Affected by the Meng Wanzhou incident, Canada Goose cancels the opening of its first store in Mainland China tomorrow

2022-10-03 06:02

Author | Chen Shu

The Canadian Goose, whose stock price has been rushing since its listing last year, may have unexpectedly encountered a sudden crisis when it was preparing to make further efforts in the Chinese market. Some analysts pointed out that the opening plan of the first store in China has been slim in the near future. .

Affected by the arrest of Meng Wanzhou, the daughter of Huawei’s founder , some investors worried that Chinese consumers might be dissatisfied with Canadian brands in the future, and even launched a boycott. Last Thursday, Canada Goose, a company listed on the New York Stock Exchange (GOOS.US) )’S stock price plummeted 8.44%, and closed by 6.64% on Friday. It fell further by 1.25% this Tuesday. In the past four trading days, the market value has evaporated by more than US$1.5 billion and more than RMB 10 billion.

Some people in the industry said that if it enters the Chinese market smoothly, China will be a new growth point for Canada Goose, but all of this has begun to become confusing. Earlier, the Italian luxury brand Dolce & Gabbana was boycotted by the people for its "humiliating China video", which made investors more vigilant about similar incidents. Bloomberg also believes that the cost of channel expansion and market differences will be the risks faced by Canada Goose in the future.

Although it was born in 1957, it has only been nearly a decade for the Canadian goose to take the world by storm. After all, in 2001, the company's sales revenue was only US$3 million, but it is now more than 100 times that of the time. According to public information, Canada Goose has been selling its products through wholesalers in the past. It has only started to open self-operated stores in 2016. At present, it has established independent regional official websites in Canada, the United States, the United Kingdom and France, and plans to continue in 2020. Seven European regions including Germany, Sweden, the Netherlands, Ireland, Belgium, Luxembourg and Austria launched official e-commerce websites, eventually expanding the retail network to all parts of the world.

According to statistics from Fashion Headlines, thanks to its aggressive expansion strategy, Canada Goose’s sales in the three months ended June 30 this year surged 59% year-on-year to US$44.7 million, with a gross profit margin of 64%. Among them, brand revenue from wholesale channels increased by 8% to 21.5 million U.S. dollars, while sales in direct retail channels soared 180% to 23.2 million U.S. dollars.

In addition to investor doubts, Canada Goose also faces criticism of social morality. According to CNN's earlier report, Woodchurch High School in the north of the United Kingdom issued a new policy that explicitly requires students to prohibit the use of high-end winter coats such as Moncler or Canadian goose. Principal Rebekah Phillips explained that this is to eliminate the pressure faced by students from poorer backgrounds. It is reported that the regulations will be implemented after the Christmas holiday ends.

With the awakening of consumer awareness, whether the clothing worn comes from a supply chain with corporate ethics has also begun to become more and more important. At the end of 2016, a group of animal protection organizations launched a protest at the entrance of the Canadian Goose's SoHo flagship store in the United States, calling on consumers to pay attention to animal rights and distributing some ironic leaflets. Design a trap for the wolf’s fur or directly knock the wolf to death.

In November last year, a video published by PETA, a US organization for the protection of animals for the good, showed that a supplier of Canadian goose down put the geese in a narrow cage before slaughtering them at a farm called James Valley Colony Farms. Some geese died from squeezing and suffocation, and then transported to the slaughterhouse. At the end of the video, PETA called on consumers to boycott Canadian goose products.

Previously, Canada Goose CEO Dani Reiss had made it clear that as the world's most potential luxury consumer market, China will provide many opportunities for the development of Canada Goose and hope to establish brand relationships with Chinese consumers.

It is worth noting that Canada Goose repeatedly mentioned the importance of the Chinese market in its financial reports. In May of this year, Canada Goose announced that it would cooperate with Alibaba Group to set up an office in Shanghai. In terms of online business, the brand has entered Tmall under Alibaba Group and currently has nearly 300,000 fans. According to the report "2009-2018 Tmall Double 11 Decade Insights: The Coming of the New Consumer Era" released by Alibaba a few days ago, the Canadian Goose, which has recently opened a store on Tmall, easily broke 10 million transactions in one hour. On October 16, Canada Goose opened its first store in Greater China in Hong Kong, and it is currently the only directly-operated store in the market.

As for the expectation for the next fiscal year in 2019, Canada Goose is very optimistic that its annual revenue will increase by at least 30%, and the adjusted net income per share will increase by at least 40% annually. However, the Canadian Goose is currently experiencing "a cold winter."

Whether the criticism of public opinion will affect Canada Goose and whether the brand can continue the explosive growth in the future has become the focus of attention. This also makes the industry always vigilant about the "third hand" that affects performance, that is, the impact of social factors on the brand.Compared with changes in the economic situation, social and cultural changes are often difficult to record in a quantitative manner, and are therefore easily ignored by decision-makers. But in fact, as a social phenomenon, the destiny of luxury goods is closely related to changes in social psychology.

As of the close of the stock market yesterday, the Canadian Goose (GOOS.US) share price continued to plummet 6.37% to US$54.69 per share, and its market value has fallen below US$6 billion.

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