Canada Goose (GOOS 57.47, +1.56, +2.79%) reported really strong fiscal first quarter
results this morning, which is seasonally the company's slowest. Canada Goose
is known for their high quality and expensive outerwear.
First quarter results indicate the company will have yet another impressive, record year, as expected. Sales grew 58.5% to CAD$44.7 mln, a whopping 25% above estimates. Direct to consumer revenue grew 180% to CAD$23 mln, allowing gross margin to expand 1720 basis points to 64%, well above estimates. The company reported a (seasonal) modest net loss, slightly better than expected.
The top line results are robust to say the least, but fourth quarter sales reported in June grew 144% and exceeded estimates by 62%.
Aside from slowing growth, the only other blemish would be the fact that the company reaffirmed its outlook for fiscal 2019. The company continues to see adjusted EPS growth of at least 25%, adjusted EBITDA margin expansion of at least 50 basis points and annual revenue growth of at least 20%.
Wall Street, meanwhile, expects EPS to grow 32% with sales up 26%. Canada Goose reported fiscal 2018 adjusted EPS up 95% with sales up 46%.
It's safe to say that the company's outlook was conservative when it was initially given in June. One can assume the outlook remains conservative, as management didn't feel the need to raise guidance after its first and seasonally slowest quarter.
Canada Goose is almost certainly the strongest luxury retail growth story in the US stock market. The company has reported blow out results all six quarters since its IPO in March of last year and the stock is up over 200% since then.
The biggest headwind for the stock right now appears to be the valuation.
With a USD $6 bln valuation, GOOS trades north of 60x earnings estimates or 40x EBITDA.
The stock has held support at the ~$55-56 level since gapping up to new highs after reporting phenomenal fourth quarter results in June.
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