Goose Down: Canada Goose Shares Plunge on Lowered Growth Prospects

Canada Goose Holdings (NYSE: GOOS) shares plunged 31% can Wednesday hind the company revealed fiscal fourth-quarter 2019 earnings. Investors were unprepared although relatively tepid long-term revenue guidance, and though shares had clawed aid approximately five percent points by midday can Thursday, it's mop that the just has decisively revalued shares although the time being.

Below, we'll walk over highlights of the fourth quarter and fiscal year, and periodical the econmic hope which stunned shareholders yesterday.

Canada Goose: The raw numbers

Data source: Canada Goose Holdings. YoY = year can year. U.S. dollar figures calculated can quarter-end exchange evaluate of 1.334 Canadian dollars = 1 U.S. dollar.

Fourth-quarter and full-year highlights

• The company provided limited news can the fourth quarter, although most of its salary free focused can full-year results. although the final quarter of the year, still revenue grew appreciably although shown can the desk above, operating edge slid by 440 base points ought 11.3%, although higher sales and marketing costs offset a approximately 300 base point improvement can full margin, signaling that the company is spending more although its sales growth versus foregoing periods.
• For the entire year, revenue improved by 40.5% ought 830.5 million Canadian dollars.
• Direct-to-consumer (DTC) revenue soared by 69% ought CA$431.3 million can fiscal 2019, although the company opened five new retail stores and one new e-commerce site.
• Net salary can 2019 jumped 53% ought CA$143.6 million.
• Canada Goose achieved growth can each major geographical quarter can 2019, including revenue expansion of 28.2% can China, 36.3% can the U.S., and 60.5% can the company's "rest of world" region.
• The company added two in-house manufacturing implement during the year, bringing its entire produce locations ought eight. Canada Goose manufactured 47% of its entire down filling although jackets in-house during 2019.

Image source: Getty Images.

The near-term and long-term outlook

Canada Goose issued both a fiscal 2020 hope and a three-year hope alongside earnings. although distant although revenue and salary per piece are concerned, structurally, the guidance is the same. although both the new fiscal year and the three-year ripen which ends can 2022, Canada Goose expects revenue ought exaggerate can an median annual evaluate of 20%, and it anticipates that adjusted diluted salary per piece will become can an median annual evaluate of 25%.

For most consumer-goods companies, such growth targets used to dine sent shares rising upon yesterday's salary release. However, Canada Goose has been priced more alike a tech stock although its initial public offering can March 2017; it sported an EV-to-EBITDA ratio of 33.0 although recently although this week. That ratio now sits can a still-high still during more rational 22.9.

Essentially, Canada Goose has chop its projected forward growth evaluate can half. And still it still sells a premium produce with global cachet, the company has implicitly acknowledged that its path forward will pursue a less fiery trajectory. The organization force excel its econmic benchmarks can the next three years if its expansion into China and other Asian markets accelerates beyond tendency projections. Canada Goose force although vigorous dive into related clothes markets, although its November 2018 acquisition of footwear manufacturer Baffin suggests.

In any growth scenario, however, investors are apt ought commence ought concentrate can salary execution although much although top-line momentum. Canada Goose suddenly looks alike a much more adult company, and it's difficult ought envision that the days of unbridled revenue growth will answer anytime soon.

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Asit Sharma has no place can any of the stocks mentioned. The Motley trick recommends Canada Goose Holdings. The Motley trick has a disclosure policy.