Canada Goose sales rise in Q1. Is GOOS stock a buy?

Highlights 

  • Canada Goose stocks have declined by 6.5 per cent in the last six months.
  • It is reportedly planning to sell its products only through its stores and website.
  • It announced its first quarter fiscal 2022 results on Wednesday, August 11.

Stocks of winter clothing retailer Canada Goose (TSX:GOOS) declined by 13 per cent on Wednesday, August 11, after the company announced its first quarter fiscal 2022 results.

GOOS stock went on to close the day at C$ 48.38.

The premium apparel brand saw an increase of 116 per cent year-over-year (YoY) in its sales in Q1 FY22, amounting to C$ 56.3 million. However, investors appear to have taken a closer look at its net loss for the three months ending June 27, 2021.

Canada Goose saw its net loss widen to C$ 56.7 million in the first quarter of fiscal 2022, up from C$ 50.1 million in Q1 2021. Overall, the company saw increased sales and registered a growth of 80.8 per cent YoY in its e-commerce segment in the latest quarter.

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Canada Goose (TSX:GOOS) plans to change business strategies

As COVID-related public health restrictions are eventually lifted amid vaccination campaigns, it is expected that people will return to physical retail stores. However, Canada Goose, which is a luxury winter clothing and parka maker, has kept its full-year guidance unchanged.

Canada Goose is reportedly planning to sell its products through its stores and website, while it maintains distance from third-party retailers. This could help the company to increase profitability.

The Canadian company has also revealed that it is committed to removing fur from its iconic parkas. The Toronto-based apparel brand has said that it will stop buying fur by the year-end and cease manufacturing such clothes by 2022-end.

In the past, Canada Goose has often been criticized by animal rights groups as they use coyote fur in some of their clothes. The company has, however, not revealed which material will be used to replace the fur.

Also Read: 5 Canadian stocks paying the highest dividend in 2021 

Bottomline

GOOS stock seems to be on a downward trajectory for the past few months. After a surge of 28 per cent year-to-date (YTD), GOOS shares declined by 6.5 per cent in the last six months and by nine per cent in the past week.

1-year chart of stock performance, volume and moving average multiple of Canada Goose (Source: Refinitiv)

As per the last closing price of C$ 48.38 on Wednesday, August 11, GOOS stock seems to be overvalued as its price-to-earnings (P/E) ratio is 77.22.

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