Eight analysts have raised their EPS forecasts for this outdoor apparel company in the past 30 days.
Canada Goose Holdings Inc. (GOOS)
From Canaccord Genuity Research
Canada Goose Holdings Inc. (GOOS) reported superb FQ2 results with EPS of 29c beating our consensus estimate of 21c. The beat was broad-based across sales, gross margin, and SG&A. Revenue of C$172M (+35%) beat our estimate of C$155M (+21%) while gross margins expanded +416bps, nicely above our +370bp estimate.
Both wholesale and DTC revenues contributed to the top-line beat as wholesale sales were up 24% vs. our 14% est. and benefited from $13M of demand that was pulled forward. This pull-forward of demand is a true testament to the strength of the brand and commensurately strong sell-through rates at retail, particularly at a time during the quarter when weather trends were not favorable to typical cold weather categories.
DTC revenue was also strong (+269% vs. our +172% estimate) beating by C$5.3M. Inventory, up 8% vs. 35% sales growth, looks to be lean and will be a source of questioning on the call. SG&A also delivered by 290bps less than our estimate due to the strong revenue growth. A lower tax rate also helped by 2c.
In no uncertain terms, GOOS is executing at a high level as the brand continues to expand its category offering (launched knitwear this quarter), retail presence (new retail store openings), and geographic representation (launched country-specific e-commerce sites across Europe), all of which are contributing to the company’s evolution into a lifestyle brand.
Given these robust results, the company raised its full-year 2018 outlook. Guidance now calls for revenue growth to be up at least 25% vs. mid-high teens previously, adj. EBITDA margin to expand at least 50bps vs. flattish previously, and EPS to be up at least 35%.
Our C$34 price target is based on an average of 50x our F2019E EPS, 27x EBITDA, and DCF. In our opinion, GOOS is the best retail growth story in our coverage. We reiterate our BUY rating.
Camilo Lyon and Pallav Saini, Canaccord Genuity Research, www.canaccordgenuity.com, November 9, 2017