Canada Goose sees upbeat annual sales as China recovery gains steam

This post was originally published on this site

(Reuters) -Canada Goose Holdings Inc forecast annual sales above Street estimates on Thursday, as a sharp rebound in key luxury market China is making up for a demand slowdown in the United States, sending its U.S.-listed shares up 9% premarket.

A reversal in China’s strict COVID-19 policy has brought consumers back to stores, encouraging wealthy shoppers to snap up everything from Coach handbags to Cartier jewelry and Birkin bags.

That has buttressed sales at a time when affluent U.S. shoppers have paused a post-pandemic splurge on high-end goods, with companies including LVMH and Gucci-owner Kering (EPA:PRTP) reporting sagging sales in the market.

While Canada Goose’s U.S. revenue declined 4.5% to C$67.5 million, its Asia Pacific segment jumped 65.4% to C$114.1 million in the quarter, which, coupled with robust demand in Europe and Canada, helped the luxury winterwear maker beat expectations in its fourth-quarter results.

Canada Goose, popular for its bright-red parkas and pricey puffer jackets, has about 18 retail stores in Mainland China – the highest number of outlets it has in any country.

“We will go back to seeing China become more of a region of growth,” said Jessica Ramírez, senior analyst at Jane Hali & Associates, adding Chinese consumers getting back to traveling would further boost sales in other regions.

The company is also planning to double its store count worldwide over the next five years, from 51 permanent stores currently.

Toronto, Ontario-based Canada Goose said it expects fiscal 2024 revenue between C$1.40 billion ($1.05 billion) and C$1.50 billion, while analysts were expecting C$1.33 billion, according to Refinitiv data.

However, it forecast annual per-share profit in the range of C$1.20 to C$1.48, compared with estimates of C$1.46 per share.

Revenue rose to 31.4% to C$293.2 million in the quarter ended April 2, while adjusted per-share profit stood at 14 Canadian cents, both beating estimates.

($1 = 1.3372 Canadian dollars)