Canada Goose Is Migrating Higher Shares of Canada Goose (NYSE: GOOS) are migrating higher in the wake of Q2 earnings because the company was able to deliver results. Not only that, the company is citing...
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Supply Chain No Problem For Canada Goose
Shares of Canada Goose (NYSE: GOOS) are migrating higher in the wake of Q2 earnings because the company was able to deliver results. Not only that, the company is citing its supply chain as a factor that is not the norm in this reporting cycle. The best news, however, is the outlook. CEO Dani Weiss says the leading indicators are pointing to a solid holiday season and we are not surprised. Canada Goose is a high-quality brand that resonates with the luxury market and inside efforts to reach consumers are working.
"Our second-quarter results demonstrate our momentum," said Dani Reiss, President & CEO. "Across all channels, we are seeing strong leading indicators of peak season demand. With accelerating DTC trends, growing lifestyle relevance and unique supply chain flexibility, we believe we have the right foundation in place for an outstanding fiscal 2022."
Canada Goose Has A Cozy Quarter
Canada Goose had a great quarter in which it exceeded expectations on all levels. The company reported C$232.9 million in consolidated revenue which is up 19.6% from last year and compounded by widening margins. Sales beat the consensus by 1300 basis points and that is including the impact of PPE sales last year. When adjusting for PPE sales, the company's core organic growth topped 40% driven by strength in all channels. DTC sales are up 86% on strength n eCommerce. eCommerce sales are up 33.8% and wholesale is strong too. Wholesale revenue is up 24.84%.
Moving down to the earnings, the company reported a 960 basis point increase in gross margin that was more than enough to offset a small decline in operating margin. The gross margin came in at 58% and the operating margin at 4.9% to drive strong earnings on the bottom line. The adjusted C$0.12 is not only a surprise profit but beat the consensus by $0.21 and the company is expecting strength to continue.
Looking forward, Canada Goose raised its guidance for the year. The company is now expecting revenue in a range of $1.12 to $1.175 billion or up from the previous outlook of >$1.0 billion. The analyst's consensus estimate is only $927 million.
The Analysts Are Still On The Fence With Canada Goose
The analysts have been on the fence about Canada Goose for a long time and there has been little change. The consensus rating has edged from a solid neutral to almost a weak buy and we don't see it changing much now. The last two analysts to make comments, both in the wake of the Q2 release, are still bullish on the stock but issued contradicting statements. On the one hand, Baird has an Outperform rating and raised the price target to C$80 from $70 while CIBC cut the rating from Buy to Neutral. CBIC says the company's outperformance is priced in after last week's surge but we don't think so.
The Technical Outlook: Canada Goose Consolidates For Next Move
Shares of Canada Goose are pulling back in the wake of last week's surge but that is to be expected. Price action is still above previous resistance so we are expecting consolidation at this level. Assuming price action can maintain the current levels we would then expect to se another rally up to the $57.50 to $60 range. That compares to the Marketbeat.com analysts consensus of $53.50 which assumes about 12% of upside for the stock. 
