Below is a note written by Retail analysts Brian McGough and Daniel Biolsi.
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The reality is that the magnitude of the guide down for 4Q largely assumes that China all but evaporates for GOOS. That might well be the case, but the company also reset numbers due to weakness in the core – which can partially be attributed to a warmer than expected winter, which is fair. In the end, the ~$1.35 in EPS set by the company seems doable, which is the first time in nine months I can confidently say that about a GOOS quarter. Do I still have concerns that the company will ultimately prove to be unable to navigate the transition to a business where better than 50% of sales come from its non-parka business? Absolutely. Over a TAIL duration, I think there’s risk to management’s margin targets. And it will be all the more reason for me to revisit the name in the future Short Side. Hedgeye TREND resistance is up at $37.95. Furthermore, we think there's diminished likelihood of a fundamental miss in 4Q (and higher probability of a beat). |
Click here to read Retail analyst Brian McGough's original report on Canada Goose in which he lays out the intermediate-term and long-term thesis.
