The peak season for down jacket sales is approaching, but Canada Goose has become a hot topic due to quality issues.
On December 12th, "Canadian goose 9500 yuan down jacket suspected of defective products" appeared on Weibo hot search. According to the news, Ms. Xu, a consumer, claimed to have purchased a white down jacket priced at 9500 yuan, but found a whole cut and stitched front fabric in her pocket, suspecting that she had purchased a defective item.
The final solution to this incident is to exchange the Canadian goose for Ms. Xu and compensate her son with a small gift.
Canadian geese are not the first to spark public discussion. Previously, "Canadian goose masks sell for up to 1000 yuan" and "Canadian geese are not allowed to be returned to stores in Chinese Mainland" were on the hot search. Due to its high price, Canadian geese are known as the "LV of the down jacket industry". Now, when high prices and quality collide, Canadian geese have once again entered the center of public opinion.
On December 13th, Zhan Junhao, founder of Fujian Huace Brand Positioning Consulting, told Time Weekly reporters, "Brands that are positioned as high-end have relatively high prices, so consumers have many expectations for high-end brands. Whether in terms of quality, design sense, or brand communication, they should match the high-end positioning in order to ultimately gain consumer recognition."
"The spread of negative public opinion can lower brand image and lead to a decrease in consumer trust in the brand," Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, told Time Weekly. "Consumers' doubts about product quality may cause them to hesitate when making purchases, thereby affecting Canada's sales in the Chinese market."
On December 13th, a reporter from Time Weekly contacted a person related to Canadian geese, and their response stated that after investigation, it was confirmed that the fabric was left behind during the product packaging process due to negligence, and it does not belong to the product itself, nor will it affect the functionality or use of the product. "Consumer satisfaction is crucial to us, and we have taken immediate measures to prevent such incidents from happening again. We will also continuously improve and optimize the customer experience, providing better services."
For Canadian geese, the Chinese market has always been an important driver of revenue growth for Canadian geese. With the rise of Chinese down jackets and the market share sharing of down jacket replacement products, how should we respond to the challenges of developing in the Chinese market against the backdrop of a decline in Canadian goose reputation and a cold capital market?
Brand development is under pressure
In 2018, Canadian geese entered the Chinese market, priced at ten thousand yuan, but consumer enthusiasm for purchasing did not diminish, leading to long queues in stores. This phenomenon not only shows the potential of the high-end market to the brand side, but also accelerates the process of high-end domestic brands.
According to statistics from the National Business Information Center of China, the average unit price of down jackets in China increased by over 200 yuan from 432 yuan to 656 yuan from 2015 to 2020.
Taking Bosideng as an example, a brand with a clear process of high-end development. According to a research report by Dongxing Securities, Bosideng's average listing price in 2017 was 1000 to 1100 yuan, and in 2021 it exceeded 1800 yuan.
On the one hand, the market share of Canadian geese is being squeezed by other high-end brands. According to Magic Mirror analysis and data, the sales data for the past year (November 2022 to October 2023) shows that Bosideng's sales reached 4.58 billion yuan, ranking first in the top 30 sales rankings, with a market share of 5.5%. The sales revenue of Canadian geese is 335 million yuan, ranking 20th on the top 30 sales list with a market share of 0.4%.
"Canadian geese are being squeezed by domestic brands in terms of brand culture, price differences, and brand communication in multiple dimensions," said Zhan Junhao.
Between the international high-end down jacket brands Canada Goose and Moncler, the growth rate of Canada Goose also appears to be slow. As of October 1, 2023, Canadian Goose Asia Pacific revenue increased by 13%. According to Moncler's financial data as of September 30th, the revenue of the Moncler brand in the Asian market increased by 22% year-on-year in the third quarter.
On the other hand, this winter, with topics such as "Can you accept a thousand yuan down jacket?" "The price increase of down jackets has ignited the trend of assault jackets." "Military coats are more cost-effective." The market share of down jackets has been squeezed to some extent by other products.
According to Magic Mirror Insight data, in September this year, the market share of assault jackets in the outdoor clothing category increased by 8.2 percentage points compared to the same period last year, while the market share of down jackets decreased by 3.1 percentage points.
Wang Peng stated that as consumers pursue cost-effectiveness, the down jacket market may experience differentiation. Some consumers will choose lower priced flat replacement products, while others are still willing to purchase well-known brand down jackets at higher prices. This also requires high-end brands to continuously improve product quality and innovate design to meet consumers' pursuit of quality and personality.
Market value evaporated by over 700 million US dollars within the year
On March 16, 2017, Canada Goose was listed with an issue price of $12.76. On the first day of listing, its stock price opened at $18, fell during trading, and finally closed at $16.08, with a market value of approximately $1.7 billion.
On November 14, 2018, the stock price of Canadian geese reached its peak at $72.27, with a market value of approximately $7.8 billion.
Since then, the stock price of Canadian geese has entered a downward trend and hit a low of $12.94 on March 17, 2020. Although Canadian geese rebounded to $53.64 on November 16, 2021, the downward trend remained unchanged.
On November 1, 2023, the stock price of Canadian geese fell to a new low of $9.8 since its listing. On the same day, the news showed that Canada Goose will lower its revenue forecast, with an expected total revenue for the 2024 fiscal year between $1.2 billion and $1.4 billion, compared to the previous forecast of $1.4 billion to $1.5 billion.
By extending the timeline, it was found that since the Canadian Goose Double Standard event in December 2021, its market value has been continuously declining.
As of the close on December 13th, the stock price of Canadian Goose fell 3.07% to close at $11.35, with a market value of approximately $1.15 billion.
Compared to the market value of approximately $1.9 billion in early January 2023, the annual market value of Canadian geese has evaporated by over $700 million. Compared to its highest market value of $7.8 billion since its listing, the market value of Canadian geese has evaporated by approximately $6.7 billion.
In October this year, Swiss banks downgraded the rating of Canadian geese to neutral. And it is pointed out that global luxury consumption has slowed down, and the brand is losing consumer favor. Meanwhile, the warm weather in North America is also unfavorable for the performance of Canadian geese in the second quarter. These factors may lead to Canada Goose lowering its earnings per share guidance for the 2024 fiscal year.
Zhan Junhao stated that the revenue of high-end and luxury brands will experience a short-term slowdown, and stock prices will also experience a decline, which is a foreseeable market situation. But from a macroeconomic perspective, high-end brands will continue to improve in the future.
In the future, how will Canadian geese mitigate negative impacts and increase stock prices? As of the time of publication, no response has been received from the Canadian goose side.