The rock and roll artist was in the city on Saturday and had his photograph taken wearing the coat at the Always in Vogue clothes shop.
After store employee Darren Halloran posted the photo on social media, a response on Stewart's Facebook page says he didn't check what the jacket was made of and was irritated the photo was being displayed.
"Rod has since been very upset to learn that the shop has been using this image as an advertisement for an industry that he does not know much about and certainly does not support," says his Facebook page.
"Rod went there to play music and as always had an absolute blast performing to the people of Canada."
Watson says he thinks Stewart's explanation was prompted by criticism from his fans.
"It might be popular to say you support the seal hunt in Newfoundland, but it isn't very popular anywhere else," he said Thursday in a telephone interview from France.
Watson wrote a commentary on Stewart's decision to wear the coat on Facebook, going so far as to rewrite the lyrics to his song "Do Ya Think I'm Sexy?" to reflect the controversy surrounding the seal hunt.
Halloran says he regrets he didn't tell the star more about the political controversy and he didn't intend to cause problems for Stewart by posting the picture.
"We didn't do it for publicity and we apologize he had to go through this right now," he said.