When the U.S. slapped 50% tariffs on many key imports from Canada in July, Canada Goose took action.
The company worked hard to get its products into the U.S. before the new duties became effective just a month later, Neil Bowden, CFO of the Canadian luxury apparel maker known for its parkas, said in an interview Thursday.
The effort enabled the Toronto-based company to mitigate the impact of the new tariffs, because the goods crossed the border duty free until mid August, he said. “The supply chain and logistics teams are pretty agile,” Bowden said.
The fancy footwork also helped to reduce the new U.S. tariffs’ expected impact on the company’s EBIT margin to 100 basis points or about 15 million Canadian dollars ($10.6 million), he said. The company had estimated the duties would have an impact of less than 200 basis points, Bowden said on the company’s fiscal Q2 earnings call Thursday.
What the company has yet to do, he said, is raise prices subsequent to the new U.S. duties because it typically only adjusts prices once annually, at the beginning of its fiscal year in April. For the time being, Bowden said the prices have remained “intact” and the company has absorbed the full impact of the tariffs this year.
“We will obviously, as we normally do, revisit pricing next year,” Bowden said. “We’re not quite ready to make a determination about what that pricing will look like but certainly a factor is, what does the consumer environment look like and how much of these tariffs are really going to stick.”
The company may need to consider is how much higher they can push prices: Some models of the brand’s luxury down coats for women are currently priced from about $950 and into the $1,700 range on Nordstrom’s website.
Beyond the parka
The tariff issue is just one of the moving parts Bowden has navigated since becoming CFO of the company in 2024. An alum of the Big Four firm KPMG, Bowden joined Canada Goose more than a decade ago. Over that time, he has presided over the finance team of a company that has sought to expand its brand beyond the signature luxury black parka.
Bowden, who said he tried to lead with both data and heart, feels tremendously fortunate to be at the company while noting the challenge is finding the path to realize the potential of the powerful brand.
While there’s a lot of awareness about Canada Goose parkas and the company’s lightweight down and vests, he said the company is now selling T-shirts, knitwear and rain gear that make people think of Canada Goose year-round.
The company has also broadened the channels that it sells through. “When I got here 10 years ago we were all wholesale, mostly North American and a narrow product category, primarily parkas,” he said. Now its own stores and e-commerce channel account for a big chunk of its revenue.
Headwinds and hope
But the company also faces some headwinds beyond tariffs. In the most recent quarter ended Sept. 27, its revenue rose 5.9% from the year-earlier period to 274 million Canadian dollars, it reported on Thursday. At the same time, it reported an operating loss of 21.6 million Canadian dollar which is wider than the 17.6 million loss in the year-earlier period, citing higher SG&A expenses partially offset by higher gross profit.
Wells Fargo analysts led by Ike Boruchow said the company’s results during the second quarter were mixed. “While mgmt reiterated FY plan, continued softness into October (with warmer weather delaying seasonal purchases) puts more pressure on execution during the critical holiday season,” the analysts wrote. Gross margin “gains provide some support, but flow-through remains a key risk against softer sales and rising tariff exposures.”
No matter the country it is selling in, Bowden believes tariffs will be a part of the industry reality that the company must manage. He’s not banking on any easing of the tariffs, but noted that the U.S. Democratic sweep of the midterm elections on Nov. 3 could provide an opening for an easing of the duties.
“Net net; maybe we’re hopeful,” he said. “But I don’t think we really can control that so our focus is on what we can control, which is inside the walls of our business with our people, and our perspective is we need to run the best business possible and the politicians will do their thing and we’ll respond to that as they impact us.”
