Remember that ‘Chinese boycott’ of Canada Goose down jackets because of Meng Wanzhou? Revenue numbers show it didn’t happen, with sales rising, and forecasts up
- Despite a December call for Chinese buyers to spurn Canada Goose after the arrest of Huawei’s CFO in Vancouver, sales climbed 50 per cent in Q4 2018
- Revenue forecasts have been increased compared to November’s predictions – but Canada Goose stock tanked on Thursday on the back of weak US retail data
Canada Goose Holdings boosted its annual forecast for the second time in six months, signalling its premium down parkas remain popular with Chinese shoppers amid a diplomatic spat between China and Canada and calls for a boycott of the brand.
Based on the “strength” of the nine months ended on December 31, Canada Goose said revenue would rise in the mid- to high 30s on a percentage basis, compared with a November forecast of at least 30 per cent.
Last quarter, sales climbed 50 per cent to C$399.3 million (US$301 million), topping the C$360 million average of analysts’ estimates.
Those numbers appear to show that calls for a Chinese boycott of Canada Goose jackets in the wake of the arrest of Huawei executive Sabrina Meng Wanzhou in Vancouver on December 1 have fallen flat.
Chinese customers flock to Canada Goose’s first China flagship store opening despite calls for boycott
However, US shares of the Toronto-based company tanked in New York on Thursday amid a rout in retail stocks after government data showed retail sales in the US unexpectedly dropped in December.
The firm remains optimistic about its Chinese expansion plans.
Despite calls for the boycott on Chinese websites and social media, Chinese shoppers lined up in the cold outside Canada Goose’s downtown Beijing store when it opened in late December.
CEO Dani Reiss said the country name still resonates well in China and elsewhere.
Why people are breaking the law to get their hands on a Canada Goose luxury parka
Canada Goose’s partnership with Alibaba’s online Tmall has proven the “right way” to sell his coats to Chinese shoppers, Reiss said. Canada Goose is already a top-selling brand in its category on the platform, despite only being available for just over a month, he said.
Alibaba owns the South China Morning Post.
“There’s a lot of noise out there in the headlines, but as you see in our results, we continue to grow our business significantly, and you see that in China and all of our geographies,” Reiss said. “We’re just getting started in China.”
The outlook could help assuage concerns about the company’s expansion in China, where the opening of the Beijing flagship store was delayed two weeks in December amid escalating tensions with Canada.
Canada Goose delays opening its first China flagship store amid tension over Canada’s role in the arrest of Huawei CFO Sabrina Meng Wanzhou
“We can’t control politicians,” Reiss said in an interview Thursday morning. “We’re really happy with our Chinese business plan and the way we plan to approach it. It’s been executed really well.”
Canada Goose said Thursday that the forecast includes the establishment of its country office in Greater China to “lead market development efforts.”
The company had made a splashy entry into Greater China in November with the opening of a Hong Kong store, just before the Huawei affair. The company also opened stores in cities including Montreal and Vancouver last quarter, helping boost direct-to-consumer sales as the weather grew colder.
The results show that analysts’ initial scans of North America e-commerce sites, which showed many models as sold out or selling fast, were on the mark. Growth in direct-to-consumer sales helped boost margins during the quarter. The company maintained its forecast for Ebitda margins, which exclude items such as taxes and depreciation, to grow 150 percentage points for the financial year.
Canada Goose’s US shares were down 10 per cent at 12.50pm in New York after initially rising in pre-market trading following the results.
Is Canada Goose cooked? Shares slide as Chinese buyers demand boycott over arrest of Huawei CFO Sabrina Meng Wanzhou
On a recent evening at the Beijing store, the madness from opening day had died down. Window shoppers filed past the mannequins as a cashier inside rung up US$600 jackets. One shopper, who identified herself as Mrs Hu, said she was surprised to see so many people decked out in Canada Goose, especially because it’s often not cold enough to warrant wearing the kind of coat they wear in Antarctica. She said any anti-Canada sentiment that may be out there won’t last.
“Canada diplomatic tensions are not an issue,” she said. “I mostly care about the product itself. The company is not to blame for the actions of the nation.”
