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Why Canada Goose Stock Fell 18% Last Month

By Anders Bylund – Jun 5, 2020 at 1:51PM

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The Canadian maker of premium outerwear saw a sharp correction following an anemic analysis of the American economy.

What happened

Shares of outerwear maker Canada Goose (GOOS -3.49%) lost 18.2% in May, according to data from S&P Global Market Intelligence. The sharpest drop of the month was a 6.5% single-day decline based on signs of a weakening economy.

So what

On May 13, Federal Reserve Chairman Jerome Powell said that the COVID-19 pandemic had left the U.S. economy "highly uncertain and subject to significant downside risks." Many retailers' stocks tumbled on that statement, particularly on the upscale side of the tracks. It's no surprise to see Canada Goose crashing on a day like that given 29% of the company's annual sales come from the U.S. market.

A 3D rendering of a red charting arrow pointing downward.

Image source: Getty Images.

Now what

The stock bounced back in a hurry in early June, thanks to gradual reopenings in many U.S. states and a solid fourth-quarter earnings report. Canada Goose's cost-saving steps helped the company crush Wall Street's bottom-line estimates despite a 10% year-over-year drop in sales. Shares are now trading 7% above their prices at the end of April, but also 29% lower on a year-to-date basis.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Canada Goose Holdings. The Motley Fool has a disclosure policy.

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