Investing.com -- Goldman Sachs downgraded Canada Goose to Sell from Neutral on Monday, citing challenges in the competitive landscape and concerns over slowing brand momentum.

The firm highlighted several factors that contributed to the downgrade, pointing to a "less attractive risk/reward" compared to other companies in the apparel and retail sector.

"We see a less attractive risk/reward relative to other companies in our brands and apparel sector for GOOS," said Goldman Sachs.

The firm noted that Canada Goose faces an increasingly competitive environment, with early signs of normalizing consumer engagement and a broader slowdown in the global luxury market.

Additionally, "a choppy China macro" has further weighed on the company's outlook, adding to the challenges.

Although Goldman acknowledged some positive aspects of Canada Goose's strategy, such as new product initiatives under its creative director and a focus on retail improvements, the analysts believe these efforts are already reflected in the company's guidance.

"While we are constructive on GOOS's strategic initiatives, including product capsules from new creative director and management's focus on improving retail execution we believe the majority of these potential benefits are already embedded in guidance," said Goldman Sachs.

Goldman Sachs also expressed caution about the broader apparel market ahead of the third-quarter earnings season, noting that weather disruptions and geopolitical uncertainties, including U.S. election impacts, could create volatility.

However, looking into 2025, the firm sees potential for a healthier retail outlook driven by falling gas prices, improving consumer discretionary cash flow, and a more balanced inventory environment.

Goldman is focused on companies that offer compelling value through innovation, new products, and strong margins. For now, though, Canada Goose does not fit the profile for the bank.

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