Canada Goose (GOOS) Q2 2027 earnings review
Canada Goose stores sell less, but each sale earns more
Canada Goose is making more money on every coat it sells, but fewer people walk into its stores. Revenue rose 6% to $274 million, against a year that no longer includes the Baffin boot business. Sales at shops open at least a year dropped 7.5%, and finance chief Neil Bowden said October stayed negative.
| Revenue | $274.0M +5.9% from a year ago, excluding the sold Baffin business |
|---|---|
| Gross margin | 66.8% 64.0% a year ago |
| Operating loss, excluding one-offs | $(21.6)M $(14.2)M a year ago |
| Full-year outlook | Unchanged operating margin of 11% to 12% of sales |
⚖️ Verdict: 🔴 Bearish
The case got worse, because the weakness spread. Store sales were sliding in one region three months ago; now every region reports a decline, while the newer shops still carry rent. The good news: each sale earns much more, and the new U.S. duties now look likely to cost one point of profit margin for the year rather than two.
The question now is whether the holiday season can carry the year's profit while store sales fall. One answer: the fatter margin, the bigger wholesale order book and the new collection convert visitors into buyers. The other: a growing shop fleet meets shoppers who buy later and spend less. February's third-quarter report settles it.
🐂 Bull Case
Gross Margin Reached 66.8% of Sales
Canada Goose keeps about two thirds of every dollar a shopper pays, once it has paid to make the coat. That share, the gross margin, widened to 66.8% from 64.0%, because the brand raised prices, got more out of its factories and paid less for freight and duty.
- Gross margin: 66.8% of sales, against 64.0% a year ago
- Cost of making the products: 33.2% of sales, down from 36.0%
- First half gross margin: 2.1 points better than last year
Operations chief Beth Clymer told analysts the gain is “pretty much all structural”, so it should hold. The release names “favourable product mix, production efficiencies and lower freight and duty costs”, and the half-year figure supports her rather than one quarter alone.
That matters because the newer apparel, rain wear and wind wear carry a risk: light clothing usually earns less than a heavyweight down parka, so a shift away from winter coats could thin this number. Product mix added to it instead.
What to watch: third-quarter gross margin, reported in February. U.S. duties began on 22 August and the holiday quarter brings most of the year’s sales, so that reading shows whether the pricing and sourcing gains survive.
Retailers Ordered More of the Non-Winter Range
Wholesale means selling to other retailers, and it brought in $128.2 million, 4.6% more than a year ago on the same basis after the sold boot business left both years. Apparel, rain wear and wind wear grew at double-digit rates, and partners are “buying deeper and wider”, Bowden said.
Next spring’s orders matter more than this quarter’s shipments. Canada Goose reported that its “Spring/Summer 2027 order book grew significantly over last year”, and Bowden added that sell-through at partners is up with their stock better balanced. Retailers commit a season ahead, so that book is the earliest demand signal the group publishes.
What to watch: wholesale revenue in the fourth and first quarters, when Bowden expects the spring order to ship. Growth then would show the year-round range adds sales instead of moving them between seasons.
Asia Pacific Revenue Grew 23%
Asia Pacific is now the biggest region at Canada Goose. Revenue there reached $97.5 million, 23% above last year, helped by wholesale demand on Hainan Island and in Korea. Greater China — mainland China, Hong Kong, Macau and Taiwan — grew by a third.
Store visits fell here too, and comparable sales declined 4%. Those who walked in bought more readily: brand and commercial president Carrie Baker pointed to a “double digit improvement in a store conversion”, and said shoppers are taking to the apparel and rainwear as well as the heavy down.
What to watch: Greater China revenue in the third quarter. The region supplies a quarter of all sales, so any slowdown in Chinese spending or travel would land on the year’s biggest quarter.
Canada Goose Started Buying Its Shares Again
Canada Goose had not bought back a share for about two years, while cash went into new stores and a logistics network. That changed in the second quarter, and the board approved another twelve months of buying, for up to 3,156,958 shares.
- Repurchased in the quarter: 2,092,572 shares for $23.7 million
- Bought to 31 October under the current programme: 3,487,620 shares at an average $11.30
Directors call this “an appropriate and desirable use of available excess cash on hand”, yet cash stood at $87.1 million against $94.2 million a year earlier. Bowden described the second quarter as the yearly peak for working capital, so repurchases and inventory draw on one pool.
What to watch: repurchases in the third quarter, when the selling season brings cash in. Buying at this pace would shrink the share count for the first time since fiscal 2024.
🐻 Bear Case
Store Sales Fell 7.5%, and Kept Falling
Comparable sales count only stores and websites open at least a year, so they show whether existing shops sell more. Canada Goose’s measure fell 7.5%, a steeper decline than in the first quarter. Fewer people came through the doors in every region, Bowden said.
- Comparable sales: −7.5%, after −3.2% in the first quarter and +10.2% a year ago
- EMEA, meaning Europe, the Middle East, Africa and Latin America: comparable sales −27%, revenue −14%
- North America and Asia Pacific: comparable sales −4% each
- Permanent stores: 94, against 77 a year ago
Reiss points at traffic rather than the brand, and the measures he follows improved: “Awareness, consideration, and desire improved year over year” in Britain, France and mainland China. Europe says otherwise. Shoppers there cut spending by a quarter, and “softer local and tourist demand” met “product availability constraints” from a new warehouse network.
“DTC comparable sales remain negative in October as softer traffic persisted,” Bowden said. Seventeen more shops than last year pay rent and wages against smaller sales in each one, which is why the loss widened.
What to watch: comparable sales for the third quarter. Another decline through the holidays would hand the year’s profit to the newer stores rather than to the weather.
The Year's Profit Rests on the Holiday Half
Canada Goose earns nearly all its profit in autumn and winter, and plans for about three quarters of yearly revenue to arrive in the second half. The first half therefore ran at a loss of $123.5 million before one-off items.
The outlook asks a lot of the two quarters that remain. Reiss and Bowden held the full-year target at 11% to 12% of sales. By our math that needs second-half operating profit near $299 million, on revenue the same outlook leaves close to flat.
- Second-half operating profit needed: about $299 million by our math, against $269 million last year
- Second-half margin implied: about 26% of sales, against 24%
- Second-half revenue implied: roughly flat
Costs are what make that hard. Overheads reached $204.5 million, up 12%, as marketing took a bigger slice of revenue before the holidays and the larger shop fleet added rent. Better gross margins could not cover it, so the operating loss widened to $21.6 million.
What to watch: third-quarter operating profit in February. Bowden says “we feel like we got enough room in the wholesale delivery and other factors”; a reading below last year’s $203.7 million leaves the target to one quarter.
U.S. Duties Cost About One Point of Margin
Washington imposed duties on a wide range of Canadian goods from 22 August, and some Canada Goose products fall inside them. The outlook now carries a number for that: the duties “to impact adjusted EBIT margin by approximately 100 basis points for fiscal 2027”, or one percentage point of profit margin.
Three months ago Bowden put the unmitigated cost at under two points and left it outside the plan, so a smaller, stated figure counts as progress. Timing matters, though: the duties ran for five weeks of this quarter, and three quarters of the year’s sales come after it.
What to watch: whether February’s report still carries the 11% to 12% margin range after a full quarter of duty costs. A change there would show that mitigation only delayed the bill.
Risks this quarter didn't answer
Four standing worries got no new figures in this report, and three of them concern numbers Canada Goose has never published. Each needs one specific disclosure to move, and the list names what it would be.
- Shipment timing: a new warehouse network pushed EMEA wholesale orders into the third quarter and Korean orders shipped early; Bowden sized neither shift.
- Lifestyle range: apparel, rain wear and wind wear grew at double-digit rates, with no revenue figure for a second quarter.
- New stores: 94 shops, 17 more than a year ago, and no sales-per-store figure.
- Debt: net debt of $781.9 million, “entirely reflecting an increase in store lease liabilities”, at 2.6 times cash profit.
What to watch: the geographic and channel tables in February’s quarterly filing, which would size the EMEA orders that slipped. Those figures would show whether wholesale growth came from demand or from the calendar.
👓 Other Themes
Baffin Sale Changed the Comparison
Canada Goose sold Baffin, its boot maker, to L.P. Royer on 10 August for $15.1 million after costs, “reflecting our focus on simplifying the business”. Baffin brought in about $35 million last year, mostly through wholesale in the second and third quarters. Both years now exclude it, which lowered last year’s second-quarter revenue to $258.8 million from $272.6 million.
💲 Other KPIs
Stock rose 7.8% from a year ago, slightly faster than sales, as Canada Goose built coats for the peak season and filled a larger wholesale order book. Turns, the speed at which stock sells, held at 1.0 times and improved 8% against last year.
The charge for wearing out shops and equipment rose 24%, because the retail network keeps growing. Leased space on the balance sheet reached $363.8 million, from $285.9 million. That increase explains why cash profit held flat while the operating loss widened.
The group drained $18.1 million less cash than a year ago, when it also settled a $43.8 million arbitration award. Working capital still absorbed $104.2 million as inventory built. Across the first half the outflow reached $286.1 million, deeper than last year.
🔮 Guidance
Unchanged. The plan still has sales a few percent higher for the year. The first half delivered 7.4%, so by our math the rest of the year sits close to flat, between a 1% decline and 2% growth. Pricing, deeper assortments, a bigger order book and new shops add; weaker traffic, thinner consumer confidence and less travel subtract, the company said.
Held for a third quarter. The first half helped, with the margin 1.7 points better than last year. By our math the range still needs about 26% of second-half sales to reach operating profit, against 24% a year ago. Bowden credits first-half margin work plus the revenue plan for the rest of the year.
Unchanged, and the quarter ran ahead of it. Pricing and factory efficiencies lift this line; product mix, dearer raw materials and supply-chain costs pull against it, the company said. Clymer expects the first-half drivers to carry into the second half and beyond.
Unchanged, and it has not happened yet: overheads outran sales in both quarters so far. Fixed costs sit evenly across the twelve months while three quarters of revenue arrives after October, which is the mechanism that pulls the share down. Management promises tight control of head count and discretionary spending.
Halved. In the summer Bowden sized the duties at under two percentage points of yearly margin and kept them outside the plan; the figure is now about one point and sits inside it. Mitigation held the second-quarter cost to an immaterial amount, he said, but the duties only started on 22 August.
❓ Key Questions
How much EMEA wholesale revenue slipped into the third quarter?
Bowden said the new warehouse network delayed European deliveries that should catch up in the third quarter. Without the amount, readers cannot tell how much of any rebound is demand and how much is a calendar shift.
What do apparel, rain wear and wind wear sell?
The release repeats double-digit growth and a bigger share of the mix for a second quarter without a dollar figure. A revenue and gross margin number would settle whether the year-round range adds sales or replaces parka sales.
How much margin gain is new rather than lapped?
Roughly a point and a half of the planned full-year improvement comes from last year's bad debt and shop write-downs not repeating. Management has never split the lapped part from genuine progress.
What do the newest shops earn against the fleet?
Seventeen shops opened in the past year while comparable sales fell. Sales per shop for recent openings against mature ones would show whether the build-out is adding profit or spreading fixed costs thinner.
What did the new commerce platform change?
Canada Goose moved several markets onto a Shopify-powered platform with new tills and a clienteling tool. E-commerce comparable sales turned positive in two regions, but the company has given no conversion or spend-per-customer figures to size the gain.