The news
Canada Goose has absorbed the full cost of the new 50% US tariff on many Canadian goods this year and will revisit its pricing next year, CFO Neil Bowden said. For now, prices remain "intact," he added.
The company expects the tariffs to reduce its adjusted EBIT margin by about 100 basis points this fiscal year, or approximately C$15 million (US$10.6 million).
"We're not quite ready to make a determination about what that pricing will look like," Bowden said.
Why it matters: Moving stock into the US early cut Canada Goose's tariff bill for this year, but it hasn't decided what its prices will look like next year.
The details
Canada Goose limited the impact by moving goods into the US before the duties took effect in August. Its products crossed the border duty-free until mid-August.
The company had initially estimated a margin hit of less than 200 basis points.
"The supply chain and logistics teams are pretty agile," Bowden said.
The 50% duty, announced July 20, also applies to goods covered by the US-Mexico-Canada Agreement. The White House imposed it under Section 338 of the Tariff Act of 1930, citing Canada's trade practices as discriminatory toward US commerce.
The tariff covers textiles and consumer goods, among other Canadian products.
Energy, potash and goods already subject to Section 232 tariffs are exempt.
The tariff also affects one of Canada Goose’s faster-growing markets. US sales rose 10.4% to C$57.4 million in the company's fiscal second quarter. Total revenue increased 5.9% to C$274 million, but its operating loss widened to C$21.6 million from C$17.6 million, according to its results.
Comparable direct-to-consumer sales fell 7.5%.
Gross margin improved to 66.8% from 64%.
The company maintained its full-year outlook for low-single-digit revenue growth and an adjusted EBIT margin of 11% to 12%.
What’s next
Canada Goose typically adjusts prices once a year, at the start of its fiscal year in April. That gives the company until then to decide how much of the tariff cost, if any, to pass on to customers.
(Photo via Wikimedia Commons)
