Is luxury outerwear maker Canada Goose (TSE:GOOS) cooked? It definitely went south for the winter as it slashed its full-year financial guidance and sales forecasts. Investors didn’t take the news well at all, and abandoned Canada Goose in flocks, taking with them over 8% of Canada Goose’s market cap at one point in Wednesday morning’s trading.
Canada Goose, only recently, looked for revenue to come in between $1.4 billion and $1.5 billion. Canada Goose, earlier today, pared that range back to between $1.2 billion and $1.5 billion. Meanwhile, adjusted income per diluted share got cut from its original range of $1.20 and $1.48 to a new range of between $0.60 and $1.40. There’s still hope it can achieve somewhere in the original ranges for both earnings and revenue, but the low end of the range has been expanded so significantly that the hope of a beat on either original range is forlorn at best.
So what happened? One of the biggest problems appears to be Canada Goose’s sales in China. While previously, it was enjoying a substantial recovery in the country, that recovery appears to be grinding to a halt. Meanwhile, Canada Goose’s sales to the United States are starting to falter as well, as people face soaring inflation rates and concerns about potential recession. These factors combined are reducing Canada Goose’s ability to sell, and thus, hurting revenue. In a measure that it likely hopes will help, Canada Goose also brought in a new chief financial officer in Neil Bowden, Canada Goose’s current deputy finance chief.
Is Canada Goose a Good Company to Invest In?
Turning to Wall Street, analysts have a Hold consensus rating on GOOS stock based on one Buy, seven Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average GOOS price target of $15.87 per share implies 56.2% upside potential.
