The Goose Takes Wing -

The Goose Takes Wing

Mar 14, 2017Jeremy ParkinsonFinance0

This week we have the IPO of Canada Goose (NYSE:GOOS). If you live in NYC or Boston you can’t help but notice that everyone seems to be wearing these parkas.

How does a company that’s been around since 1957 suddenly make such an impression? Here are a few facts to know about the company and the deal that we pulled out of the GOOS IPO roadshow transcript:

Until recently GOOS was a private-label maker of down-filled outerwear for other brands.

The third generation CEO came in and decided to capitalize on the “authenticity” of the company and create their own consumer brand. They would be the “Land Rover of clothing.”

They have had great success in doing so by leveraging their heritage and “Made in Canada” operating model. Their coats have also been worn by some of the rich and famous and appeared in TV shows and popular films. They took a page out of the early Under Amour (UA) playbook.

Management claims that by building up a massive supply chain it would be “nearly impossible” to replicate their capabilities.

Despite all the “like owning a piece of Canada” rhetoric they decided to make gloves and hats offshore and their new knitwear line will be made in Europe.

The brand has a plenty of international expansion opportunity. They are only partially present in the US and have nearly greenfield opportunities in many other countries around the world.

Margins are expanding thanks to the direct-to-consumer business which has grown from nothing to $100M or about 25% of total sales. This part of the business will dominate growth, further expanding margins.

The company is launching their first casual knitwear collection this fall. For the first time they will be a multiple season clothing maker.

Business is highly seasonal now with 75% of revenues in Q2 and Q3. Wholesale orders are made in advance giving management strong visiblility.

Over time they expect to open more of their own stores (14 to 16 more in the next few years) and continue to build their e-commerce revenue.

A large chunk of the IPO proceeds will be used to pay down debt and give the company the flexibility to grow and make capital investments.