Canada Goose is an apparel and outerwear company based out of Toronto, Canada. They make stylish down jackets, winter garments, and assorted accessories. They’re not as popular as The North Face or Patagonia due to their availability and significant price (their popular items range from $300 up to over $900), but they still sell millions of dollars in product under the Canada Goose Brand
As of March 16th, Canada Goose is a publicly traded company. They filed for IPO, were listed yesterday on both New York and Toronto Stock Exchanges, and can now be bought for a little under $17 a share as of this writing. Given the fact that their price increased by 25% in the first day, it’s safe to say that their stock is pretty in demand.
But should you invest in the trendy outerwear company? More importantly, what are the company’s financials like, and why did they go public in the first place? Let’s take a look.
Canada Goose went from private to public to raise $256 million.
Unlike Snap Inc. ($SNAP), which recently went public, Canada Goose ($GOOS) is profitable. They made $291 million in revenue last year and a $27 million profit, which was up significantly from previous years. The company, however, has nearly $300 million in debt. Raising money will help them pay down their debt, expand across the United States (a major customer), and increase brand recognition. The company could also develop new products that make sense for their outerwear, outdoorsy brand.
Sales of Canada Goose in America are over $100 million, but they could be higher.
The company’s jackets are pretty trendy in America. In fact, their product sales are higher in America than Canada as of last year. Unfortunately, they’re not really well known outside of fashion-conscious consumers. By going public and raising money, the company could increase their marketing budget, production of jackets, and where those jackets are sold. There are many potential customers who are likely willing to pay a premium on a stylish, fashion-forward jacket. They just don’t know that the company exists or where to buy their product offerings.
Investors are excited for the success of the company, but they have two big problems ahead of them.
Investor sentiment in the $GOOS stock is fairly high, much more so than $SNAP. This means that new investors are positive about the future of the company, especially since they’re profitable. Many investors believe that they will grow to be a much bigger brand than they are now. The company, however, relies heavily on selling their merchandise in retail stores, and the U.S. retail market is currently seeing significantly less foot traffic. If foot traffic dwindles across all retail stores over time, Canada Goose could possibly see a decrease in their U.S. sales.
Then there’s the problem of activists like PETA, who’ve paid increasing attention to the brand for their use of fur. Though the company hasn’t had a problem selling expensive jackets with fur-lined hoods, anti-fur activists are becoming more vocal of the company’s practices that could lead to dog fur ending up on their jackets. Such claims could become a PR nightmare for the company, especially if they’re trying to attract more people to their brand.
Should you invest in Canada Goose? The company hasn’t been public for more than a couple of days, so their stock is highly volatile and its price is changing rapidly. Yet if you think the company’s popularity and profitability will only help them increase in value, you might want to do your research and invest now while the stock price is relatively low. If you think they’ll be plagued by the problems other fashion houses are currently suffering, however, you’ll want to invest elsewhere.