It was only a year ago that shares of Canada Goose Holdings Inc (TSX:GOOS)(NYSE:GOOS) were trading at more than $50. Today, they’re barely holding on to the $30 mark. A slowing growth rate was already weighing on the stock when COVID-19 dealt it another blow early this year.
The big problem right now is that there isn’t a huge market for luxury apparel and it’s going to be hard for the company to find much growth in the foreseeable future.
In its most recent quarterly results, sales of $26.1 million were down more than 63% from a year ago when Canada Goose reported sales of $71.1 million. Although COVID-19’s disrupted the company’s business the effects could linger long after the pandemic’s gone – whenever that is. With many economies in the world now in recessions, selling luxury apparel’s going to be a lot more difficult than it was when things were going well.
And with the stock trading at 25 times earnings and around seven times its book value, Canada Goose isn’t a cheap stock to own. There’s a lot that would have to go right in the fight against COVID-19 for the outlook for Canada Goose to improve.
Right now, this is a dangerous stock to hold as the company’s heading into its busy winter season in the coming months and a disappointing performance there could send its shares reeling even further.
Although Canada Goose has a strong direct-to-consumer business, that’s not going to matter much when consumers are drowning in debt or out of work as a result of COVID-19.
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