Canada Goose Holdings Inc. (TSX:GOOS)(NYSE:GOOS), one of the world’s leading makers of performance luxury apparel, released its fiscal 2018 first-quarter earnings results Thursday morning, and its stock opened for trading up over 6%, but it gave up those gains throughout the trading session and ended the day down just over 3%. Let’s break down the quarterly results to figure out what we should do with the stock now.
Breaking down Canada Goose’s Q1 results
Here’s a quick breakdown of eight of the most notable financial statistics from Canada Goose’s three-month period ended on June 30, 2017, compared with the same period in 2016:
|Metric||Q1 2018||Q1 2017||Change|
|Wholesale revenue||$19.9 million||$14.44 million||37.8%|
|Direct-to-Consumer (DTC) revenue||$8.31 million||$1.26 million||560.5%|
|Total revenue||$28.21 million||$15.7 million||79.7%|
|Gross profit||$13.24 million||$4.66 million||184.2%|
|Gross margin||46.9%||29.7%||1,720 basis points|
|Adjusted EBITDA||($13.57 million)||($7.48 million)||81.3%|
|Adjusted net loss||($13.23 million)||($9.53 million)||38.8%|
|Adjusted net loss per share||($0.13)||($0.10)||30%|
What should you do with Canada Goose now?
It was a fantastic quarter overall for Canada Goose, as it has continued to achieve very strong growth in both its wholesale and DTC segments. Its results also came in well above the consensus estimates of analysts, which called for an adjusted loss of $0.19 per share on revenue of $17 million.
In the press release, the company noted that it will be opening five new retail stores in fiscal 2018, that it has already launched four of the seven new e-commerce markets that it had planned for the year, and that it is “well positioned for our upcoming peak selling season and beyond,” which leads me to believe that Canada Goose can continue to deliver double-digit growth in the quarters and years ahead.
With all of this information in mind, I think the market’s initial reaction of sending Canada Goose’s stock higher was correct, so I think the decline represents a very attractive entry point for long-term investors who are interested in investing in one of Canada’s best growth stocks.