Canada Goose beats estimates as North America recovers, shares surge

By Granth Vanaik

(Reuters) -Canada Goose beat Wall Street estimates for fourth-quarter revenue and profit on Thursday, riding on a rebound in North America and steady demand in China for its pricey puffer jackets, sending its U.S.-listed shares up more than 24%.

Revenues jumped 24.5% in North America, compared with a 14% decline in the prior quarter. Wholesale revenues fell 9%, after dropping 28% in the previous quarter.

Online traffic increased in January with the onset of more seasonal weather versus a year earlier, finance chief Neil Bowden said on a post-earnings call.

The company had grappled with sluggish sales for its luxury parkas, which retail for more than $1,000, as customers cut back on discretionary spending and retailers trimmed excess inventories in the U.S.

There was a fear that investors might see bigger destocking or decline in the wholesale, said Javier Gonzalez Lastra, luxury-focused portfolio manager at Tema ETFs.

Canada Goose's shares were down about 3% for the year through Wednesday's close after a 33.5% tumble in 2023, pressured by worries over luxury spending against the backdrop of higher interest rates and sticky inflation.

Sales rose about 30% in Greater China, as customers increased spending both domestically and outside their home market.

"I think it's a really bad luxury environment in general... (Canada Goose's results) are showing different attributes compared to other luxury goods," said Cole Smead, chief executive of Smead Capital Management in Phoenix.

Several luxury brands have signaled a slowdown in demand for their products in China, which is grappling with a property crisis and youth unemployment.

Canada Goose forecast fiscal 2025 revenue to grow in the low single-digits from a year earlier. That compared with revenue growth of about 10% for fiscal 2024.

The company also withdrew its long-term growth targets announced last year, citing changes in business conditions including a more challenging consumer spending environment.

Ontario-based Canada Goose's revenue rose to C$358 million ($262.71 million) in the fourth quarter, compared with analysts' estimates of C$315.5 million, according to LSEG data.

It earned a profit of 19 Canadian cents per share, versus expectations of 7 Canadian cents.

($1 = 1.3627 Canadian dollars)

(Reporting by Granth Vanaik in Bengaluru; Editing by Krishna Chandra Eluri and Sriraj Kalluvila)