Canada Goose Gets Its Wings Clipped
While insiders at Canada Goose (NYSE: GOOS) have not made any transactions since late November 2021 their activity at the time suggests they (some of them at least) were expecting the weakness just seen in the Q3 earnings release. It’s hard to track down exactly how much of the company is owned by the insiders and selling was light but selling there was. Two senior executives and a director sold C$4.0 million worth of shares, about 0.1% of the market cap now, in three transactions we view as timely, to say the least because shares were trading at multi-year highs in mid-November.
The institutions, on the other hand, were buying shares last year although the volume of activity slowed considerably in the 4th quarter. Net institutional activity is worth about 7.1% of the market cap with shares at their new low and brought total ownership up to 45%. It is worth noting that institutional activity not only slowed noticeably in the Q4 period but that it also turned bearish with net selling worth about $20 million. We’ve not gotten any data for Q4 yet but we won’t be surprised to see institutional and insider activity pick back up. The question is if it will pick back up and be bearish, or pick back and be bullish?
Canada Goose Misses And Guides Lower
Canada Goose had a great quarter despite global headwinds and the emergence of COVID-19 variants A through Z. That is, until you bring in the analysts and their estimates, and then the C$586.1 million revenue and 23.6% YOY growth is only as expected and not what the market needs to maintain confidence in the brand's momentum. The good news is that price and mix aided better than expected margin and earnings above the Marketbeat.com consensus. On a reporting basis, key drivers of growth including non-parka sales jumped 75% proving the brand's appeal for year-round users while eCommerce increased by 28.1% on top of last year’s strong showing and DTC in China rose by 35.1%.
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“Canada Goose’s brand momentum and supply chain resilience drove a strong performance in our largest quarter,” said Dani Reiss, President & CEO. “Our digital business continued to exceed last year’s outsized gains, alongside a sharp improvement in retail productivity. We remain confident in our long-term trajectory for revenue growth and margin expansion, notwithstanding the emergence of temporary and unexpected COVID-19 disruptions in certain markets.”
On the bottom line, the $1.42 in earnings beat the consensus by $0.03 but that is where the good news ends. The company says it is lowering its guidance for the year because current-quarter sales trends, plus the emergence of new variants and their effect on store openings, have not produced the desired results. The new guidance calls for revenue and earnings in a range well below the current consensus. This is bad news going into the company’s weakest time of the year.
The Technical Outlook: Canada Goose Falls To Support
Shares of Canada Goose were down more than 15% in the wake of the Q3 release and guidance update but support is beginning to show itself. Support appears to be present at the $20 level which is a two-year low. In our view, the company may not recoup lost business immediately but the long-term trends are positive. If support is confirmed at this level we’d become interested in the stock, if the institutional activity begins to show buying pick up as well we’d get even more interested.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Canada Goose (GOOS) | $9.52 | +2.0% | N/A | 25.72 | Reduce | $11.80 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
