From humble beginnings, Sam Tick founded Metro Sportswear Limited in a small warehouse. In 1957, he created vests, snowmobile suits and raincoats. By 1970, the well-established Canadian business changed direction with the son-in-law David Reiss taking over.
Venturing forth the new machine that could load down quickly became the basis for the enterprise. Metro changed to Snow Goose and eventually to Canada Goose Holdings. When scientists got media attention in the 1980s doing exploration around the Antarctic McMurdo Station the public noticed the parkas. Also, the parkas traveled to the top of Mount Everest at nearly the same time.
By the 1990s, the grandson Dani Reiss of Sam Tick joined and by 2001 becomes president. His “Made in Canada” campaign caught on. The decade of 2000 proved to be a stellar time for the company. The company became socially responsible and responded to the needs of polar bears in the Far North supporting a bevy of charitable organizations.
It found 50 people who embodied its value system and brought back the idea of adventure to the public’s mind. Getting recognition globally by the expedition, it built brand awareness so that in 2011 they won the “Best Back Country Jacket” from Outside Magazine. The path widened.
Global headquarters opened in 2014 in Toronto and like the 1970s, the company increased its capacity to manufacture its products. This decade using a distinctive logo with the colors blue, white and red, this manufacturer has now given a global perspective to its product lines. Still known as Canada Goose Holdings, its fur-trimmed parkas filled with down of feathers have become part of the wintry urban landscape on the bodies of teenagers in many of the world’s cities.
The firm lists headquarters in Toronto Canada still, but Bain Capital of Massachusetts mostly owns Canada Goose Holdings (TSX: GOOS) now with stocks in NASDAQ.
Company structure
Canada Goose is now considered a successful international clothing brand that specifically makes outerwear for women, children, and men. The operation does direct to consumer sales and wholesale. Its direct to consumer sales use an online website to sell products in North America, Europe, and Asia. The wholesale division distributes to individual shops, specialty stores, department stores, and international distributors.
In recent years, Canada Goose opened brick and mortar facilities. In 2016, Motley Fool reported the opening of its retail store in Yorkdale Mall in Toronto, and New York City in the U.S. Then the company added flagship stores in Montreal, Vancouver, Boston, New Jersey, and Chicago. It continued to open stores globally by placing units in London, Tokyo, Beijing, and Hong Kong. By 2020 the company aims to open a total of 20 flagship stores.
Stock
The physical facilities created a stir with its public relations campaigns. So, Canada Goose did an initial public offering in March 2017 with a dual listing of TSX and NASDAQ. For six months the company expanded its top line by nearly 40 percent but winter gives way to spring and summer. So, sales declined since the business flourishes during cold weather. In other countries, the marketing campaigns built brand awareness and the word-of-mouth of purchasers fueled more sales than normal during the off-season.
Experts suggested for the company to get the most value to target geographical distribution to tweak the new business model. The experts believe due to when the stores opened the data has not shown an accurate portrayal of value. At that point, the analysts recommended it as a buy in stock. Even into November 2018, analysts classified it as a growth stock. The stock managed earnings per share of 52.4 percent. With a long-term growth rate of 31.3 percent, it makes a possible long haul stock.
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Today
Moving forward to today, the news about Canada Goose Holdings has shown some dinks as the retail and company structure changes to reflect its public offering status. A downgrade from Wells Fargo to market perform sent a signal that the stock may have become overvalued. Weather dependent the milder winter may have slowed sales. The stock could also merely be a victim of the December 2018 stock market shake-up.
The downgrade did cause a loss of 7.3 percent when announced. It took the Canada Goose stock from $80 to $68. The analyst, however, hinted that the firm most likely would recover. The stock has strong multi growth stories, but the space the brand goes in has a choppiness to it. The firm did open a brick and mortar facility in China during the USA and China tariff war. That speaks volumes about whether the company can handle pressure while countries fight about trade issues.
Presently, due to the retail sells as in the normal January discounts in retail plus the December volatility in the markets, a sell-off occurred in the retail sectors. Canada Goose Holdings became oversold. With the major polar vortex gripping Canada and most of North America, outerwear will sell and drive the stock back up. The company expanded its product line with wool knitwear offering an opportunity to increase product sales. Knitwear allows consumers to buy warm clothes for the Arctic-like weather to use as a layer under clothing.
Future
As with all things seasonal and as the weather warms, the company with all its new flagships needs to develop a few more products for its portfolio. SeekingAlpha reported Canada Goose Holdings shifting to direct to consumer and creating an international presence makes it a good buy. That revenue stream continues to increase. Seeking Alpha suggested sustainable topline growth possible for the company.
Using the query box on Google Trends shows Canada Goose needs to do much more market penetration in the U.S. Black Friday in November 2018 showed a 2,400 percent increase to their ad campaign for the holiday season with queries looking for “Canada goose sale” and “Canada goose.” So consumers have a high interest in a high-end retail product of this type.
Conclusion
Busy with all the flagship buildings caused a public awareness of the product line. Cold weather not seen in decades helps the product’s brand awareness develop further. What the company does now with its marketing to the regional and global markets will drive the stock. Retail remains a tight space and Canada Goose Holdings will have to fly on its own without the weather’s help to support.