Canada Goose: Kate Upton and a Fashion Favorite

12/21/2017 5:00 am EST

Focus: STOCKS

Tyler Laundon

Editor, Cabot Small-Cap Confidential

The story behind Canada Goose (GOOS) begins in 1957 with a Polish immigrant making cold-weather workwear out of a Toronto warehouse, notes Tyler Laundon, editor of Cabot Small Cap Confidential.

He then branched out to Europe and established a loyal customer base of dog sledders, arctic researchers, petroleum engineers and other people who frequently found themselves exposed to the harshest environments.

Fast forward about 50 years and you begin to find celebrities wearing the company’s jackets, which, for some models, retail for $1,000 or more.

Then Kate Upton was featured on the cover of the 2013 Sports Illustrated Swimsuit Edition wearing a white Canada Goose jacket and things really took off. The clothing, which is extremely well made, became as much a status symbol as a way to stay warm.

Analysts like the story because Canada Goose has been rapidly expanding its direct-to-consumer (DTC) business, which adds significant revenue above and beyond the more established wholesale channel.


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The company has also been opening its own retail stores, and introducing additional products (including knitwear) in its stores, which should further diversify revenue into the shoulder seasons.

When the company reported Q2 results on November 9, it trounced analyst expectations with revenue expanding by 35% and EPS of $0.29 beating by $0.08. Management said it had opened e-commerce sites in all seven of the planned market expansion sites, and was on track to have seven retail destinations open by the end of the year.

Wholesale revenue was up 24% (88.2% of total revenue) while DTC revenue was up 269% (to 11.8% of total revenue). After those results, analysts increased their outlook for next year to reflect 22% revenue growth and 26% EPS growth. GOOS is one of my best idea among Canadian small caps.

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