Canada Goose to seek $2B IPO, report says
Luxury coatmaker following steps of fellow retailer Aritzia
Less than a month after opening its first store at Yorkdale Shopping Centre, Canada Goose Inc. has chosen bankers to lead an initial public offering, according to a Bloomberg report.
Credit Suisse Group AG, Canadian Imperial Bank of Commerce and Goldman Sachs Group Inc. will lead the Toronto-based retailer’s stock market offering, according to the report, which cited unnamed sources. The sale of shares in the company could happen as soon as 2017 and Canada Goose, which is backed by hedge fund Bain Capital, plans to seek a valuation of about $2 billion, according to the report.
Representatives for Canada Goose, CIBC, Credit Suisse and Goldman Sachs declined to comment. A representative for Bain did not respond to requests for comment.
The news follows on the heels of a wildly successful IPO by fellow Canadian retailer Aritzia Inc. which raised $400 million selling shares on the Toronto Stock Exchange in October, in the largest Canadian IPO of the year.
“Canada Goose is a strong brand and they may be emboldened by the uptake of the Aritzia offering,” said Brian Madden, senior vice-president and portfolio manager at Goodreid Investment Counsel.
Aritzia’s IPO issue was oversubscribed by a factor of 10, meaning demand for the stock was 10 times higher than supply and Madden believes that reflects a dearth of high-quality, growth and consumeroriented IPOs this year in Canada.
Canada Goose was founded in a Toronto warehouse in 1957 as Metro Sportswear Ltd., specializing in woollen vests, raincoats and snowmobile suits. In recent years, it has shifted its focus to luxury consumers. The company employs more than 1,000 people worldwide, according to its website.
Bain Capital acquired a majority position in Canada Goose in 2013 for an undisclosed sum.
Dani Reiss, the company’s chief executive officer and grandson of its founder, Sam Tick, retained a minority position in the company at the time.
“One could argue that they’re at their crest in terms of their brand recognition and their brand cachet,” Bruce Winder, partner and cofounder of Toronto-based consultancy Retail Advisors Network, said in an interview.
“It’s just incredible what they can get for their jackets and there’s probably some good expansion opportunities outside of North America,” he said.
Canada Goose’s most expensive coat — which has a coyote-fur lined hood and claims to protect the wearer in temperatures below -32 C — retails for $1,500.
In May, Canada Goose announced plans to open its first flagship stores in Toronto and New York. The combined 4,000 square feet (372 square metres) of retail space are the company’s first stand-alone stores, adding to its existing online operations and concessions in 50 countries.
There were lineups outside the Yorkdale store for the first two weeks after it opened and shoppers contin- ue to line up outside the store on weekends, according to a shopping centre spokesperson.
Nonetheless, retail remains a sector facing seismic challenges, said Ryan Bushell, vice-president and portfolio manager, Leon Frazer.
“Retail is just a really fickle business. I think Canada Goose is a great brand. I just don’t think there is any retail brand — very few of them stand the test of time,” Bushell said.
“I certainly know there is going to be interest in this,” said Kathleen Smith, manager, IPO-focused exchange traded funds (ETF) for Renaissance Capital.
“This is not a bad segment to be in . . . Investors are interested in strong brands, with growth and profitability.”
She pointed to the U.S.-based Yeti Holding inc., which sells premium bear-proof coolers for more than $1,000 apiece, as an example of a luxury retailer operating with high profit margins, which is expected to draw a lot of interest in the event of an IPO.
And she thinks the Canada Goose story is even stronger than Aritzia’s.
“They need footprint, but the idea isn’t to store out the world, they’re going to be selective about where they go,” Smith said.
“You can sell these coats in a lot of different ways.” With files from Bloomberg