Canada Goose Plunges to All-Time Low as Jacket Sales Pressured

Stephanie Hughes
Thu, October 19, 2023 





(Bloomberg) -- Canada Goose Holdings Inc. shares plummeted to a record low for the second day in a row as economic and consumer pressures prompted a pair of analyst downgrades.

The parka retailer’s stock fell as much as 9.8% to $11.48 in New York trading after analysts from Wells Fargo & Company and TD Cowen recommended investors move to the sidelines as the economic outlook for key markets sours. Warmer than usual fall weather and weak customer trends are also expected to weigh on sales.

TD Cowen analysts led by Oliver Chen pointed to cautious economic news out of China and Europe in a note downgrading the company to market perform from outperform and lowering the price target to $15 from $22.

They fear the outlook for China is poised to grow worse before it improves given the nation’s shaky real estate market, higher savings rate as consumers tighten purse strings and elevated youth unemployment rate. The analysts estimate that China makes up a quarter of Canada Goose’s sales, but tourism means Chinese clientele could make up a much larger portion.

Wells Fargo & Co. analyst Ike Boruchow also downgraded the stock Thursday, reducing his team’s recommendation to equalweight from overweight and trimming the price target to C$20 from C$25. Boruchow pointed to a weakening economic outlook in the US and China.

He also noted that the warmer-than-usual Black Friday and Christmas holiday forecasts are a poor setup for Canada Goose, which posted the biggest observed sales decline among apparel retailers in August.

The downgrades leave Canada Goose with three analysts who still recommend buying the stock, eight who say hold and two who recommend selling, according to Bloomberg compiled data. Canadian shares were the worst performing on the S&P/TSX Composite Index.