian fashion talent trained at Canada Goose in the news. The outerwear company itself remains focused on repairing Europe while holding its year-round push in apparel.

No date was given for when the logistics issues will be fully resolved. Reiss described them as temporary, and the full-year guidance of low-single-digit revenue growth and 11 to 12 percent adjusted margins is the benchmark the company has set itself.

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Image: Courtesy of Canada Goose