Canada Goose (GOOS) stock spiked early Wednesday, then turned sharply lower despite earnings beat by the luxury parka manufacturer.
Adjusted EPS for fiscal Q2 jumped 23% to 43 cents, while revenue popped 27% to $ 223 million. Analysts had expected EPS of 35 cents and $ 205 million in revenue, according to Zacks Investment Research.
The company said wholesale revenues had risen 22% while revenues directly to the consumer had swelled by 47%, both above the expectation of consensus.  Management also kept its full-year guidance steady ahead of its peak season, and continued to see EPS growth of at least 25% of revenue growth of at least 20%. Analysts see EPS growth of 21.15% for the fiscal year ending March 2020 at a revenue growth of 21.7%.
Canada Goose Earnings Beat & # 39; Overshadowed & # 39;
The Toronto-based company is known for its $ 1,000 parks. It branched off to Beijing and Hong Kong last year as it sought to capitalize on the growing appetite for luxury goods among wealthy Chinese.
CEO Dani Reiss told analysts at a conference call that protests in Hong Kong have harmed the results there, and management also warned that wholesale sales in Q3, which make up most of the revenue, would fall by the middle of the teens.
Canada Goose's expansion efforts outweigh fiscal results in 2020. Financial income in the first quarter was hit by several store openings during the high season and more spending to support growth, including in greater China.
Baird analyst Jonathan Komp, who considers the stock neutral with a 43 price target, said the Q2 income beat was "overshadowed by other factors." He noted that gross margin was lower than consensus expectations due to mix and lower wholesale performance.
"GOOS maintained its previous full-year outlook and key assumptions, after lifting full-year guidance with this report for the past two years," he said in a research note on November 13. "We suspect the report may not solve current investor concerns related to DTC momentum, margin and inventory (growth up to + 61.5% year over year despite previous wholesale shipments)."
CFRA analyst Camilla Yanushevsky attributed Wednesday's stock fall, in order of importance, to the firm's reluctance to increase guidance after strong beats, gross margins, wholesale prospects and Hong Kong.
But she also expects a downturn and continues to rank the stock as a strong buy, while cutting her price target by 5 to 65.
"GOOS shares have historically tended to increase the pre-market by a top and bottom line and gross margin loss, fall behind the revenue call and recover within the next few days, "she told IBD. "The dropout today comes as no surprise. We're sure stocks will recover."
Canada Goose Stock Gets Cooked
Shares plunged nearly 11% to 34.81 in the stock market today. Canada Goose stock is flashing bearish technical signals. The latest move saw it fall longer than the 50-day moving average, MarketSmith analysis shows.
The poor performance of the Canada Goose stock has seen IBD Composite Rating plummet to 42. The Stock Checkup Tool shows that it has an impressive three year EPS growth of 147%. However, the latest performance, which includes a loss in the previous quarter and a dramatic fall in earnings in the quarter before that, has seen its EPS rating drop 60.
The stock is currently at a low 12th place in the apparel industry Group. The group itself has been lagging, and currently sits in 143rd place out of the 197 track industrial groups.
Among rivals, Columbia Sportswear (COLM) dipped 0.7%, North Face Parents VF Corp. (VFC) increased 1.2% and Ralph Lauren (RL) eased 0.6%.
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