By Aatrayee Chatterjee (Reuters) -Canada Goose Holdings trimmed its annual profit forecast and missed market estimates for third-quarter revenue on Thursday due to choppy sales in China, a key market for luxury goods, sending its shares down 4% in morning trading. Weak consumer spending in China, which is grappling with youth unemployment and a property […]
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Canada Goose cuts annual profit forecast on feeble demand in crucial market China
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By Aatrayee Chatterjee
(Reuters) -Canada Goose Holdings trimmed its annual profit forecast and missed market estimates for third-quarter revenue on Thursday due to choppy sales in China, a key market for luxury goods, sending its shares down 4% in morning trading.
Weak consumer spending in China, which is grappling with youth unemployment and a property crisis, has been a major concern for the luxury goods industry and has slowed demand recovery in the region, significantly impacting brands such as Canada Goose.
U.S. luxury retailer Estee Lauder, which bet on China, expanded a restructuring plan on Tuesday that involves up to 7,000 job cuts as the cosmetics giant grapples with persistent demand weakness, especially in Asia.
With slower economic growth weighing on the region, Chinese consumers have not been propping up earnings, said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Canada Goose’s capsule collection Snow Goose, with designer Haider Ackermann, during the quarter attracted new customers, but macroeconomic pressures continued to impact demand in Hong Kong, Macau and Taiwan, where it is still seeing lower traffic, a company executive said in a post-earnings call.
Toronto, Ontario-based Canada Goose saw revenues in Greater China drop by 4.7%, compared to the previous quarter’s 5.7% jump.
However, sales in the United States recovered following a lull in luxury spending due to depleted pandemic-era savings and persistent inflation, driven by a strong holiday season.
The company expects fiscal 2025 adjusted profit of flat to low-single-digit percentage growth, compared to its previous forecast of a mid-single-digit rise.
Its third-quarter revenue fell to C$607.9 million ($423.59 million), from C$609.9 million a year earlier.
Analysts on average had expected revenue of C$620.9 million, according to data compiled by LSEG.
Revenues in the U.S. rose 2.5% in the reported quarter, compared to a 4.2% drop in the previous one.
Excluding one-off items, Canada Goose posted a profit of C$1.51 per share, compared with an estimate of C$1.54 per share.
($1 = 1.4351 Canadian dollars)
(Reporting by Aatrayee Chatterjee in Bengaluru; Editing by Pooja Desai)