Shares in Canada Goose Holdings Inc. fell 12 percent on Wednesday, with investors wary of the outfitter’s change of strategy to move away from third-party retailers. It was the biggest drop in its stock’s value since the start of pandemic, despite Canada Goose not changing its financial forecast for Q2.
According to Bloomberg, Canada Goose has yet to convince analysts that channelling all sales via its own e-commerce and retail will boost profitability despite cutting on its wholesale orders.
“As the mix of sales channels shifts, investors are expecting Canada Goose’s fiscal second-quarter earnings to be lackluster. The company says the third and fourth quarters will be the uplifting ones.”
Canada Goose strategy
Direct to consumer sales are expected to increase to 70 percent, up from 52 percent in 2019. That “fundamentally changes the revenue pattern of the business,” with a “huge skew” to the second half, Chief Financial Officer Jonathan Sinclair said on a call with analysts.
Luxury brands are increasingly downsizing wholesale operations
The best ecosystem and way to experience a brand is via its own retail touchpoints. This is why luxury brands are increasingly investing in their own digital transformations and omnichannel strategies.
Sales from owned store networks provide powerful data for brands, including which products consumers are responding to and who its customers are. At the same time, pricing is under full control, without having to battle discounting from department stores and third-party retailers.