Canada Goose shares plunge on revenue miss and outlook cut
If yesterday was all about payment technology, and it was today is all about retail. And we've got earnings and I'm putting earnings in air quotes because there's a lot of red out there today. Let's start with Canada goose, which is the maker of outerwear and Benson jackets. I own this on the stock just got cheaper the stock just got cheaper and let me just say a lot Canada. To anyone listening, please ignore any headlines. You see about Canada goose fourth quarter adjusted prophets being higher than expected. Because none of that matters revenue was weak. And the company said it expects a now I'm quoting materially larger losses in the current quarter. Well, this is this actually that that's not really very shocking. I wouldn't call revenue week. It was still pretty good growth. The, the problem here is there. Always surpassing estimates. They missed the estimates by Wapping eight hundred thousand dollars. Stocks down twenty five percent or close to it right now. So that is a bit of an overreaction, but it's understandable revenue was up twenty five percent, and that's in Canadian dollars, and I can't remember how Canadian dollars compared to real dollars these days, but we'll do things in Canadian dollars since that's what I have in front of me. And they said looking out that, well, this was slowest revenue growth in several quarters. But this is not really that crazy. They sell expensive jackets and you can't grow forty percents every quarter forever. You know, you start you get a bigger base in that growth becomes harder to achieve now the material larger losses in justed operating earnings and net. Income are also really nuts. Not a surprise because they have been building out, a small small butts, but larger retail footprint. And so you talk about quarters where you're not selling as much product mostly, they still sell in Ohio end jackets. So when you're selling less product, but you have a bigger footprint in your putting the pedal to the metal on on systems to support that footprint. You end up with more losses in the quarters where you're not gaining the revenue. None of this is to say that this is awesome news. I'm I'm not excited about it as a shareholder. But I'm not really all that worried. This is a company that was trading at a premium. So this is not unexpected. But I don't think this is a signal for the end. So let me get to the math for second because while you were chatting, I just use the Google machine one coalition one, Canadian dollar equals basically seventy five cents in the US, so eight hundred thousand dollar loss. That's just a shade under six hundred thousand. Dollars. So you, you really look at this stock down twenty five twenty six percent and you think to yourself. This seems like a little over reaction. I would have expected something more line of like ten fifteen percent. But what do I know people are worried about a lot of stuff today? We've got the trade war continuing to go on in many other retailers are kind of stinking it up. We've got a couple of you know, we've got an we're gonna talk about Abercrombie aren't we is this a is this transition? Is this what's known in the biz is a transition also down around twenty twenty five percent of we can. But let me just say one last thing with Canada goose, which is I mean this stock with the drop today is basically where it was a year ago. Yeah. So it it has visited lots of interesting places in between now. It's sort of mid thirties today. I was near a double not long ago. Yeah. I didn't sell it because this is a stock that came to me when I was in New York City, everybody was wearing these jackets or knockoff version. But even the dudes carrying noodles. Out of the dumpling shop, that I like. So these aren't folks who make a ton of money their, their delivery dudes on vikes. They were buying the actual candidate goose jacket because they didn't wanna freeze. It was really cold at that point in time, I came back, I started looking into, you know, reading reviews of the jackets, even the dirtbag gear magazines were they frown on sort of boutique expensive stuff. Their attitude was, you know, it kinda hate to admit it because he's really expensive, but they really are a step above. So if you've got the money this is what you should go for. And then I started looking at the financials, I thought this was worth an investment to me. They're doing a good job, but it's always been high price stock. And if you be can't hurdle that earnings estimate for the first time in a while everyone freaks out.