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Why Canada Goose Holdings Inc. Stock Was Flying Higher Today

By Jeremy Bowman – Nov 14, 2018 at 1:35PM

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Shares of the outerwear maker were taking off after another strong quarterly earnings report.

What happened

Shares of Canada Goose Holdings Inc. (GOOS 2.97%) were surging today after the high-end coat maker turned in another strong earnings report. Canada Goose beat estimates on both top and bottom lines as brisk sales growth continued, and the stock was up 11.8% as of 12:36 p.m. EST.

So what  

Canada Goose, which makes luxury outdoor wear including parkas and fleece vests, posted strong top-line growth with revenue up 33.7% to $172.7 million, which easily beat estimates at $150.4 million. The company delivered impressive growth in both its wholesale and direct-to-consumer (DTC) channels as it expanded through new stores, online sales, and retail partners.   

A man's face is coated with ice and snow under a furry hood.

Image source: Canada Goose.

Profitability continued to improve, and gross margin jumped from 50.6% to 55.8%, due primarily to an increasing percentage of sales from the direct-to-consumer segment and improvements in its wholesale business. On the bottom line, adjusted earnings per share increased from $0.22 to $0.35, crushing estimates at $0.20.

CEO Dani Reiss said:

Continuing the momentum of the first quarter, the results we delivered in the second quarter are exceptional. With such an outstanding first half of the fiscal year, we are in a strong position ahead of our peak selling season. Our wholesale growth and DTC sales productivity further accelerated, which more than offset strategic growth investments that will carry us into the future, including opening a third manufacturing facility in Winnipeg, the build-out of our Greater China business, and the commercial launch of our DTC channel in that market.

Now what

The winter wear specialist also offered solid guidance heading into its key season, raising its fiscal-year revenue growth forecast from 20% to 30% and adjusted earnings-per-share growth of at least 40%. The company plans to open five new retail stores this year and sees wholesale revenue growth in the high single digits.

With the economy strong and its brand continuing to resonate with customers, the holiday season should be another rewarding one for Canada Goose.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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