Canada Goose shares drop as lightweight clothes hurt margins
Canada Goose has reported a slip in its gross margin for the first quarter as it increased sales of its less profitable lightweight clothes.
Read more: July 2019 worst on record for retail sales growth
The Toronto based firm, best known for its luxury parka jackets, increased its revenue by 59 per cent to CA$71.1m (£44.3m), while its net loss widened to CA$29.4m.
But shares in Canada Goose dropped five per cent as investors were spooked by a drop in profit margin from 64 per cent to 57.5 per cent.
The retailer said the narrower margins were sparked by higher sales of clothes in its non-parka lines.
Canada Goose has branched out into lightweight jackets and raincoats in recent years in a bid to boost seasonal sales and counteract growing opposition to its parkas, which are made with real coyote fur.
However, these cheaper lines are not as profitable as its $1,000 (£830) winter coats.
Read more: Innovation boosts online retail sales
President and chief executive Dani Reiss said: “The affinity and desire we have seen for our seasonally relevant lightweight offerings tells us our product expansion is working, and combined with the volume of highly engaged consumers looking to get ahead of the upcoming fall/winter season, we believe our business has never been stronger as we report our smallest fiscal quarter.”
Main image credit: Getty