In March, Canada Goose Holdings (TSX:GOOS)(NYSE:GOOS) announced that it would be laying off 17% of its corporate staff as it looks to improve efficiency and reduce costs. A warmer-than-expected winter has adversely impacted the demand for the company’s high-priced parkas, and that’s bad news for a company which relies heavily on just one or two strong quarters in the year.
During the company’s most recent quarter, which ended on Dec. 31, 2023, Canada Goose reported just modest 6% revenue growth with its top line rising to $609.9 million. But despite the top-line growth, earnings totaling $131.4 million were lower than the $137.5 million Canada Goose reported in the prior-year period.
Over the past 12 months, shares of Canada Goose have fallen by 33%. And with inflation and affordability still being a problem for many consumers, it may be hard for investors to get too excited about the stock, especially given its lackluster sales growth and the seasonality of its business. While the company has a strong, identifiable brand, it may be a tough road ahead for Canada Goose because if a recession hits, it may become even more difficult for the company to generate much growth in future quarters.
Investors are discounting the stock heavily, however, with Canada Goose stock trading at just 10 times its estimated future earnings and 1.3 times its revenue.
For contrarian investors, this could be a stock worth potentially picking up given Canada Goose’s beaten-down valuation. There’s some risk here, but with a market cap of only $1.2 billion, there could be a fair bit of upside for investors who are willing to be patient with the retail stock.
