Canada Goose is plunging after saying it expects 'materially larger losses' this quarter

AP/Mark Lennihan

• Canada Goose shares plunged early Wednesday after the company reported mixed fourth-quarter and fiscal-year 2019 results.
• The company's fourth-quarter sales came in lower than expected, and the company said it expected "materially larger losses" during its fiscal first quarter.
• That forecast came partly as a result of more stores operating during off-peak periods and higher corporate investments to support growth, the company said.
• Watch Canada Goose trade live.

Canada Goose plunged 16% early Wednesday after the company reported mixed fourth-quarter and fiscal-year 2019 earnings results.

The Toronto-based company's fourth-quarter revenue fell short of expectations, and the luxury-outerwear maker said it expected "materially larger losses" during its fiscal first quarter.

That forecast was due in part to a larger number of stores operating during off-peak periods and higher corporate investments to support growth, the company said.

The planned growth includes "local market activation" ahead of planned retail openings, new products, and operations in Greater China. Canada Goose opened its first mainland China location late last year in downtown Beijing.

"I believe that we are still just scratching the surface of our long-term potential as we continue to define performance luxury globally," CEO Dani Reiss said in a statement.

Here's what Canada Goose reported for its fourth quarter compared with what analysts polled by Bloomberg were expecting:

• Revenue: 156.2 million Canadian dollars (158.9 million Canadian dollars expected)
• Adjusted earnings per share: 0.09 Canadian dollars (0.04 Canadian dollars expected)
• Adjusted EBITDA: 20.4 million Canadian dollars (17.7 million Canadian dollars expected)

Investors appeared unimpressed that the company's net income rose nearly 50% between fiscal 2018 and fiscal 2019, to $143.6 million Canadian dollars.

Another bright spot in the report was that Canada Goose posted double-digit sales growth in every geographic region it tracks, with revenue rising by 28.2% in Canada, 36.3% in the US, and 60.5% in other regions.

Canada Goose shares, which trade on the New York Stock Exchange and the Toronto Stock Exchange, have surged more than 280% since going public in March 2017. But they've slipped in recent months even as the broader US stock market has recovered much of its losses from the late 2018 sell-off. Shares have fallen 31% since hitting an all-time high in November.

"We believe the weakness in the stock price is unfounded," Susquehanna analyst Sam Poser told clients last month.

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