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Canada Goose Beat Q4 Earnings, Luxury Demand Outweighs Inflation

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Updated 19 May 2022

Key points:

  • GOOS shares rose 13% in Thursday premarket as the company delivered a strong fourth quarter
  • Inflation isn't getting in the way of luxury clothing spending
  • The company reported EPS of C$0.04, on a consensus of a C$0.01 loss

Shares of luxury clothing retailer Canada Goose (NYSE: GOOS) rose around 13% in Thursday’s premarket trading, with buyers flocking to the company’s seemingly impenetrable business model. At a time when fiscal freedom is limited, investors have been expecting high-end business models to feel the pressure of reduced spending as consumers swap to more affordable alternatives. 

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Target, Walmart and Lowes have all failed to deliver on Q1 earnings over the last few days, with Home Depot the sole retailer that has been able to rely on a trend continuation. It seems however, that consumers are still opting for Canada Goose’s expensive product line; the company delivered on both top and bottom line growth for the first-quarter. 

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Demand for luxury goods is clearly a more robust feature of the economic landscape than initially perceived. Record levels of inflation hasn’t tapered demand for Canada Goose’s high-end parkas and jackets. Consumers are also still spending on high-end accessories and perfumes, despite soaring food and fuel costs. 

The company reported fourth quarter earnings of C$0.04 on an expected loss of C$0.01. Sales rose 6.8% over the quarter to C$223.1M, just edging past the C$222.7M consensus. The company followed with an upbeat FY forecast, expecting revenue for fiscal 2023 to be between C$1.3B and C$1.4B. Analysts are expecting C$1.3B.

The first quarter will likely see a dip in revenue brought on by renewed lockdowns in China, resulting in a sizable hit to the market. Looking at this as a temporary hurdle, Canada Goose remains optimistic about the year ahead. With inflation gripping the markets, it’s insightful to see how certain spending habits remain resilient.