Rating its debt for the first time, Moody’s gave Canada Goose a B1 corporate family rating and a B2 rating to a proposed senior secured loan of 402 million Canadian dollars (€258m-$300m) due in 2027, nearly half of which would be used to add cash to its balance sheet and the rest to repay existing loans. The rating agency said the company benefits from a strong brand and a good debt/Ebitda leverage of 3.3 times for the financial year ending in March 2021, which could rise to 4 times within 18 months. The company will also benefit from good liquidity of more than C$665 (€495m-$427m) after the transaction, strong margins and growing geographic diversity. On the downside, Canada Goose is constrained by its “narrow and discretionary luxury product, which is subject to volatile trends and economic downturns,” its small-scale seasonal business, social concerns around its use of animal products, the negative impact of the coronavirus pandemic and “risks with its majority control by private equity.” Moody’s gave a “stable” outlook to the company’s business, predicting “meaningful improvement” in the fiscal year ending in March 2022 and subsequently, although it will continue to be impacted this year by the coronavirus epidemic.
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