Why Canada Goose Holdings shares were down on Wednesday


What happened

Canada Goose Holdings (NYSE: GOOS) reported revenue results which showed ecommerce sales increased by 80%, increasing total revenue by 115% year over year, but it was not enough . The company posted a larger-than-expected net loss, which stole the narrative for the quarter.

The stock was down 13.2% as of 12:37 p.m. EDT Wednesday, while year-to-date the stock is up 32% and has significantly outperformed the broader market as measured by the S&P 500 index.

GOOS data by YCharts

So what

The company seems to be enjoying good momentum at the moment, as evidenced by the strong performance of its revenue. Lower COVID-19 restrictions and further retail expansions have pushed direct revenue to consumers to $ 29.4 million, from $ 10.4 million in the quarter last year. Despite more visitors to physical stores this year, Canada Goose has consistently shown tremendous growth in e-commerce.

However, investors focused more on the larger operating loss of $ 60.7 million from $ 59.3 million in the previous year quarter. The company saw higher marketing spend and investment in strategic initiatives, as well as higher performance-based compensation spend and unfavorable currency fluctuations.

A person wearing a down coat in a snowy landscape.

Image source: Getty Images.

Now what

Overall, it’s hard to call the disappointing quarter. CEO Dani Reiss called it a “good start to the year”.

Market participants might have been looking for an increase in management’s annual outlook, which helped the stock sell off after earnings, but that shouldn’t worry long-term investors. Management’s forecast for fiscal 2022 calls for revenues in excess of $ 1 billion. This assumes that direct revenues to consumers approach 70% of total revenues.

The company has a catalyst on the horizon with its next footwear launch, not to mention the prospects for accelerating momentum as the colder season and the holidays approach.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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