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.
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.
