Why Canada Goose Shares Shed 16% Last Month

What happened

Actions of Canada Goose (NYSE: GOOS) lost altitude in March as investor skepticism continued to grow about the trendy parka retailer. After a strong third quarter earnings report in February, the stock nevertheless sold, a sign that investor optimism may have peaked.

In March, that momentum appeared to build on brand concerns and criticism of the company despite little direct news on the stock. Based on data from S&P Global Market Intelligence, the stock lost 16% last month. As you can see from the chart below, the stock’s decline occurred in two spurts at the start and end of the month.

GOOS given by YCharts.

So what

One incident that may have caused the sale of Canada Goose earlier this month was a rant by comedian Bill Maher for PETA, in which he said Canada Goose products were intended for “showers” and spoke out against the abuse. of business to the coyotes and geese that he used to stuff and line his jackets. Although the clip was not shown on his show, it did do a few social media tours and highlighted a challenge the brand faces as others have criticized the company for its treatment of animals.

A man in an arctic scene puts on a backpack.

Image source: Canada Goose.

Canada Goose shares fell 7.6% in the first two sessions of March on high volume trading, which could have been a response to Maher’s clip. As a fashion brand, Canada Goose is particularly vulnerable to consumer perceptions, and a reputation for animal abuse could hurt the company if the accusations gain credibility.

On March 25, the stock fell 4% as PETA again attacked the company, promising a Chicago store protest the next day that would include nearly naked and “bloody” protesters to draw attention to the treatment. of animals by the company.

Now what

There is no doubt that Canada Goose’s financial performance has been impressive. In its final quarter, during the key winter and holiday period, revenues jumped 50% and earnings per share rose 66%. The company also raised its outlook for the year, calling for revenue growth of around 30% to medium-high.

However, stocks are trading at a premium compared to other retailers, and it could be risky if brand sentiment changes. Canada Goose investors should keep an eye out for other celebrities speaking out against the company, which could certainly hurt the brand.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

About Nell Love

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