Canada Goose sticks to forecast after strong quarter, shares slump

By Aditi Sebastian

(Reuters) -Canada Goose Holdings Inc maintained its full-year revenue forecast after beating quarterly estimates on Wednesday, sending the luxury parka maker's shares tumbling 15% amid concerns over rising COVID-19 cases in key markets.

The company's conservative outlook contrasted with upbeat expectations from peers Ralph Lauren Corp and Michael Kors-owner Capri Holdings Ltd in recent weeks.

The surge in cases involving the highly infectious Delta variant of the virus has raised fears that potential new lockdowns could slam the brakes on a rebound in the global luxury goods industry.

Meanwhile, some cities in China, a key growth market for Canada Goose and other high-end apparel makers, have already put in place curbs to control an outbreak.

However, the new restrictions have not had an impact on the company's business in China yet, Canada Goose Chief Executive Officer Dani Reiss told Reuters, adding that the company was prepared for "whatever's ahead."

Canada Goose, best known for its pricey red parkas, reiterated its full-year revenue forecast of over C$1 billion.

Analysts at CIBC Capital Markets said the company's forecast for low double digit wholesale revenue growth in its second quarter was below expectations.

"While the wholesale guidance is disappointing, we place greater emphasis on DTC trends given their strategic importance and materiality to results," analyst Mark Petrie said in a note.

The luxury outerwear maker has ramped up investments in its website and on online shopping features since the outbreak of the pandemic to mitigate the hit caused by store closures and other restrictions.

The Toronto, Ontario-based company said first-quarter revenue more than doubled to C$56.3 million ($44.90 million), powered by a near tripling of its direct-to-consumer sales to C$29.4 million.

Analysts on average had expected C$49.7 million, according to IBES data from Refinitiv.

($1 = 1.2538 Canadian dollars)

(Reporting by Aditi Sebastian and Uday Sampath Kumar in Bengaluru; Editing by Sriraj Kalluvila)

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