Canada Goose Holdings Inc. plotted its China expansion at an unfortunate time, but the coatmaker's chief said there's nothing he can do about it.
Diplomatic tensions between Canada and China arose in December, due to the arrest of a Chinese telecom executive in Canada, which prompted some Chinese websites to call for a boycott of Canadian brands. Canada Goose opened its Beijing flagship store just a few weeks later — right before Apple cut its sales forecast, sparking worries about consumer spending in the critical Chinese market.
"We leave politics to the politicians," Canada Goose's Chief Executive Dani Reiss said Thursday. "We're really happy with our Chinese business plan and the way we plan to approach it. It's been executed really well."
Investors are less optimistic, perhaps because of wider macroeconomic problems back in the U.S., one of Canada Goose's largest markets. Retail stocks tanked Thursday after the U.S. Department of Commerce released data that showed sales fell unexpectedly in December — so much, in fact, that some analysts are questioning if the report's right.
Canada Goose shares were dragged down, falling as much as 9.8 percent, even though it boosted its forecast for the year and global sales beat analyst estimates, rising 50 percent last quarter.
Canada Goose began its move into China last summer, planning to open a regional headquarters in Shanghai in addition to flagship stores in Beijing and Hong Kong. The maker of down jackets and parkas fit for arctic temperatures has been looking for new paths for growth since going public in 2017.
Luxury brands have been flocking to China, choosing to serve those valuable shoppers directly in their domestic market to mitigate exposure to ever-fluctuating tourist flows. U.S. luxury labels such as Coach and Ralph Lauren are opening more stores in China, too, and local demand for handbags and high-end spirits have fueled growth at French conglomerate LVMH in recent months.