Shares of Canada Goose (NYSE:GOOS) fell by more than 25% on Wednesday after the outdoor-apparel maker reported weaker-than-expected fiscal fourth-quarter sales and warned it anticipates slower sales growth in the years to come.
Canada Goose reported fiscal fourth-quarter revenue of $156.2 million (Canadian), up 25% year over year but short of the CA$156.8 million target that analysts had expected. The company also said it expects average annual sales growth of 20% over the next three years, a deceleration from the 40%-plus gains Canada Goose has posted in recent years.
The company also said it expects "materially larger losses" during the fiscal first quarter due to higher corporate investments and a large number of stores operating during off-peak periods.
Canada Goose has been an incredible growth story, with its shares up nearly 300% over a three-year period ending in late 2018. But investors have been growing increasingly skeptical over whether that momentum could continue, and these latest results seem to have confirmed those fears.
For all the negativity, this was still a solid quarter, and the company's growth targets would make more established retailers envious. CEO Dani Reiss said in a statement, "We have come a long way in a short time," adding, "I believe that we are still just scratching the surface of our long-term potential as we continue to define performance luxury globally."
The problem is Canada Goose trades at nearly 38 times earnings even after Wednesday's pullback. At that sort of premium multiple, even the slightest flinch can send investors running for the exits. On Wednesday, Canada Goose flinched.