Canada Goose profit estimate cut amid coronavirus concerns
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Canada Goose is in the midst of an aggressive expansion focused heavily on China, and may be one of the retailers feeling the weight of the coronavirus outbreak.
Many brands with Chinese locations have reduced store hours or closed some locations entirely. Nike said Tuesday it temporarily closed about half of its company-owned stores in China as a result of the outbreak, which it expects will have a material impact on its operations.
Canada Goose’s stock is down about 4 per cent since the first case of coronavirus was confirmed in the United States.
On Wednesday, Wells Fargo senior analysts Ike Boruchow and Tom Nikic lowered price estimates for retailers with meaningful exposure to China, including Canada Goose. Boruchow downgraded Canada Goose’s expected full year profit from $1.72 per share to $1.63 per share due to the ongoing uncertainty in China regarding the coronavirus.
While the company does not have any locations in Wuhan, the city at the centre of the virus outbreak, Wells Fargo says that 14 per cent of Canada Goose’s sales are exposed to the Chinese market.
Canada Goose did not respond to a request for comment regarding its business in China.
The luxury parka retailer is scheduled to report its third-quarter results on Friday. Investors and analysts will look for any insight into how the coronavirus has impacted sales at Canada Goose locations in China in recent weeks. The company has three stores in mainland China, and another two locations in Hong Kong.
Canada Goose is currently embarking on an international expansion plan focused on the Asian market, which has been a critical region for luxury brands.
In the last quarter, the company posted strong overall results, but investor concern over weak sales in Hong Kong, where political upheaval and protests occurred, weighed on its stock performance. At the time, chief executive Dani Reiss pointed to strength in China as a bright spot for the company.
“The results [in Asia] are showing dividends, notwithstanding obviously what is going on in Hong Kong,” Reiss said on a conference call with analysts in November.
“We’re hoping that will resolve itself in a positive way for everybody. But in the meantime, China is great, demand is strong, and with Chinese consumers, our brand is really resonating with them.”