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Why Canada Goose Is Flying High Today

By Rich Duprey – Nov 5, 2021 at 12:03PM

Key Points

  • Canada Goose reported fiscal second-quarter results that beat analyst expectations.
  • The outerwear company raised guidance for the full year above consensus estimates.
  • The supply chain crisis isn't coming home to roost for this domestic clothing manufacturer.

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The outerwear company is benefiting from making most of its products in Canada.

What happened

Shares of Canada Goose Holdings (GOOS -23.69%) are taking flight Friday morning, rising over 16% after the outerwear company reported fiscal second-quarter earnings that beat analyst expectations.

Canada Goose also announced it was raising its full-year guidance and said, unlike the rest of the world that's beset by supply chain problems, it has plenty of raw materials on hand to more than meet demand for not only this year but next year, too.

Person with sled wearing parka in snowy valley.

Image source: Canada Goose.

So what

Canada Goose reported that revenue for the quarter was up 20% from last year to $186.6 million, with adjusted earnings per share of 0.12 Canadian dollars ($0.10) rising by a like percentage while also handily beating consensus estimates of CA$0.10 per share.

Its results were boosted by continued demand in China as the high-end clothing company saw direct-to-consumer revenue from the mainland surge 86% from last year. It also anticipates a strong holiday season in Canada, which led it to raise its share price guidance to a range of CA$1.17 to CA$1.33, beating Wall Street's forecast of CA$1.16.

Now what

Because Canada Goose produces most of its goods in Canada, it doesn't face the same supply chain constraints afflicting most other businesses. CEO Dani Reiss told Reuters, the clothing company has "all the finished goods and all the raw materials that we need to satisfy all of demand for this year," as well as having plenty to make sufficient inventory for next year.

The supply chain crisis had officials warning that Americans should lower their expectations for holiday shopping because they wouldn't be able to buy everything they wanted. Numerous retailers have resorted to chartering their own container ships to try to get sufficient products onto the store shelves.

With the the fiscal third quarter typically accounting for half of Canada Goose's annual revenue, investors are having warm feelings for the apparel stock and are sending its shares soaring.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool recommends Canada Goose Holdings. The Motley Fool has a disclosure policy.

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