Estee’s shares slipped 21 per cent to reach a more than six-year low of $102.22 while Canada Goose’s stock lost 10 per cent
Estee Lauder and Canada Goose Holdings, on Wednesday cut their annual forecasts as the luxury goods companies struggle with weak demand in high-growth market China.
Estee’s shares slipped 21 per cent to reach a more than six-year low of $102.22 while Canada Goose’s stock lost 10 per cent.
Global firms ranging from L’Oreal to LVMH have signalled that inflation and economic turmoil are curbing a post-pandemic spending spree, mainly in the world’s second-biggest economy China.
Luxury firms have also flagged a hit from Beijing’s tighter controls of “daigou” resellers – people who purchase items at lower prices overseas and resell them at a discount in the country.
They are very exposed to the daigou trade and are also big beneficiaries. The Chinese authorities have clearly cracked down on these bigger trades and it might have fundamentally changed the trade from here, said Javier Gonzalez Lastra, luxury-focused portfolio manager at Tema ETFs.
Canada Goose, whose luxury parkas retail for more than $1,000, said sales in China declined in Q2 from the previous quarter, while Estee has grappled with a weaker-than-expected rebound in demand from fliers in Asia, mainly in travel destinations like Korea and China’s Hainan province.
Canada Goose’s Chinese business has not gone back to what they would have expected at this point, said Cole Smead of Smead Capital Management. The people selling the stock today are just saying in the interim they do not think it is going to recover anytime soon.
Smead Capital owns Canada Goose shares in its International Value portfolio.
Estee indicated that a resetting of inventory in Asia travel retail is expected to extend until the end of Q3 of its financial year 2024.