Some products are recession-proof: staples such as soap and groceries, for example. But what about a $1,000 parka?
The economic impact of the COVID-19 pandemic is changing buying habits, as people manage their discretionary spending differently. Canada Goose Holdings Inc. chief executive officer Dani Reiss is optimistic about the recovery in demand for “investment” purchases such as his company’s outerwear.
"Our brand has been able to withstand and even grow through many crises over time," he said on a conference call Wednesday to discuss the company's fourth-quarter earnings.
Canada Goose products do not often go on sale, and its signature parkas sell for prices ranging from more than $800 to more than $1,600. As the global economy faces a recession, retailers are facing a great deal of uncertainty when it comes to consumer demand – particularly for high-end products.
Providing an update on Wednesday, the Toronto-based company projected that sales in its current quarter will be “negligible.” As retailers that sell its products around the world have had to shut their doors, wholesale shipments have been largely frozen since the end of March.
The worst impact has come during a typically light sales period for Canada Goose, which makes the bulk of its revenue in the back half of the year.
Mr. Reiss said he believes consumers will gravitate toward products that are durable. “Especially this winter, when it’s cold outside and people don’t feel comfortable going outside very much, but will go for a walk,” he said he expects demand for outerwear to continue.
The company is also cutting expenses and is targeting approximately $90-million in cost savings in the first quarter.
Canada Goose is also increasing its focus on selling directly to consumers through its own branded retail stores and through e-commerce. While wholesale will continue to be important to the business, the company makes three times higher profits on direct-to-consumer sales.
“No matter what happens, people will be engaging and shopping online," Mr. Reiss said.
Canada Goose reported $140.9-million in revenue in the three months ended March 29, compared with $156.2-million in the same period last year. Its fourth-quarter profit fell 72 per cent to $2.5-million.
For the full year ended March 29, Canada Goose reported $958.1-million in revenue, compared with $830.5-million in the prior year. Its profit grew 5.6 per cent to $151.7-million.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.