Canada Goose cuts forecasts as COVID disruptions weigh on China sales

Canada Goose Holdings Inc trimmed its full-year revenue and profit forecasts on Thursday after COVID-19 disruptions weighed on sales of its luxury parkas and jackets in China during the third quarter.

U.S.-listed shares of the Canadian company fell about 8% in premarket trading to $22.60, after the company also said it faced a slowing momentum in North America.

The Chinese government's efforts to contain the spread of infections with its zero-COVID policy have hit revenues of luxury companies like Canada Goose that witnessed store closures, elevated inventory levels and decline in demand in the country as consumers turned more cautious.

European peers like Cartier jewellery maker Richemont also missed market expectations in January after a resurgence of COVID-19 in China hampered sales growth, while British luxury brand Burberry saw the disruptions offset a stronger performance in Europe.

The Toronto, Ontario-based company cut its fiscal 2023 sales expectations to about C$1.18 billion to C$1.20 billion, compared with its prior forecast of C$1.2 billion to C$1.3 billion. It forecast adjusted profit of between 92 Canadian cents and C$1.03 per share for fiscal 2023, against a prior target of C$1.31 to C$1.62.

Still, chief executive Dani Reiss said the company had seen promising signs of "a strong local rebound to date" in Mainland China.

Analysts predict luxury and beauty companies to be among the biggest gainers from China's easing of COVID protocols in 2023, which is expected to boost their sales in the region.

The luxury parka maker's revenue fell to C$576.7 million in the third-quarter ended January 1, compared to analysts' average forecast of about C$623.6 million in Refinitiv IBES data.