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The pandemic-triggered drop in consumer spending, especially when it came to non-essentials such as seasonal clothing, saw Canada Goose’s (TSX:GOOS) business take a hit earlier in 2020. But its latest, generally positive earnings report released on Thursday, February 4, seems to have reassured investors quite a bit.
Stocks of this winter apparel maker took a flying start early on Thursday, hitting a fresh 52-week high of C$ 58.52. At close, Goose stocks were up by over 22 per cent to C$ 54.95, bringing their year-to-date growth to over 45 per cent.
This stock price surge came after the company’s 2020 third quarter financials beat Wall Street analysts' expectations.
What Does Canada Goose’s Latest Financials Show?
Market analysts surveyed by Thomson Reuters had estimated Canada Goose’s Q3 2020 earnings to stand at C$ 0.86 per share, on revenues of C$ 415.27 million.
Beating these projections, the company reported basic EPS of C$ 0.97 and a diluted EPS of C$ 0.96 for the third quarter ending December 27, 2020. Its Q3 2020 revenue was also higher at C$ 474 million, increased from that of C$ 452.1 in Q3 2019.
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The luxury coat maker pointed that its increased revenue was driven by a 39 per cent year-over-year growth in e-commerce business and market expansion in China. These factors, the company said, compensated for the fact that many of its physical stores remained shut amid the pandemic.
Its gross profit of C$ 316.4 for the latest quarter also registered a year-over-year climb, up from C$ 298.4 million in Q3 2019.
Canada Goose’s third-quarter net income, however, was down to C$ 107 million from that of C$ 118 million in the same quarter previous year.
Is Canada Goose Stock A Good Buy?
A point to be noted here is that when the pandemic first hit last year, around March-April, it was summertime. Winter clothes were not a necessary buy, and so, Canada Goose’s business dipped.
But as the company’s third quarter, spanning over September to December, came around, it was the start of winter in the northern hemisphere. Hence, this period traditionally accounted for a surge in its product sales. Reports says that the winter months record nearly half of the annual sales for Canada Goose as people gear up for the cold weather.
At the same time, while a second wave of COVID-19 forced Canada Goose to close the shutters of its physical stores during the holiday season, its e-commerce business expanded in every major market.
So, with the cold weather in North America still hanging around and online shopping platforms not going anywhere, it is likely for Canada Goose’s sales number to be green.
As for its equity side of things, Canada Goose stocks reflected a steady growth through most of 2020 since the March meltdown, by almost 85 per cent over the last six months.
However, this is just a preliminary view of the stocks. Any interest in stocks should be evaluated further from investment point of view.
