Canada Goose Warms Up The Market


Image source: Flickr

What's going on?

Luxury coat maker Canada Goose went “public” on Thursday (i.e. it completed a so-called IPO by listing its shares for trading on stock exchanges) – and its stock price immediately jumped over 25%! (tweet this)

What does this mean?

About 35 years ago, a mom ‘n’ pop apparel company in Toronto sold its first “Snow Goose” designer winter jacket made with premium Canadian goose down feathers. Today, its $900 winter parkas are taking the affluent world by storm. In the meantime, the company has massively grown its annual revenue from $5 million in 2001 to $150 million in 2013, when a big chunk was bought by Bain Capital (a major investment firm) at a reported $250 million valuation. By the end of trading on Thursday, Canada Goose was valued at almost $2 billion! That’ll keep ‘em warm.

Why should I care?

The big picture: The IPO market is heating up.

Snap Inc. became a public company a few weeks ago in a high profile $24 billion IPO. Canada Goose isn’t quite as valuable, but there was clearly high demand from investors for its stock. Other IPOs have taken place this year and more are likely on the way. This shouldn’t really be a surprise: with stock prices near record highs, private companies are keen to get in on the action.

For the stock: Investors see differences between Canada Goose and other retailers.

It’s been a rough year for many retailers (cough, cough… Under Armour, Tiffany’s and others), so it’s noteworthy that investors are snapping up Canada Goose’s shares. The company’s profits are growing (although more slowly than they used to) and it directly sells a growing proportion of its own clothing (particularly online). But to maintain its growth, it will likely need to shake up what it sells to consumers (you’re not going to buy a new Canada Goose jacket every winter) and it’s not certain that it will be able to do this effectively, given its distinctly winter-y brand appeal.

Originally posted as part of the Finimize daily email.

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