Canada Goose results fall short of estimates as demand falters

By Savyata Mishra and Chandni Shah

(Reuters) -Luxury apparel maker Canada Goose missed estimates for second-quarter revenue on Thursday, as its efforts to drive sales by bolstering its marketing and promotional strategies failed to deliver results in a weak demand environment.

U.S.-listed shares of the company fell about 14% in early trading as Canada Goose also posted a wider-than-expected quarterly loss.

The company has been under margin pressure as it ramps up marketing spend and pivots away from core high-margin parkas in a bid to broaden its product assortment.

"U.S. shoppers are prioritizing must-haves and value, and winter wear qualifies - but at Canada Goose’s luxury price point, newer rivals and weather variability raise the bar," said Suzy Davidkhanian, vice president of content, Emarketer.

Wholesale revenue dipped 1% in the quarter, while direct-to-consumer sales rose 21.8%. SG&A expenses climbed to $187.7 million from $162.5 million a year earlier, driven by higher labor and training costs ahead of the holiday season and increased marketing spend tied to its fall and winter campaigns.

Adjusted profit margin shrank 5.2% in the quarter from a 0.9% jump a year ago.

Canada Goose posted a loss of 14 Canadian cents per share, which was bigger than analysts' estimates of a loss of 11 Canadian cents per share, according to data compiled by LSEG.

The company reported a 1.8% jump in revenue to C$272.6 million ($194.38 million) in the quarter ended September 28, compared with the estimates of C$279.3 million, as per data compiled by LSEG.

Canada Goose, whose outfits are used by movie stars, Arctic scientists and mountaineers, suspended forecasts in May due to tariff-related uncertainty.

In August, a media report said controlling shareholder Bain Capital had received bids to take Canada Goose private at a valuation of about $1.4 billion.

($1 = 1.4024 Canadian dollars)

(Reporting by Chandni Shah and Savyata Mishra in Bengaluru; Editing by Anil D'Silva)

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