21st Century Business Herald Liu Jingxi reports from Guangzhou
On August 1st, Canada Goose, a high-end clothing brand in Canada, released key financial data for the first quarter of fiscal year 2025 as of June 30, 2024.
Continuous losses, but year-on-year shrinkage
According to the financial report, the group's revenue increased by 4% to $63.58 million in the first quarter, with a net loss of $53.6 million. Compared to the same period last year (with a loss of approximately $58.44 million), the loss has narrowed. The gross profit margin decreased by 5.4 percentage points to 59.7%, compared to 65.1% in the same period last year.
By region, revenue in the Canadian market decreased by 6.8% to $15.8 million, revenue in the US market increased by 2.2% to $13.35 million, revenue in the Chinese market surged by 12.3% to $15.8 million, and revenue in the Asia Pacific market outside of China surged by 78% to $6.42 million.
Looking at different channels, retail channel revenue increased by 13% to $45.54 million, wholesale channel revenue decreased by 41% to $11.55 million, and other channel revenue increased by 374% to $6.49 million.
The company stated that the loss was mainly due to the low contribution of the European manufacturing plant acquired in the third quarter of last fiscal year to sales, as well as the high sales ratio of products other than down jackets in the product portfolio.
March to June is usually the off-season for Canada Goose. According to historical data, the peak sales season for Canadian geese is in the second half of the fiscal year, and in general, the revenue in the second half of the fiscal year can reach more than twice that of the first half.
After a sharp drop of 5.63% on August 1st, the Canadian Goose stock price fell another 1.47% to $10.74 on August 2nd, with a current market value of approximately $1.039 billion.
In fact, Canada Goose has just undergone a round of layoffs. On March 26th local time, Canada Goose announced that it will lay off 17% of its workforce worldwide due to weak demand and cautious consumer spending.
Not long ago, Swiss bank downgraded the rating of high-end down jacket brand Canada Goose to neutral. Swiss bank points out that global luxury consumption has slowed down and the brand is losing the favor of consumers.
Contribution from Greater China region
Canada Goose's revenue in Greater China has maintained strong growth in recent years.
In the fiscal year 2024, Greater China became the largest market for Canadian geese for the first time, with sales increasing by 47.0% year-on-year to 422 million Canadian dollars (approximately 2.24 billion yuan), surpassing the 325 million Canadian dollars in the United States and 246 million Canadian dollars in Canada, accounting for 31.7% of total revenue. It is also the only region in Canada where goose business has achieved positive performance growth.
Since entering China in 2018, the growth rate of the Chinese market has been much higher than other markets, which has led Canada Goose to focus on its Chinese business in recent years. Currently, according to the company's official website, out of 80 stores worldwide, there are 31 stores in China. Last year, Canada Goose upgraded its Taikoo Li store in Sanlitun, Beijing to the world's largest flagship store.
In addition, according to the data disclosed by Canada Goose at the investor conference in February 2023, the market penetration rate of Canada Goose in Chinese Mainland in fiscal year 2023 is about 1.7%, far lower than Canada's 15.9%. Although China already has the world's largest store network of Canada Goose, there is still vast potential and development space, "said Dani Reiss, Chairman and CEO of Canada Goose, to the media.
However, in the past two years, with the successful transformation of domestic down jacket brands towards high-end and youthfulness, the threat from the domestic down jacket market in China cannot be underestimated.
Not long ago, domestic veteran Bosideng released its financial performance report for the 23/24 fiscal year ending on March 31, 2024. According to financial report data, during the reporting period, Bosideng's annual revenue reached 23.214 billion yuan, a year-on-year increase of 38.4%; The net profit attributable to the company's shareholders was 3.074 billion yuan, a year-on-year increase of 43.7%. Both revenue and net profit have reached new historical highs for Bosideng.
Bosideng is undergoing a high-end transformation, targeting Canada Goose directly. In 2021, Bosideng's high-end down jacket product "Dengfeng 2.0 Series" significantly increased the price of Canadian geese, with the highest price tag reaching 14900 yuan.
Other domestic brands are also unstoppable. Last winter, companies such as Taiping Nian, Gaofan, Duck Duck, Skypeople, Yalu, and others launched a wave of marketing campaigns and stood out in the competition.
How is the Chinese down jacket market going this year? Let's see this winter.