Due to the continuous weakness of the Chinese economy and sluggish domestic demand, Chinese consumers are tightening their wallets and reducing luxury goods consumption. On Thursday, February 6th, Canada Goose Holdings Inc. lowered its annual profit outlook. The company’s third-quarter revenue, announced on Thursday, fell below market expectations, leading to a 4% drop in its stock price during early trading.
According to reports from Reuters, China is facing youth unemployment and a real estate crisis, resulting in weak consumer spending. The global luxury goods industry is concerned about the Chinese market, especially international brands that heavily rely on this market. The softening Chinese economy has had a significant impact on brands like Canada Goose.
Canada Goose’s revenue in the Greater China region declined by 4.7% in the third quarter, headquartered in Toronto, Ontario, Canada.
During the earnings conference call, a senior executive at Canada Goose mentioned that the Snow Goose collection launched in collaboration with designer Haider Ackermann attracted new customers in this quarter (third quarter). However, macroeconomic pressures continue to affect demand in Hong Kong, Macau, and Taiwan, with foot traffic remaining low.
Nevertheless, driven by strong holiday season promotions, sales in the United States showed some recovery. The company expects adjusted profits for fiscal year 2025 to remain flat to low single-digit percentage growth, compared to the previous forecast of mid-single-digit growth.
Canada Goose’s third-quarter revenue dropped from 609.9 million Canadian dollars in the same period last year to 607.9 million Canadian dollars. According to data compiled by the London Stock Exchange, analysts’ average expected revenue was 620.9 million Canadian dollars.
The report indicates that revenue from the U.S. region in the third quarter increased by 2.5%, compared to a 4.2% decrease in the previous quarter. Canada Goose’s earnings per share were 1.51 Canadian dollars, previously expected to be 1.54 Canadian dollars per share.
Susannah Streeter, the capital and markets director at Hargreaves Lansdown, stated that due to slowing economic growth, Chinese consumers have not bolstered company earnings.
American luxury retailer Estee Lauder has also been affected by the Chinese market, expanding its restructuring plan on Tuesday, involving layoffs of 7,000 employees. Estee Lauder is striving to address sustained weak demand, especially in Asian markets.