Canada Goose said on Wednesday that it will increase its focus on its own branded stores and e-commerce business as it enters the early stages of a COVID-19 recovery.
The Toronto-based parka maker (GOOS.TO) halted shipments to its wholesale partners, which includes department stores like Nieman Marcus, in late March as retailers were forced to close stores due to the coronavirus pandemic.
Now, as lockdowns are gradually lifted across North America and Europe and economies begin to slowly reopen, the company said it will “take an even more disciplined approach” when it comes to its wholesale business.
While wholesale remains “strategically important” to the company, Canada Goose’s chief financial officer Jonathan Sinclair told analysts on a conference call Wednesday that the company will increase its focus on its direct-to-consumer business, particularly in the early stages of reopening.
“This allows us to control the consumer experience directly while earning double the revenue and triple the profit on a unit-for-unit basis,” Sinclair said.
Canada Goose chief executive Dani Reiss said that although the company’s order book for wholesale will be smaller going forward, it does not expect products to be discounted and that the “business model remains in tact.”
“Many (wholesale retailers) are expecting us to be one of the brands that help lead them through the recovery,” Reiss said.
The company’s stock was up more than 16 per cent at $33.89 in mid-afternoon trading on the Toronto Stock Exchange.
Reiss also said he expects the brand will be able to withstand a situation where consumers are spending less on discretionary items. Canada Goose parkas typically retail for around $1,000.
“I think especially this winter when it’s cold outside, if people don’t feel comfortable going outside very much but want to go for a walk, I can’t think of a better item to purchase than a Canada Goose product,” Reiss said.
“I think our items are seen as investment items, and I think that’s why we feel very confident that we are more relevant than ever.”
Canada Goose, which released its 2020 fiscal results on Wednesday, reported a profit of $151.7 million in the year ending March 29, or $1.36 per diluted share, up from $143.6 million last year, or $1.28 per diluted share. In the fourth quarter ending March 29, the company reported a profit of $2.5 million, compared to $9 million in the same period in 2019.
After the COVID-19 pandemic began, Canada Goose pivoted its eight Canadian factories to produce personal protective equipment for frontline workers. Reiss said the company is currently producing 100,000 medical gowns each week at cost for provincial and federal contracts, and has the capacity to make more if needed.
The parka maker expects its first quarter ending June 28 to be hit the hardest by the impact of COVID-19, but noted that it is historically the smallest quarter for the company, representing 7.4 per cent of overall sales in fiscal 2020.
With files from Reuters