Canada Goose announced its plans to reduce its corporate workforce by approximately 17%, joining a trend of downsizing retailers due to decreased consumer spending.
A Realignment of Corporate Resources
The exact number of employees affected by the layoffs remains unspecified. Still, as per a securities filing, the cuts were said to impact personnel at Canada Goose's corporate headquarters, which had around 915 employees as of April 2023. Over the two years from April 2021 to April 2023, the company nearly doubled its corporate head office staff from 544 to 915 to facilitate its continued growth, according to the filing.
In a statement on Tuesday, CEO Dani Reiss announced a team realignment to optimize corporate resources for the company's next phase of growth across various regions, categories, and distribution channels.
The Lukewarm Consumer Demand
In an interview with WWD in February, Reiss characterized the consumer environment as lukewarm, similar to other brands serving cold-weather enthusiasts. Canada Goose's sales were affected by unusually warm temperatures in the U.S. during the past winter season.
READ ALSO: Nike Pointing to a Weaker Consumer Demand, Axes 1,500 Jobs in a Broad Restructuring
Canada Goose's Cost-Saving Measures
In a statement on Tuesday announcing the layoffs, Canada Goose emphasized its intention to invest in brand enhancement, design, and operational excellence. The company stated that the realignment would result in immediate cost savings, streamline organizational structure, expedite decision-making, and enhance efficiencies across its operating platform. It plans to integrate cross-functional teams and align business activities with its forward strategy. He added that while downsizing was a tough choice, it was necessary for the company's future and thanked departing employees for their contributions and for being part of Canada Goose.
Canada Goose will disclose its full quarterly and annual results for the fiscal year ending March 31 during its May earnings call.
Ongoing Wholesale Sales
During its fiscal third-quarter results announcement in February, the company noted ongoing declines in wholesale sales, partly attributed to unseasonably warm weather at the beginning of the season. Wholesale sales for the quarter dropped by 28.5% to 81.8 million Canadian dollars, while direct-to-consumer sales through the brand's website and retail stores increased by 14.2% to 514 million Canadian dollars.
Canada Goose shares concluded the day approximately 7% lower.
In the three months ending on December 31, Canada Goose experienced a 6% increase in sales compared to the previous year's period. However, these results fell below analysts' expectations, as reported by LSEG, formerly Refinitiv. Canada Goose highlighted weak wholesale revenues in its holiday-quarter results, a persistent trend several other retailers have also encountered.
Several retailers, such as Under Armour and Nike, have recently reported sluggish wholesale orders, attributed to department stores' efforts to manage inventories and address declining consumer demand.
Canada Goose's layoffs follow a series of widespread layoffs announced by companies including Nike, Macy's, Wayfair, Hasbro, and Etsy over the past few months, aiming to enhance efficiency and prioritize profitability amid reduced consumer spending on discretionary items like clothing, shoes, and toys.
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