Luxury parka maker leans into lower-priced lines as China demand rebounds
Canada Goose wiped out nearly a fifth of its value in a day after its growth push squeezed margins and underwhelmed on profit, despite strong winter conditions.
Canada Goose Holdings Inc.’s Toronto-listed shares dropped as much as 24 percent intraday on Thursday, the biggest fall since 2019, before trimming some losses, according to Bloomberg.
Bloomberg Intelligence analysts said the fiscal third-quarter results “will likely trim earnings per share expectations for 2026 and beyond,” and noted the adjusted EBIT margin came in at 29.3 percent, below the 32.9 percent analysts expected.
Canada Goose missed profit estimates as higher marketing and promotional spending, along with a shift into lower-priced products, weighed on margins, according to Reuters.
The company reported adjusted earnings per share of $1.43 versus the $1.66 analysts expected, as per LSEG data cited by Reuters.
Profit attributable to shareholders slipped to $134.8m, or $1.36 per diluted share, from $139.7m, or $1.42 per diluted share, a year earlier, according to The Canadian Press.
Revenue told a different story.
Third-quarter sales rose 14.2 percent to $694.5m from $607.9m, with Reuters noting that revenue of $694.5m beat the $658.5m consensus.
Direct-to-consumer revenue rose to $591.0m and wholesale to $88.3m.
China remained a key growth driver.
Revenue from Greater China increased 13.1 percent to $248.3m, and demand from affluent Gen Z shoppers there has started to improve, according to Reuters, which said China accounts for about 32 percent of the company’s revenue as of 2025.
Management framed the margin pressure as a strategic choice.
Canada Goose has been increasing marketing spend and pushing beyond its core high-margin parkas into less expensive categories such as non-down outerwear, nudging gross margin down to 74.0 percent from 74.4 percent.
CEO Dani Reiss said, “Margins this quarter reflected deliberate choices we made to expand product relevance and fuel brand momentum... These actions will position us to expand margins in the years ahead.”
Product diversification is already changing the sales mix.
The Canadian Press reported that while demand for down-filled outerwear remained strong, non-down outerwear grew even faster, alongside lightweight and year-round apparel.
Carrie Baker, president of brand and commercial, called that shift “intentional” and said the company wants to “bring newness to the floor” to drive repeat visits.
