Canada Goose is moving away from selling through third-party sellers, a strategy that the company says is paying off. Wall Street, however, is not so sure.
In Q1, the company saw its revenue beat estimates. Still, its gross margins were below expectations, sending the company’s stock tumbling by 12 percent after an earlier drop of 15 percent — the lowest point since the start of the pandemic. The company plans to keep its projections for the rest of the year unchanged.
Canada Goose, however, remains bullish on its prospects of boosting profitability by selling directly through its own stores and website.
This shift is likely to raise profitability at a different point in time than what investors have observed so far, Bloomberg reported. The company will likely see more orders come in as temperatures drop instead of seeing a surge in orders when department stores place wholesale orders for the winter season.
Investors are thus less than enthused by this shift and are expecting not-so-stellar performance in the next quarter.
The luxury parka maker is expecting close to 70 percent of its sales to come from the direct-to-consumer (DTC) channel, up from 52 percent in 2019. This shift “fundamentally changes the revenue pattern of the business,” the company’s CFO Jonathan Sinclair during a call with analysts.