Goldman Sachs downgraded Canada Goose to “Sell” from “Neutral,” citing challenges in the competitive landscape and concerns over slowing brand momentum and luxury spending overall.
“We see a less attractive risk/reward relative to other companies in our brands and apparel sector for GOOS, driven by an increasingly competitive category backdrop, signs of normalizing brand momentum and engagement, and a slowing global luxury backdrop and a choppy China macro,” analysts led by Brooke Roach said Monday in a note. “While we are constructive on GOOS’s strategic initiatives, including product capsules from new creative director Haider Ackermann and management’s focus on improving retail execution, we believe the majority of these potential benefits are already embedded in expectations.”
Roach noted that conditions in the luxury space have decelerated in the third quarter from the second quarter with slowing tourist spending in Japan, softer domestic China trends, and no signs of a significant rebound in U.S. luxury shopping behavior in the sector. The analyst wrote, “While we see opportunity for some improvement following recent fiscal stimulus measures in China, we remain cautious on the level and magnitude of potential improvement possible for the brand amidst a competitive backdrop where other outdoor brands are gaining significant share.”
Specific to Canada Goose, Roach wrote that Goldman’s team has seen more pressure in relative brand momentum metrics in recent months. Combined with broader macro pressures, Goldman sees “slower growth and a tougher path to margin expansion ahead” for Canada Goose.
Roach further noted that Canada Goose is one of the few brands in Goldman’s coverage universe expecting a “sharp increase” in comp growth to support second-half guidance. The analyst sees “more limited room for outperformance “ despite potential tailwinds including easier weather comparisons in November and December this year and potential strong response to select new product launches.
Goldman trimmed its estimates to C$1.05 from C$1.13 for the current fiscal year, to C$1.17 from C$1.24 in FY26; and to C$1.27 from C$1.37 in FY27. Twelve-month price targets were lowered to C$13.00/U.S.$9.00 from C$16.00/U.S.$11.50. On the New York Stock Exchange Monday, shares of Canada Goose fell 79 cents to U.S.$10.45.
Roach said, “We would look to become more positive on the stock if the company is able to drive a sustainable reacceleration in brand momentum, especially in its core North America business (US and Canada), which would help deliver stronger comp growth and better profitability for the company overall.”
Image courtesy Canada Goose
