Canada Goose, the maker of trendy $900 parkas, soared to new heights as it debuted as a publicly traded company on stock exchanges in Canada and the United States.
On Thursday, Canada Goose’s stock most recently traded at $16.58 on the New York Stock Exchange, about 8% below the opening price of $18 apiece. Shares also debuted on the Toronto Stock Exchange, where the company’s price-to-earnings valuation is higher than all other luxury goods companies. The stock is trading under the symbol GOOS on both exchanges. Private-equity firm Bain Capital, which acquired a 70% stake in Canada Goose in late 2013, will continue to own a controlling interest after the IPO.
Founded 60 years ago in Toronto, Canada Goose has won over celebrities, athletes, film crew workers and even scientists as a specialist in selling expensive cold-weather outwear pieces that feature prominent logo patches that say “Canada Goose Arctic Program.” The company’s revenue totaled $290.8 million in fiscal 2016, up from $152.1 million two years earlier. Roughly two-thirds of sales are derived from Canada and the U.S. Brand awareness is strongest at home, where 76% of those surveyed are aware of Canada Goose. The company sees potential to grow in foreign markets.
Even in the U.S. where it has made the most inroads, there is more work to do. Brand awareness in that market stands at only 16%. Canada Goose has sought to tackle the U.S. region more aggressively via a national e-commerce that launched in 2015 and by opening a retail store in New York City late last year. It says there is large white space in other regions, including the Midwest and Pacific Northwest. More broadly, Canada Goose wants to expand wholesale distribution by adding new stores and getting more volume at existing retailers. It also wants to accelerate e-commerce sales.
One of the greatest challenges Canada Goose may face is diversifying a brand that is today mostly known as a purveyor of expensive winter parkas. Canada Goose already warned in IPO filings that warm winters could pressure sales for the company’s bulky jackets. To help lessen that business risk, the company will have to try to develop other apparel and accessories where the Canada Goose brand makes sense.
But efforts to expand into other product categories aren’t guaranteed to take flight. Plastic shoe maker Crocs (CROX) and handbag maker Vera Bradley (VRA) are among the consumer brands that have struggled to find white space outside their core product lines. Others, like yoga-inspired Lululemon Athletica (LULU), have had more success diversifying.
Another unusual business risk: animal-rights activists. Because Canada Goose’s products include animal products including goose and duck feathers and coyote fur, People for the Ethical Treatment of Animals (PETA) and others lament the brand’s business practices. That can result in protests outside stores and noise on social media.
Few IPOs are comparable to Canada Goose, according to IPO ETF manager Renaissance Capital, as it is a branded apparel distributor and not a strict apparel retailer like Lululemon Athletica (LULU) or Gap (GPS). Italian-based luxury outwear maker Moncler is most similar. It enjoyed a 43% IPO pop on the first day of trading back in 2013, an unusually stellar debut for a European listing and also giving Moncler the best showing on the continent that year.