Trying to replicate the commercial and financial success of Moncler, the Canadian brand of down-filled outerwear has filed applications to go public on the stock exchanges of New York and Toronto. While the pricing has yet to be determined, Canada Goose Holdings indicates that it considers its worth at around $2 billion, as it would like to raise between $200 million and $300 million through an initial public offering (IPO) of between 10 and 15 percent of its shares, which could take place as early as next month.
Its prospectus notes that it has been recording annual average growth rates in the last three years of 38.3 percent in revenues, 85 percent in Ebitda and 196 percent in net earnings. In its latest financial year, ended on March 31, 2016, its revenues went up to $291 million, generating an indicated gross margin of 50.2 percent and net income of $146 million. In the nine months through Dec. 31, sales jumped by 41.7 percent to $352.7 million, as compared to the same period of 2015, and net income rose by 26.3 percent to $45.1 million.
Founded in Toronto in 1957, Canada Goose is run by Dani Reiss, grandson of its founder, who owns 30 percent of the shares. Since the end of 2013, the balance of 70 percent has been in the hands of Bain Capital, which is charging a consulting fee to Canada Goose and plans to keep majority control after the IPO.
At the time of the takeover, observers speculated that the Canadian company was worth about $900 million, or five to six times its estimated 2012 revenues. Interestingly, Bain obtained a major capital gain when it reportedly sold its stake in Jack Wolfskin in 2005 for €93 million, after acquiring it for €42 million three years earlier.
Famous for its coyote-fur hoods, Canada Goose has been developing more strongly in the fashion segment of the market than in the sporting goods and outdoor retail channels lately, particularly in Western Europe. The strategy resembles that of Moncler and Woolrich, which was recently taken over by its European licensee.
In its prospectus, Canada Goose warned that its image and its sales may be endangered by animal welfare activists who are against the use of coyote fur and goose and duck feathers in its clothing. It also admitted that it had some accounting problems in the past, and that they may persist.
According to the prospectus, Canada Goose sees major opportunities for further development in terms of product, public recognition, direct-to-consumer sales and geographical expansion. On the product side, it wants to “selectively” broaden the range beyond its expensive winter jackets into categories like knitwear, fleece, footwear, travel gear and bedding, in tune with its functional down heritage.
More products will be offered for the warmer months of the year. Canada Goose has just launched a campaign under the “Chance Nothing” tagline to promote its Spring 2017 collection, which features new styles of outerwear and five new proprietary materials. It offers multiple layers and is designed to withstand heavy rain, high winds and unexpectedly cool temperatures.
The U.S. represents about one-third of the turnover for the brand, but Canada Goose feels that it is largely underpenetrated, considering that it has a brand awareness of only 16 percent south of the Canadian border, versus 76 percent north of it. Its products are sold in 35 other countries. They have been well received in Japan and Korea.
The brand is sold in every major Western European market. It is particularly strong in the U.K. and France, and it wants to expand especially in Germany, Italy and Scandinavia in the near term. Canada Goose launched e-commerce in the U.K. and France last September. It is in the initial phases of setting up shop-in-shops in partnership with wholesale clients in both countries, and it wants to set up a directly managed retail presence there in the near future, as it recently did in Toronto and New York City.
The opening of a selected number of additional retail locations in major metropolitan centers and premium outdoor destinations around the world is part of the business plan. Online sales represented 11.4 percent of the company's sales last year, and the company wants to open transactional websites in other parts of the world.
The IPO will be managed by the Canadian Imperial Bank of Commerce, Credit Suisse, Goldman Sachs and RBC Capital Markets.