Canada Goose Holdings forecast current-quarter sales below Wall Street estimates on Thursday due to choppy US demand, taking the shine off of upbeat first-quarter results driven by a rebound in China and sending its shares down 7 percent.

Demand for luxury goods in China has recovered sharply after the country lifted its Covid-19 restrictions.

Revenue from Canada Goose’s Asia Pacific segment jumped 52.2 percent to C$24.5 million in the first quarter that ended July 2, building on a 65.4 percent surge seen in the previous quarter. This was boosted by the return of tourism in China, leading to strong growth in key areas like Macau and Hong Kong.

However, even as Canada Goose expects the momentum in Asia to continue, finance chief Jonathan Sinclair said the outlook reflected a “more challenged consumer backdrop” in the US.

Luxury firms have seen their sales taper in the US over the past few months, as a post-pandemic splurging spree by wealthy shoppers - which had led to stellar results in prior quarters - starts to sag amid still-high inflation, rising interest rates and worsening credit conditions.

That has knocked results at many sector players, including luxury powerhouse LVMH and Ray-Ban sunglasses maker EssilorLuxottica.

Canada Goose forecasted second-quarter revenue of C$270 million to C$290 million, below estimates of about C$298.5 million. It sees an adjusted net loss per share of between 24 Canadian cents and 17 Canadian cents, compared with estimates for a profit of 6 Canadian cents.

“I think (the forecast) is conservative, and it makes sense ... because of the volatility that we still have going on in the market, particularly in the US,” Jessica Ramírez, senior research analyst at Jane Hali & Associates, said.

First-quarter revenue rose 21 percent to C$84.8 million ($63.44 million), beating Refinitiv estimates of C$75.4 million. Adjusted loss of 70 Canadian cents per share was also smaller than a loss of 86 Canadian cents expected by analysts.

By Deborah Sophia in Bengaluru; Editors Milla Nissi and Shinjini Ganguli

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Canada Goose Caution on US Eclipses Upbeat Annual Sales Forecast

Canada Goose Holdings Inc on Thursday struck a cautious note on its business in the United States as luxury spending cooled in the market, overshadowing an upbeat annual sales forecast driven by a recovery in China and sending its shares down about 11 percent.