Friday 19 October 2018

Investor: Market could warm to long-term Canada Goose opportunity

 

Model Jodie Kidd at Canada Goose’s 60th anniversary event in London. Photo: Getty Images
Model Jodie Kidd at Canada Goose’s 60th anniversary event in London. Photo: Getty Images

Aidan Donnelly

If you were out and about around Christmas, you could have been excused for thinking that Ireland had moved closer to the Arctic. This was not just due to the weather - but also because of the number of people walking around in fur-lined parka jackets.

In some cases, these sported a badge with a red, white and navy emblem that told you that you were looking at a Canada Goose jacket.

The roots of Canada Goose were as a private-label manufacturer of vests, wool jackets, and other outerwear in the 1950s and '60s. Over the years, the company has been on a transformational journey. That journey included becoming a serious third-party manufacturer (producing clothes for Eddie Bauer, LL Bean, Lands' End and Timberland), to becoming a branded parka jacket seller under the 'Snow Goose' brand. That brand became 'Canada Goose' in the '90s.

Today, Canada Goose has established itself as a global performance-driven aspirational brand which is vertically integrated both for the supply chain and increasingly through its ecommerce-led direct distribution model. The company's marketing proudly stresses the 'Made in Canada' message - a key distinction to consumers globally.

The Canada Goose brand is closely associated with 'warmth' among consumers, known for its use of superior materials (utilising superior real down filler, best technical fabrics, real fur and wool, and so on) and its attention to manufacturing detail. While its outerwear products are designed for the coldest and harshest conditions on earth, Canada Goose has been successful in driving the popularity of its products across key global cities where consumers increasingly have been willing to pay premium pricing for the warmth and aspirational status associated with the brand's products. This popularity has also been helped by some clever product placements in US prime time television programmes and celebrity endorsements.

Although it started as a men's brand, the company has transitioned successfully to a broader dual-gender, three-season outerwear assortment with more than 200 garments. While heavy-duty parkas still represent the vast majority of its merchandise mix and unit sales, consumer demand has allowed the company's designers to extend its craftsmanship and authenticity to new categories. Chief executive officer Dani Reiss serves as the gatekeeper to ensure that all new opportunities are carefully considered and that short-term gains are not put ahead of the longer-term opportunity to build an enduring brand.

It is not just at the product level that changes have been seen: recent years have seen a shift to a more direct-to-consumer model, led initially by an ecommerce offering and latterly by the rollout of dedicated retail outlets.

The company opened its first two retail stores in late 2016 in Toronto and in the SoHo neighbourhood of New York City, and followed these up in 2017 with stores in Chicago, Boston, Calgary, and London, leaving many opportunities for more locations over the next several years.

Since debuting on the New York and Toronto stock exchanges in March 2017, the share price has more than doubled, leaving many to wonder if this goose risks the same fate as Icarus.

But the brand uniquely blends performance and fashion, supporting an aspirational positioning with limited direct competition and a substantial long-term market opportunity - so time will tell.

Aidan Donnelly is head of equities in Davy Private Clients. For disclosures, visit www.davy.ie/AidanDonnelly

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