2xing + Saving Canada Goose from Itself

🧠 The Takeaways

Today we’re taking Canada Goose private for $2.5B to get them back to growing after 3 stagnant years.

1. Invest heavily in bleeding edge Chinese Shopping trends to master what’s coming.

2. Fund creators for extreme climate and weather content to reinvent product placement.

3. Replace the Luxury Hotel robe with Canada Goose jackets to get product in customers hands.

+ The Coco September Update.

LBAB! Community - The Coco September Update

September returned to steady state performance as the major summer sales period came to an end. 

Now, it’s all about scaling up for holidays.

Product:

We released Dynamic Discount Codes + and new onboarding, making it easier to connect to WhatsApp.

Growth:

We hit the sales forecast but fell just short of the Sales target. 

I need to bang harder on socials to drive more pipeline + do a better job of showing why Coco is so different from the other players in the space.

Financials:

Are in a good place. We are making some considerable investments in Success + Growth heading into holidays. We are consistently Net Income positive for the 5th straight month.

Let’s Examine This Biz

Note: As always, none of what follows is legal, tax, investing, financial, or any other sort of advice. And I was never here.

Canada Goose (The Luxury Down jacket biz) is bouncing along, trying to find out how to grow as Climate change changes consumer purchasing trends.

• Share price: $14.61

• Market Cap: $1.9B

• L5 Performance: -55%

• P/E Ratio: 19x

This biz is losing its way trying to become an all-year brand. It’s time to look inwards and figure out how to get the growth engine firing again.

Financial Summary

2024 Financial Statements (YoY Comparison)

Sales: $1.3B (+1%) 😟
Gross Profits: $943m (+3%)  👍
OPEX: $815m (+3%) 😐

Net Income: $103m (+78%) 😍

Link to Company’s earnings

TLDR Analysis:

• Sales flatlined for the 3rd straight year. 😟

• COGS decreased, leading to higher Margins. 👍

• Net Income exploded after cleaning up their books. 💪

The perfect ex of why a great biz with poor prospects can have their stock get killed. Canada Goose is a great biz. $1B in Sales, kicking off $100m in Profits/yr. 

But they don’t have a growth story. 

And if they don’t grow, people won’t invest more. 

They have a lot of the pieces to get back to growth but need to overcome some serious macro headwinds and refocus on who they want to be. 

Patagonia is a great ex of the brand Canada Goose could become with better long-term direction.

Let’s Save This Biz

Here are my 3 moves to save Canada Goose.

1) Lean Aggressively into Chinese Shopping Trends

For the last decade, the major innovations in eCom shopping have all come out of Asia (mostly from China).

Canada Goose has hit peak Luxury branding. Specifically in China: 

• 32% of their total Sales (#1 market)

• 28 retail locations (Most Stores)

They’ve started running tests with live shopping on Douyin (China’s TikTok) and are attributing sales growth to that activation.

It’s not easy for a 68-year-old brand to be at the bleeding edge of trends, but to restart growth, they have to find the most compelling ways to convince young Chinese shoppers to spend $2k on a coat.

The real value is in mastering those trends before they come to the West.

Canada Goose has the:

• Retail Footprint

• Brand Halo + Stable of Influencers

• Customer Love/Aspiration

To ride a major technological wave + re-ignite growth.

Takeaway: China is the frontier of modern shopping.

2) Become Climate Doomsday Huckberry

Canada Goose wants to be seen as the cool-kids-streetwear brand. They already have thousands of creators showing off their products in at-home try-on videos. 

But they need to be pushing the conversation here, and the content they create is way off the mark.

Their only YT video from the last 12 months that’s broken 5k views is their new ad unit. The rest are clawing to 1-2k views.

Insane for a brand doing $1B/yr in Sales.

And these videos make you truly ask WTF is going on over there. Some of them even have major celebrities (e.g., Ethan Hawke or Influencers). 

Let’s strip this to the basics:

1. If you want to target cool, hip, young kids -> Focus on Climate change.

2. YOU’RE THE G*D DAMN CLIMATE CHANGE COMPANY.

3. MAKE CONTENT ABOUT CLIMATE CHANGE.

The #1 organic video when searching “Canada Goose” in YT starts with how they became a mega hit brand by placing themselves in the middle of a doomsday climate movie (The Day After Tomorrow). 

I hope you see where I’m going with this.

• Create more Climate Awareness and Doomsday climate content. 

• Sponsor up-and-coming Content creators to go to the harshest- / most climate-affected areas + create content (wear the product -> create anything that’s engaging).

The 2020’s version of product placement in the Day after Tomorrow = product placement in a 20 min YT video.

• Deepens brand alignment toward climate change

• Targets what young people care about

• Perceived luxury -> CG jackets can handle anything

Takeaway: YT is the modern home of Product Placement.

3)  The Canada Goose Luxury Resort Rental

Partner with/sell to major luxury resorts, e.g., Ski resorts. 

When a guest runs to their car or wants to pop onto their balcony, they can throw on a Resort-provided Canada Goose.

Basically, replace the Hotel Robe with a Hotel Canada Goose.

Resorts can decide whether to charge for the service.

Why would they do this?

It’s another service + premium touchpoint showing “they truly thought of everything” to make customers’ stays as pleasant as possible.

Resorts could also charge guests if they don’t return the jackets at the end of their stay, just like robes 

Plus, if they buy the coats wholesale from Canada Goose and charge above MSRP when guests don’t return the product, there’s some decent margin for them.

For Canada Goose, they have the perfect in market “trial” where customers can experience their products. Knowing they are targeting the right consumer.

The Luxury Skiers have multiple expensive winter coats. 

Instead of building an incredibly expensive retail footprint in 1 of the best core markets where customers use their products (their current strategy), they can leverage Resorts’ massive real estate footprint for distribution.

Takeaway: Always find ways of getting your products in customers' hands where they use it.

Final Thought

What is the next major market? 

For the past 20 yrs, China has been the vast new market to conquer for major American/Western brands, as NA + EMEA have become more saturated.

But now that China’s becoming more saturated/challenging for Western brands, where do those brands go next?

Canada Goose is feeling the pain of those dynamics. 

There is more growth for them in China, NA, & the EU, but those markets won’t be the big sexy opportunities they need to print huge growth numbers.

I believe there’s a shortlist of countries that it could be, but they are all going to be a challenge for American brands to expand into:

GDP/Capita is taking a country's entire GDP (Size of economy) and dividing it by population to show how big the economy is on a per person level.

These are a fraction of the US’s current $88k GDP/capita, but in 2000, China’s GDP/capita was $959. Today it’s $12,600, and we’ve seen how enormous of a market that has created.

• India’s at a similar pop scale. 

• Indonesia + Bangladesh have sizable, fast-growing pops and are already well ahead of China’s $959 GDP/ Capita

The US + China will still be massive markets, but the innovators will start moving into these new markets to try to catch the next meteoric rise.