Adding Pieces
Marco Marchi’s conglomerate Eccellenze Italiane adds Blumarine parent.
With an arctic surge setting cold-weather records from Texas to Maine, Dani Reiss was in his element on Wednesday.
“This is ‘Goose weather indeed, I love it,” said Reiss, president and chief executive officer, Canada Goose Holdings Inc., which reported second-quarter results that showed continued strength in top- and bottom-line growth.
Reiss has turned his family’s manufacturing business into a leader in the luxury outerwear category by first and foremost making parkas that keep one warm even when temperatures dip below freezing, as was the case, for instance, in parts of the Gulf Coast.
Many of the parkas on the brand’s
U.S. web site sell for about $1,000.
Still, there’s a deeper vein of even higher-priced cold-weather gear for
Canada Goose to mine. The company relaunched its get-it-before-its-goneforever Branta line of one-off styles that commands higher prices — $2,595 for the Viedma 4-in-1 coat featuring Loro Piana wool and a print inspired by Diane Burko.
But just how high Canada Goose can go remains to be seen.
Competitor in the cold, Moncler, sells styles like long down jackets for $2,550 and higher for some designer collaborations.
Reiss told WWD in an interview that Canada Goose will remain “a functionfirst brand” but that “the category is growing” and “there is opportunity for us to increase prices over time and that’s obviously a positive thing for us.”
That’s another growth avenue for the brand, which is expanding in China, developing newer categories such as knits and footwear, taking a bigger piece of the wholesale market and building its own stores.
The company, which reports results in Canadian dollars, said its fiscal second quarter net income rose 21.4 percent to $60.6 million, or 55 cents a diluted share, from $49.9 million, or 45 cents, a year earlier. Revenues for the quarter ended Sept. 29 increased 27.7 percent to $294 million. In Asia, revenues nearly doubled to $48.9 million. And sales in the U.S. increased by 38.5 percent on a constant currency basis to $87.9 million.
“Our brand power has never been stronger than it is today,” Reiss said.
That doesn’t necessarily make everything about the company’s operations easy or straight-forward.
Canada Goose has two stores in Hong Kong, and like other brands with a presence in the city, its business has been hurt by the massive protests there. The company also said wholesale partners placed their orders early this year, helping drive revenues in the area up 22.9 percent. However, that will also lead third-quarter wholesale revenues to a midteen decline.
While many retailers that sell outside brands have been struggling mightily, Canada Goose is gaining.
“We are growing within our existing [wholesale] footprint and we’re growing with our partners and we’re going deeper with better,” Reiss said. “That’s the crux of our growth in wholesale. Demand is driving growth.”
But investors seemed spooked
— whether by the impact of Hong Kong, the shift in timing on wholesale, costs to keep expanding or the fact that the company didn’t boost its outlook for the year, as it did with second-quarter results for the past two years.
Shares of Canada Goose rose sharply in premarket trading Wednesday only to reverse course after the opening bell. The stock traded down 10.8 percent to close at $34.81 in trading on the New York Stock Exchange Wednesday.
Wells Fargo analyst Ike Boruchow noted: “Today marks the fourth consecutive quarter that Canada Goose has sold off following earnings. We believe the market continues to digest the evolving dynamics in wholesale, while viewing the company’s current inventory levels as added risk down the road — though management continues to feel very good about the size and composition of inventory. All in, while we acknowledge the brand continues to exhibit strong growth and visibility into ongoing global expansion, until we see signs of greater stability at wholesale we will remain sidelined.”
Reiss, for one, took the swing in stride. “The stock market does what the stock market does,” he said. “We focus on the long term.”