Shares of Canada Goose Holdings (GOOS) stock were up more than 7% in the pre-market Thursday morning following the release of quarterly earnings.
Canada Goose posted beats on both the top and bottom lines, with earnings per share of C$0.96 beating expectations by C$0.15. Revenues increased 50.2% year over year to C$399.3 million, beating Wall Street estimates of C$360.13. The company also raised revenue guidance for 2019, which are in-line with expectations.
So, why is the stock down?
Canada Goose’s direct-to-consumer gross margin fell from 76.5% to 76.1% year over year, which is largely attributed to a rise in minimum wage, creating higher manufacturing costs. The company’s wholesale gross margin also saw a decline, down from 51% to 47.7% due to changes in how products are produced in combination with the increased labor costs.
Canada’s Ontario province raised the minimum wage last year to C$14.00, which is an increase of 21%. The gross margin declines have left investors hesitant about the company’s future upside potential.
GOOS stock is currently trading at $52.02 as of 3:45 PM on Thursday, Feb 14, a drop of -$7.17, or -12.11% from the previous closing price of $59.19. GOOS stock has traded between $51.17 and $59.94 so far today. Volume today is elevated. So far 15,385,552 shares have traded compared to average volume of 2,315,426 shares.
Stock Score Report, InvestorsObserver’s proprietary scoring system gives GOOS stock a score of 66 out of a possible 100. That score is based on three component scores. A fundamental score of 81, a long-term technical score of 65 and a short-term technical score of 53.
Our proprietary system combines short and long-term technical factors, Wall Street’s opinion, and other fundamental factors into an overall score that measures a stock’s suitability for investment.
The major indices are mixed. The NASDAQ has gained 0.29% to 7,441.82. The S&P 500 is down -0.05% to 2,751.67. The Dow Jones Industrial Average has fallen -0.15% to 25,504.45.
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