Markets Warm Up to Canadian Coats: Canada Goose Holdings

Canada Goose Holdings was started in 1957 by entrepreneur Sam Tick under a sportswear company known as Metro Sportswear Ltd. It specialized in woolen vests, raincoats and snowmobile suits. However, the company came to be known as Canada Goose Holdings as much as 20 years later. Since then, it has risen to both national and international acclaim from its production of high-end apparel specializing in winter coats.

The company filed to go public on February 15th this year. Afterward, the company amended its F-1/A form to go public on March 10th. It expected to sell 20 million shares at the price range of $10.40 to $11.88 a share. Canada Goose went public on March 15th when it sold its shares at $12.63 each, a price well above the expected range. The luxury clothing company raised a revenue of $253 million from the new release.

Underwriters for the company’s issuance included CIBC, Credit Suisse, Goldman Sachs, RBC Capital Markets, BofA Merrill Lynch, Morgan Stanley, Barclays, BMO Capital Markets, TD Securities, Wells Fargo Securities, Baird, Canaccord Genuity and Nomura Securities. An additional 3,000,000 shares were available as an overallotment option for these participants. The firm currently has over 1,500 employees and is based in Toronto, Canada.

The firm made its debut on trading floors under the ticker GOOS on March 16th. On its first day trading, the company’s stock saw an upsurge of 27 percent in the Toronto Stock Exchange, closing the day at C$21.53. As a result of the increment, the business was valued at $1.72 billion at the day’s end.

Canada Goose has drawn increasing popularity from high-value individuals, who do not mind flaunting the company’s $900 coats in public. As a result of various celebrities donning this firm’s luxury wear, it has received a lot of indirect advertising such as in movies, music videos, and social gatherings. As such, the demand for the enterprise’s products has increased giving it higher returns over time. In its offering, the firm’s backer Bain Capital maintained its majority stake in the company.

In line with this company’s success, its products are sold in retail stores, e-commerce sites and via catalogs. The company currently has a clientele base spanning 36 countries. Over the period from 2014 to 2016, the firm experienced an increase in revenue up from C$152 million to C$290.8 million. This resulted in a Compound Growth Annual Rate of 38.3 percent. The industry’s recent success has also stemmed from higher sales in US markets than its Canadian base for the 2016 fiscal year. Also, Canada Goose had margins that increased by over 10 percent from 38.6 percent three years ago to 50.1 percent in 2016. As such, it has had consistent growth in the past few years.

The company plans to broaden its principal markets from the United States and Canada using its proceeds. However, a challenge is posed towards its expansion as the line will require diversifying its high-end clothing types to suit various markets; parkas cannot be worn everywhere. Further, investors have put up the question of how relevant the brand will be over the long-term, which could affect its profitability in future.

This firm’s new issuance is just a stepping stone to later milestones. More work will be required from them with time.