Dive Brief:
- In what it called a “prudent” move, Canada Goose on Thursday withdrew its long-term financial targets, citing “a more challenging consumer spending environment” and disappointing direct-to-consumer and wholesale revenues. In February 2023, the brand set an annual revenue goal of 3 billion Canadian dollars by 2028.
- Also on Thursday, Canada Goose reported that Q4 revenue rose 22.1% to CA$358 million ($263 million), with DTC up 19% and wholesale down 9%. Gross margin expanded to 65.1% from 64.9% a year ago. The company swung into the black with CA$7.6 million in net income, from last year’s CA$10 million loss.
- On Wednesday, Canada Goose named designer Haider Ackermann as its first creative director. He will be based in Paris, and his first seasonal capsule collection will launch in fall-winter this year, per a company press release.
Dive Insight:
Canada Goose finished out the year with some strength, but is nevertheless abandoning its long-term outlook to focus on a turnaround.
“While we accomplished a lot in fiscal ’24, we didn't make as much financial progress as we would have liked,” CEO Dani Reiss told analysts Thursday, adding that the company this year will focus on “doing fewer things really, really well.”
For the year, revenue rose 9.6% to CA$1.3 billion, with DTC revenue up 18% to CA$950.7 million and wholesale down 16%. Inventory ended the year down 6%. Net income dropped 16% to CA$58.1 million.
“While 4Q was solid, today is all about [management] finally ‘ripping off the band-aid’ and planning a brand reset,” Wells Fargo analysts led by Ike Boruchow said in a Thursday client note.
To accomplish that, the company is tapping the brakes on some of its previously announced five-year plans, including its brick-and-mortar strategy. Reiss said the brand had expanded its global store count to 68 permanent locations, “more than triple the number that we had five years ago.” But the company is slowing that down, with plans to open only three stand-alone locations this fiscal year, compared to last year’s 14, Canada Goose President of Brand and Commercial Carrie Baker told analysts.
“We think this is probably the right thing to do for [the brand] to take a closer look at the uneven performance of its existing stores versus its plan (considering DTC store growth is among the company’s most important long-term strategies),” Evercore ISI analysts led by Michael Binetti said in a client note Thursday.
The store slowdown comes with a renewed emphasis on merchandising and customer experience, building on initiatives from last year, Baker said. To that end, Colombian-born French designer Ackermann will “work alongside Chairman & CEO, Dani Reiss, to guide the company into its next era,” the company said.
