Canada Goose: Will the Shares Fly South?

March 18, 2017

Canada Goose Holdings turned its $1,000 down parkas into a hot fashion item favored by rappers and movie stars. Turns out the company is no featherweight on Wall Street, either. Investors eagerly bid up Canada Goose shares after last week's initial public offering, endowing the company with a market value of $1.8 billion.

Buyers, beware.

Canada Goose (ticker: GOOS) looks richly priced at $17.23, or 39 times adjusted net income of 44 cents a share for the nine months ended Dec. 31. That's a rich valuation for a one-product company with potential fashion risk. Earnings for the fiscal year ending this month are likely to be lower than 44 cents, given a seasonably weak March quarter.

"The Canada Goose valuation is related to the scarcity of growth in consumer retail," says Faye Landes, a co-founder and general partner of Back to the Future Ventures, a New York retail consulting firm. A former equity analyst, Landes speculates that the popularity of the puffy coats with an Arctic disk logo among Wall Street types probably helped the IPO.

Canada Goose, which is 57%-owned by Bain Capital, issued 20 million shares at 17 Canadian dollars, or roughly $12.75, apiece. The stock began trading Thursday on the Toronto and New York stock exchanges.

The company's success is a spot of warmth in a chilly apparel landscape. Sales rose 41% to $264 million in the nine months ended Dec. 31. Adjusted net income increased 51% to $44 million (the company reports in Canadian dollars, which we have translated into the U.S. equivalent). The growth reflected the opening of a retail store in Manhattan in late 2016 and an increasing online presence.

Given its high prices and a dearth of discounting, Canada Goose had an outsize Ebitda (earnings before interest, taxes, depreciation, and amortization) margin of 26.2% in the nine months ended Dec. 31 -- double those of Under Armour (UA) and Deckers Outdoor (DECK), which sells Uggs boots. Its margins will come under pressure if the coats' popularity fades. Canada Goose is expanding into lighter-weight jackets and looking into fleece and footwear.

Deckers and Under Armour show the risks in apparel companies. The former has seen its shares cut almost in half to $54 since a 2014 high as sales of Uggs have flattened. Shares of Under Armour, a maker of upscale athletic apparel, sank to $18 from $45 last April as growth slowed.

Landes has no view on the stock, but says there are two questions to ask about Canada Goose: "How much can it grow given its price points?" And how long is the replacement cycle? Since the coats are so well-made, owners might wear them for a decade.

Yet the nature of faddish fashions -- and Canada Goose -- is that the coats' cachet isn't likely to last. The company might have a strong 2017, but its stock discounts many years of success -- and not much risk.

With Its Earnings Debut, Can Canada Goose Take Flight?

June 1, 2017

If there’s any way to pour cold water on a hot IPO, it’s that first-ever earnings report. Snap failed the test last month and the stock tumbled. Now Canada Goose gets its shot.

But when the company delivers earnings on Friday, it won’t just be compared to Snap and other recent IPOs. There are also the recent struggles of other clothing manufacturers and retailers to think about.

Canada Goose hopes its strong brand and product differentiation will allow it to continue to command high prices on jackets and other offerings. In the nine-month period leading up to its IPO, the Toronto-based company boasted a 19.6% operating margin, almost double that of competitors VF Corporation (the parent company of North Face) at 12.7% or Columbia Sportswear at 11.5%. Since the March 16 IPO, Canada Goose shares are up almost 13%.

The spring quarter is traditionally the weakest of the year for Canada Goose, responsible for only 8% of annual sales, so investors won’t be expecting tomorrow’s release to make or break the stock. Instead, they’ll pay attention to how the company’s new spring clothing line performed in its first season on the market.

When Canada Goose went public, it promised investors it would continue to grow its business by expanding its product offering beyond its signature $900 down parkas. Canada Goose took its first step in that direction this quarter, releasing multiple styles in new lighter wind- and rain-wear collections. The company plans to further expand its brand to include a knitwear catalogue in the fall.

Another key growth strategy for Canada Goose is to expand its geographic footprint. Almost 70% of the company’s revenue came from North America in 2016. Investors will look for indications that Canada Goose has taken steps to grow brand awareness and increase sales in Europe and Asia. Currently, the company’s best markets outside of Canada and the US are France, the UK, Japan, and South Korea. Canada Goose will seek to expand both its retail presence and e-commerce sales in markets with high future growth potential including Germany, Italy, Scandinavia, and China.

Fiscal 2017 Fourth Quarter Highlights (Compared to the prior year period, in Canadian dollars):

• Total revenue increased 21.9% to $51.1 million
• Gross margin expanded 950 basis points to 54.4%
• Net loss was $23.4 million, or $0.23 per share
• Adjusted EBITDA was $(11.4) million, an increase in loss of 49.2%
• Adjusted net loss was $14.7 million, or $0.15 per share

Fiscal Year 2017 Highlights (Compared to Fiscal 2016, in Canadian dollars):

• Total revenue increased 38.8% to $403.8 million
• Gross margin expanded 240 basis points to 52.5%
• Net income was $21.6 million, or $0.21 per share
• Adjusted EBITDA was $81.0 million, an increase of $26.7 million, or 49.2%
• Adjusted EBITDA margin expanded 140 basis points to 20.1%
• Adjusted net income increased 46.6% to $44.1 million, or $0.43 per share on 102.0 million diluted shares outstanding and $0.41 per pro forma diluted share

“I am very pleased to report a strong finish to a year that included outstanding growth and significant accomplishments as we continue to build an enduring legacy. The year marked several milestones for us: we continued our rapid top and bottom line growth, opened our first two flagship retail stores - both of which far surpassed our expectations, solidified our position as a three-season brand by introducing our strongest Spring collection yet, and began our journey as a public company,” said Dani Reiss, President and CEO of Canada Goose.

“The fourth quarter represented a strong finish to an excellent year of growth, highlighted by a 22% increase in revenue, reflecting exceptional direct-to-consumer performance, which more than offset the shift in wholesale shipments to the third quarter and drove a 950 basis point expansion in gross margin. For the year, we grew revenue by 39% reflecting strong double digit growth across all geographies, increased gross margin by 240 basis points, and delivered $0.21 earnings per diluted share and a 47% increase in adjusted net income per diluted share,” Mr. Reiss continued. “I believe our strong performance in fiscal 2017 clearly demonstrates the tremendous power of the Canada Goose brand and continued demand for our best-in-class products around the globe, as well as our ability to deliver products of the highest quality, craftsmanship and functionality. This, combined with our disciplined approach to managing the business, will be instrumental as we continue to execute our long-term growth strategy and drive increased value for our stakeholders and customers.”

Aug 10 (Reuters) - Canada Goose Holdings Inc, reported a smaller-than-expected quarterly loss as the luxury apparel retailer sold more products across its sales platforms, sending its shares up 5.3 percent on the Toronto Stock Exchange.

After a red hot debut in March, Canada Goose has been opening stores internationally and increasing its presence on e-commerce sites to meet a growing demand for its jackets and parkas.

"Many retailers are specifically asking us to accelerate shipments so they can get our product on the floor earlier," Chief Executive Dani Reiss said on a post-earnings call on Thursday.

The company's direct-to-consumer sales, which includes sales from its flagship stores and online platforms, surged more than sixfold to C$8.3 million ($6.5 million), while revenue from its wholesale unit increased 38.2 percent to C$19.9 million in the first quarter ended June 30.

Separately, Canada Goose said it would open flagship stores in Boston, Calgary and Tokyo, and is on track to open stores in London and Chicago as planned, later this year.

Sticking to its "Made in Canada" pledge, the company opened its fifth factory in Ontario in June and also said it expanded its Quebec manufacturing facility in the reported quarter.

The luxury retailer specializes in making winter apparels such as scarves, mitts, hats, gloves, snow pants, which are sold in more than 30 countries.

Canada Goose's comprehensive loss narrowed to C$12 million, or 11 Canadian cents per share, from C$14 million, or 14 Canadian cents per share, a year earlier.

Excluding one-off items, the Toronto-based company posted a loss of 13 Canadian cents per share, while analysts on average were expecting a loss of 19 Canadian cents, as per Thomson Reuters I/B/E/S.

Revenue surged 79.7 percent to C$28.2 million, well ahead of analysts' average estimate of C$17 million.

Canada Goose's shares rose as much as 7.3 percent to $25.78 on the Toronto Stock Exchange, and U.S.-listed shares increased as much as 9 percent to $20 in early trading on Thursday.

Canada Goose Plunges After Rally Leaves Investors Restless

February 8, 2018

Canada Goose Holdings Inc. tumbled the most since it went public last year as better-than-expected results failed to meet investors’ lofty expectations for the parka maker.

The Toronto-based company plunged 15 percent to C$40.87 at 9:43 a.m, erasing most of its gains for the year. Canada Goose declined to give a new annual forecast and appointed a new finance chief, which may be weighing on shares, said RBC Capital Markets analyst Brian Tunick.

“Given the run in the shares, no update to the annual outlook, and a new CFO announcement, the shares could take a breather here,” he said in a note.

The stock plunged even as Canada Goose topped estimates, as customers snatched up the made-in-Canada luxury garments at new e-commerce sites and flagship stores including London and Chicago. Sales to wholesalers fell after the company moved some shipments forward, bringing the two sales channels almost to par.

The six-decade-old company is defying the retail malaise as consumers flock to parkas that were originally designed for arctic expeditions and cost as much as $1,495. The share price had almost tripled before today since Canada Goose went public in March, as its direct-to-consumer strategy helps boost margins while it keeps adding new markets.

Profit excluding some items rose to 58 cents a share in the fiscal third-quarter ended Dec. 31, more than the highest analyst estimate. Direct-to-consumer revenue almost doubled to C$131.6 million ($105.6 million) as the company added seven e-commerce channels and five stores to its network. Overall revenue jumped 27 percent to C$265.8 million, the company said in a statement Thursday.

“Canada Goose remains one of the most compelling growth stories in our coverage as a brand adoption story as well as a product cycle story,” said Goldman Sachs analysts Lindsay Drucker Mann.

The products are so popular it’s become hard to buy them, according to research by Canaccord Genuity Corp. analyst Camilo Lyon, who raised his stock price target to C$50 from C$36 previously.

In a note published Feb. 6, Lyon said more than 50 percent of parka styles online were sold out or had one size left.

Canada Goose shares soar to a record as own stores, online drive surprise profit

June 15, 2018

* Plans to open 3 news stores in Canada
* Expects revenue to grow at least 20 pct for next 3 years
* Q4 adj shr C$0.09 vs est loss of C$0.08/sh

Reuters) - Canada Goose Holdings Inc shares surged to a record on Friday as growing sales in the luxury coat maker's own stores and online channel helped double revenues and drive a surprise quarterly profit.

The Toronto-based company reported net income of C$8.1 million ($6.17 million), or 7 Canadian cents a share, in the three months ended March 31, beating analyst expectations for a loss of 8 Canadian cents a share, according to Thomson Reuters. It posted a loss of C$23.4 million, or 23 cents, a year earlier.

Canada Goose shares surged almost 30 percent to a record high of C$78.01 at 9:32 a.m. in Toronto (1332 GMT), compared with a 0.3 percent decline in the benchmark stock index.

The maker of $900 parkas has sought to expand margins by growing its direct-to-consumer business and relying less on struggling department stores. With its luxury pedigree helping cushion it from the retail industry's struggles, the company started opening its own stores in 2016, and is setting up operations in China and Hong Kong and manufacturing more of its goose-down coats itself.

Gross margin expanded to 62.7 percent in the quarter from 54.4 percent a year earlier.

Revenue from its direct-to-consumer segment jumped to C$95 million from C$36.5 million, while wholesale business doubled to almost C$30 million in the quarter from a year earlier.

"GOOS’s better-than-expected top line and money-earning quarter in typically a smaller volume, money-losing quarter serves as another proofpoint for investors that the brand is well on its way to doubling revenues" by FY21, Brian Tunick, an analyst at RBC Capital Markets, wrote in a note.

"Despite its 60-year history, we see Canada Goose as in the early stages of its growth trajectory, particularly in the fragmented and growing premium outerwear market."

Canada Goose said revenue grew 46 percent to C$591 million in the year ended March 31, and net income jumped to C$96 million, or 86 cents a share, from C$21.6 million, or 21 cents, a year earlier.

It said it expects revenue to grow at least 20 percent and adjusted net income per share to increase least 25 percent in fiscal 2019, and expects to sustain that pace of growth for the two subsequent years.

Separately, the company said it would open three new stores in North America, adding to its seven stores across the world. It has said it plans to have up to 20 stores globally by 2020. ($1 = 1.3131 Canadian dollars)

Canada Goose quarterly profit beats estimate

Nov 14, 2018

Nov 14 (Reuters) - Luxury apparel maker Canada Goose Holdings Inc handily beat analysts' quarterly profit estimates on Wednesday, driven by a strong demand for its luxury parkas, prompting the company to raise its forecast for the rest of the year.

U.S.-listed shares of the company, which have almost doubled in value this year thanks to a pair of surprisingly good results in previous quarters, were up 12.7 percent premarket.

The high-end outerwear company now expects revenue for fiscal 2019 to grow at least 30 percent. The company was earlier expecting growth of at least 20 percent.

Canada Goose, which sells parkas starting at $900, has sought to expand profit margins by growing its direct-to-consumer business and relying less on struggling department stores for sales.

Net income rose to C$49.9 million ($37.7 million) or 45 Canadian cents per share, in the second quarter ended Sept. 30, from C$37.1 million or 33 Canadian cents per share, a year earlier.

Excluding one-time items, the company earned 46 Canadian cents per share, beating analysts' average estimate of 26 Canadian cents, according to IBES data from Refinitiv.

Revenue climbed to C$230.3 million from C$172.3 million.

Canada Goose’s troubles in China deepen as parka company delays opening of Beijing store

December 14, 2018

Luxury parka maker Canada Goose said it is delaying the opening of its first store in China, originally planned for Saturday, putting its shares on track for their lowest close in six weeks.

The delay was the latest setback for Canada Goose, which is the target of a boycott sparked by the arrest of a Chinese technology executive in Canada.

Canada Goose announced its plan to open stores in Beijing and Hong Kong in May, reaching directly to customers whose strong demand had boosted the company’s sales at department stores on the mainland and its outlets globally. It has since opened the Hong Kong shop.

Chinese customers account for more than a third of spending on luxury products worldwide, and are increasingly shopping in their home market rather than on overseas trips.

More recently, however, sentiment has soured on the mainland toward the maker of $900 goose-down coats. Chinese social media users called for the boycott of its products following Canada’s arrest of Huawei Technologies Co. Ltd.’s chief financial officer.

Meng Wanzhou, also the daughter of Huawei’s founder, faces U.S. allegations that she misled multinational banks about Iran-linked transactions, putting the banks at risk of violating U.S. sanctions. A Canadian court granted her bail on Tuesday.

Some media reports have linked a slump in Canada Goose’s shares and the delay of its Chinese store opening to reprisals against the company by mainland customers for her arrest.

Earlier this week, the hashtag “Canada Goose share plunge” became the second-most trending topic on the Twitter-like Chinese microblogging website Weibo with 1.15 million mentions, after Chinese media reports on how the Huawei dispute had hammered the company’s shares.

Faux Canada Goose $5 iron-on patches are used by scammers to fake $1,000 coats

Jan 31, 2019

Canada Goose got its feathers in a ruffle after a cheeky vendor on eBay started selling $5 iron-on patches that mimicked the famous logo on the company’s $1,000 coats.

“Like many world-leading brands, our success has led to our products being copied by counterfeiters,” the company told MarketWatch in a statement. “We take the protection of our brand and our trademarks seriously, and we will continue to take the necessary steps to protect consumers from the dangers of counterfeit goods.”

The patches have since vanished from eBay’s website — though whether this was as a direct result of action by eBay EBAY, +1.69% or Canadian Goose was unclear.

Yet as of Friday a different vendor, from China, continued to offer similar products.

As our photo shows, the fake patches weren’t identical to the company’s logo, but they were pretty close… especially for about 0.5% of the price.




Canada Goose which today has a market value of more than $7 billion, built its reputation making heavy-duty down-filled “Expedition Parkas” for scientists working in Antarctica.

Now it calls itself “one of the world’s leading makers of luxury apparel,” and during the winter months its distinctive logo can be seen on coats in the richest and most fashionable neighborhoods of temperate world cities.

It has flagship stores in New York, London, Tokyo, and even steamy Hong Kong. The company said that last year it made $580 in gross profits on every $1,000 in sales. Stock in the Canadian-based company has quadrupled in value since joining the U.S. stock market last year.

Canada Goose Falls After Beating Earnings Estimates, Lifting Guidance

Feb 14, 2019

Shares of Canada Goose Holdings Co. were rising Thursday after the jacket-maker reported better-than-expected quarterly earnings and raised guidance.

The stock was up 4.75% to $62 a share in premarket trading, and then fell at the market's open 5.56% to $55.90 a share.

Adjusted earnings per share for the fiscal third quarter came in at 96 cents, beating analysts' estimates of 81 cents. Net income was C$107.2 million. Revenue was C$399.3 million, beating Wall Street expectations of C$359.7 million.

"In our peak selling season we continued to deliver when and where it matters most, while also strengthening our foundation for future success on the global stage." said Dani Reiss, president and CEO.

Canada Goose raised full-year 2019 revenue guidance to a year-over-year percentage increase in the mid to high 30% rang, up from a prior forecast for the year of a 30% increase in revenue.

"Fiscal 2019 is shaping up to be another year of impressive results," Reiss said. The company's EBITDA (earnings before interest, taxes, depreciation and amortization) margin is expected to increase by 150 basis points in 2019 from 2018. EPS year-over-year percentage growth is expected to be in the mid- to high 40% range, up from an initial forecast of 40%.

The company also said it plans to open another factory in Quebec. As capacity in the plant grows into 2020, Goose expects to employ a total of 650 people.

Canada Goose says labor costs hit profit margins, shares dive

February 14, 2019

Feb 14 (Reuters) - Luxury coat maker Canada Goose said higher labor costs in Ontario and investments to expand overseas hit profit margins in the third quarter, driving its shares down 9 percent on Thursday.

The Toronto-based company's results also came as data showed U.S. retail sales recorded their worst drop in more than nine years, suggesting a sharp slowdown in economic activity at the end of 2018.

Those worries overshadowed news of Canada Goose's better-than-expected earnings in the quarter ended December and a stronger outlook for full-year revenue.

Profit margins at the company's direct-to-consumer business, which includes online stores and company-owned retail outlets, were 76.1 percent, compared with 76.5 percent a year earlier. At its wholesale unit, margins fell to about 48 percent from 51 percent.

Higher labor costs affected the wholesale unit more because that business has lower profit margins, Chief Executive Dani Reiss said on a conference call with analysts.

Ontario, Canada's most populous province, raised minimum wages by 21 percent to C$14, an increase that went into effect in January last year.

"Despite a clear path to revenue growth, channel level gross margin declines raise questions about future upside and whether shares are priced for perfection," analyst Simeon Siegel of Nomura Instinet said.

Canada Goose has so far weathered a broader retail slowdown in North America thanks to its premium tag and brand value. Its high-end parkas range from anywhere between $500 and $1,700 in the United States.

Canada Goose expects to have about 20 brick-and-mortar stores around the world by 2020.

The company now expects revenue growth of at least 35 percent in the year ending March, compared with an earlier forecast of a 30 percent rise, as it bets on the overseas expansion.

Its December-quarter revenue climbed 50 percent, while net income surged to C$103.4 million from C$63 million a year earlier. Excluding one-time items, Canada Goose earned 96 Canadian cents per share, beating analysts' average estimate of 81 Canadian cents, according to IBES data from Refinitiv.

May 29 (Reuters) - Canada Goose Holdings Inc posted its slowest revenue growth in eight quarters that also missed estimates, sending shares of the luxury coat maker down more than 10 percent before the bell.

The miss comes as the company builds its retail operations to rely less on struggling department stores, and has been pushing into China and other areas to expand footprint beyond its home market.

The parka maker, which started opening its own shops three years back, now expects to open up to 20 brick-and-mortar stores around the world by 2020.

Revenue rose 25% to C$156.2 million ($115.65 million) in the fourth quarter ended March 31, below analysts’ estimates of C$156.8 million, according to IBES data from Refinitiv.

Cost of sales in the quarter rose 15.4%, while overall expenses surged nearly 40%.

The company’s net income rose to C$9 million, or 8 Canadian cents per share, from C$8.1 million, or 7 Canadian cents per share, a year earlier.

Excluding one-time items, the company earned 9 Canadian cents per share, well above analysts’ estimates of 6 Canadian cents.