Canada Goose (TSX:GOOS)(NYSE:GOOS) stock was up 2% in early afternoon trading on January 9. Shares have climbed 6.8% in 2019 so far after a precipitous drop in December 2018.
This plunge was sparked by an explosion of tensions between Canada and China. Canada arrested a Huawei executive in early December on charges brought by U.S. prosecutors of violating American sanctions against Iran. Chinese citizens and media giants have called for boycotts of Canadian and American products in the aftermath. Canada Goose was the target of one such boycott.
The news was enough to bring Canada Goose stock down from all-time highs and a loss of roughly $40 from early December to Christmas Eve.
In mid-December Canada Goose elected to delay the opening of its flagship store in China, citing construction issues.
Canada Goose’s growth strategy into the next decade is heavily reliant on taking advantage of wealthy Chinese consumers. Its chief rival in the region, Bosideng, has seen its stock rise to five-year highs during this crisis.
Investors should expect a solid outing from Canada Goose in the third quarter. The company passed through its busy season in November and December and retail sales in North America were promising over the holiday season according to data from payment processors.
Canada Goose stock has some room to run after this crisis has punished the stock, but looking ahead the company needs Canada and China to repair its diplomatic ties or it could face headwinds when it comes to its growth strategy going forward.
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