Canada Goose stock tanked on Wednesday. Here's why one analyst isn't worried.
Canada Goose [GOOS] felt the pinch in its 4th quarter sales, and the stock dropped more than 30% in Wednesday trading.
But Sucharita Kodali, retail analyst with Forrester Research, said that she's not really worried because of the time of year.
“I'm not terribly, terribly concerned with Canada Goose and its first quarter numbers, mainly because 80% of its revenue are going to be coming in it's Q3,” Kodali told YFi AM (video above). “It's actually going to be be coming, starting late summer. So even this next quarter should be pretty weak for them, because this is when nobody's really buying premium outerwear.”
She stressed that the company’s “only product is premium outerwear.”
There's nothing to suggest that it will be a disastrous 2019
Kodali noted that the brand is dealing with some issues arising from “trying to transition more to direct to consumer sales,” which include the need for proper execution and the length of time required “to get that in a strong enough position that it's going to completely offset your wholesale channel.”
Nevertheless, she assessed that Canada Goose is well-positioned for the long-term.
“It is a brand that resonates with consumers,” Kodali said. “It is one of the best in its category. The challenge is just that it had a softer January, February, and March — a little bit softer than it had been expected. But really the tell tale sign is the 50% of revenue that they generate in October, November, and December. And we'll have to see how that does in 2019. There's nothing to suggest that it will be a disastrous 2019 overall.”
Canada Goose stock drops raises an existential thought
One thing that Kodali questioned was whether GOOS should be a public company, given its niche appeal.
“I'm very skeptical of luxury brands ... as publicly traded companies, because you are going to have variances of demand,” she said. “And if you have these quarterly goals, sometimes you're going to do things that compromise the overall long-term health of the brand. And the only thing that preserves the long-term health of the brand is to cut back on the distribution.”
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