(Reuters) - Canada Goose Holdings Inc said earlier-than-usual shipments of its parkas and jackets to retailers would hurt its wholesale business in the current quarter and that its Hong Kong store came under pressure from protests in the city.
Shares of Canada Goose fell 10% on Wednesday, erasing premarket gains, after the company said third-quarter revenue from wholesale, its biggest business by sales, would decrease in the mid-teens on a percentage basis from a year earlier.
“We’ve shipped so much of our fall/winter order book earlier, which naturally means less shipments in the next quarter,” Chief Executive Officer Dani Reiss told analysts on a conference call.
Canada Goose - whose products are sold in department stores including Macy’s-owned Bloomingdales and Nordstrom Inc - depends largely on its wholesale business, even as it expands its retail and online operations.
Revenue from Canada Goose’s wholesale business jumped 22.2% to C$219.8 million in the second quarter, while revenue from its retail stores and online operations surged 47% to C$74.2 million.
The Toronto-based company, known for its $1,000 parkas, opened flagship stores in Beijing and Hong Kong last year to cater to a growing appetite for luxury goods among affluent Chinese.
However, the ongoing five-month long unrest in Hong Kong has hurt sales for many retailers including Ralph Lauren, Coach handbag-maker Tapesty and Michael Kors owner Capri Holdings.
“They were warning that Hong Kong is having an even greater impact,” said John Morris, a brand apparel analyst with D.A. Davidson & Co.
Canada Goose also said investments in new store and a rise in marketing spending to bolster its high-margin online business could also weigh on the current quarter.
Excluding items, the company reported a profit of 57 Canadian cents per share in the quarter ended Sept. 29. Analysts were expecting a profit of 43 Canadian cents.
Overall, revenue rose 27.7% to C$294 million ($222.2 million), well above analysts’ estimates of C$267.3 million, according to IBES data from Refinitiv. The company, however, reiterated its earnings outlook for fiscal 2020.
Both U.S.- and Canada-listed shares of the company were down nearly 10% at $35.17 and C$46.51, respectively.
Reporting by Nivedita Balu in Bengaluru; Editing by Anil D’Silva
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