Earnings preview: What to expect from Canada Goose Q4?

Canada Goose Holdings Inc. (GOOS) is scheduled to report its earnings results for the fourth quarter of 2019 on Wednesday before the market opens. The premium outdoor apparel maker is shifting itself to a retail-driven focus and market analysts expect strong growth prospects for the company.

The possible impact on consumer spending from higher prices and the long time needed to move to manufacture out of China could be hurt by the trade tariffs. This remained particularly sensitive for the apparel and footwear companies.

The company will be benefited by the existing and new stores that are likely to continue delivering robust results for the fourth quarter. Canada Goose continued to see a lot of demand for newness in the marketplace and the luxury performance outwear category will continue to evolve at a rapid pace.

The results will be benefited by higher order values from existing partners and earlier shipment timing. The company has fulfilled a higher proportion of order book and reorder allocations relative to last year, in response to customer requests and supported by expanded capacity.

The margin will be impacted by purchase account adjustments related to Baffin and changes in product mix with a high proportion of the newer product. The planned growth investments in marketing, corporate headcount and IT including greater China operations could hurt the unallocated corporate expenses.

Analysts expect the company to report a loss of $0.07 per share on revenue of $50.3 million for the fourth quarter. In comparison, during the previous year quarter, Canada Goose posted a profit of $0.07 per share on revenue of $124.82 million.

The company has surprised investors by beating analysts’ expectations in the three of the past four quarters. It is expected that Canada Goose will report upbeat results for the fourth quarter. Majority of the analysts recommended a “buy” rating with a price target of $32.90 per share.

Also read: Ross Stores Q1 earnings results

The networking capital is likely to increase due to the consolidation of Baffin including inventory marketed for resell value and the planned and build of inventory for future growth in fiscal 2020.

For the third quarter, the company reported a 64% jump in earnings driven by higher order values, shipment timing, favorable forex, incremental revenue, and strong retail stores performance. Revenue soared 50.2% year-over-year as the higher proportion of customers purchased product earlier in the second half of fiscal 2019 relative to the same period last year.

For fiscal 2019, the company expects revenue growth in the mid-to-high thirties on a percentage basis and adjusted earnings growth in the mid-to-high forties on a percentage basis. Wholesale revenue growth is predicted to be in the mid-to-high teens on a percentage basis due to sales outperformance in the channel year-to-date.

Shares of Canada Goose ended Friday’s regular session up 2.05% at $47.89 on the NYSE. The market remained closed for Memorial Day on Monday. The stock has risen over 20% in the past year while it has fallen over 14% in the past three months.

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