Canada Goose expects margin to fall as fewer tourists flock to stores

May 13 (Reuters) – Canada Goose Holdings Inc (GOOS.TO) said on Thursday a slow return of tourists to its stores would hurt the luxury clothing retailer’s earnings in fiscal 2022.

Luxury goods makers such as Estee Lauder Cos Inc (EL.N) and Coach handbag maker Tapestry Inc (TPR.N) also suffered in store sales at key shopping destinations as the pandemic keeps its affluent overseas customers at home.

Tourism, which accounts for a “large percentage” of Canada Goose’s sales, is unlikely to reach pre-pandemic levels in fiscal 2022, Chief Executive Dani Reiss said in a conference call on the results.

US-listed Canada Goose shares reversed earlier gains and fell about 6% in morning trade.

The company has opened new stores and doubled its online business in the world’s second largest economy to cushion the impact of lower spending by wealthy Chinese travelers at its stores.

However, a full recovery in margins depends on the return of international traffic, Chief Financial Officer Jonathan Sinclair said.

He pointed out that Canada Goose’s adjusted earnings before interest and taxes (EBIT) would likely be in the mid- to high-teens.

Adjusted EBIT margin for fiscal 2020 and fiscal 2019 was 21.6% and 24.9%, respectively. In the pandemic-stricken fiscal year 2021, it was 14.7%

However, Canada Goose is forecasting fiscal 2022 annual sales to top CA$1 billion for the first time as the company shifts to a largely direct-to-consumer model to capitalize on the pandemic-accelerated shift to online shopping.

For the fourth quarter ended March 28, revenue rose about 48% to CA$208.8 million (US$172.16 million), beating estimates as sales on the online channel accelerated more than doubled.

Excluding items, Canada Goose earned 1 Canadian cent per share while estimated to have lost 11 Canadian cents.

($1 = 1.2128 Canadian dollars)

Reporting by Praveen Paramasivam in Bengaluru; Edited by Devika Syamnath

Our standards: The Thomson Reuters Trust Principles.