On Friday, Williams Trading maintained a Sell rating on shares of Canada Goose (NYSE:TSX:GOOS). The firm's critical stance highlights a perceived lack of innovation within the company's product line, which is believed to be a key factor in the brand's current challenges.
The analyst from Williams Trading pointed out that while Canada Goose positions itself as a luxury brand, it does not incorporate features such as QR codes to prevent unauthorized sales and promotions, a standard practice for luxury goods to ensure authenticity and exclusivity.
The firm also noted that recent collaborations by Canada Goose, which previously sold out quickly, are now underperforming, suggesting a disconnect between the company's leadership and consumers' expectations.
This sentiment is further supported by the company's decision to remove its 2028 EBIT target of approximately 30% as of Thursday. The analyst attributes this change to the new store openings and the absence of compelling, innovative products, which they believe are directly linked to a significant decline in EBIT margin since FY19.
In FY19, Canada Goose ended the year with 11 company-owned stores, C$830 million in revenue, and an EBIT margin of 24.9%. Since then, the company has expanded to 68 company-owned stores located in prestigious shopping areas, including 5th Avenue in Manhattan and Regent Street in London.
Despite this expansion, concerns over the brand's direction and product offerings persist. Canada Goose is planning to open an additional 10 new stores in FY25, but whether this will address the issues raised by Williams Trading remains to be seen.
InvestingPro Insights
Amidst the critical views from Williams Trading, it's worth noting some financial metrics and market behavior regarding Canada Goose. The company's market capitalization stands at a significant $1.29 billion, reflecting investor confidence to a certain degree.
Moreover, the company's gross profit margin impressively registers at 68.93% over the last twelve months as of Q3 2024, underscoring a strong ability to retain earnings relative to revenue, despite the concerns over innovation and product offerings.
An InvestingPro Tip highlights that management has been aggressively buying back shares, which could be a signal of the leadership's belief in the company's value. Recent performance metrics show a substantial return over the last week, with a 20.68% increase, and a solid return over the last month, with a 17.35% increase. This could suggest a short-term market confidence in the company's strategies or a reaction to broader market trends.
Investors looking for a deeper dive into Canada Goose's financial health and market position can find additional insights with a subscription to InvestingPro. There are 11 InvestingPro Tips currently available, offering nuanced perspectives on the company's financials and market performance. For those interested, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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