Canada Goose Holdings is growing faster than perhaps any other fashion brand of its scale — earning more in the holiday quarter than it did for the whole of its fiscal 2018.
But Wall Street wants more.
It’s the job of Dani Reiss, president and chief executive officer, to balance the two and as he seeks to build the company his grandfather started in 1957 into a luxury powerhouse.
The parka-maker’s third net income shot up 72 percent to 105.3 million Canadian dollars, or $79.2 million at current exchange, as sales for the three months ended Dec. 31 increased 50.2 percent to 399.3 million Canadian dollars. (The company made 11 million Canadian dollars more in the quarter than it made for all of fiscal 2018, ended in March.)
Investors zeroed in on the company’s gross margins, which inched up to 64.4 percent — an 80 basis point improvement, while some analysts looked for a gain of more than 500 basis points. That disconnect helped push the stock down 13 percent to $51.51 Thursday.
Reiss told WWD on Wednesday that Canada Goose was managing its dramatic growth and laying seeds for the future. He said the brand has more potential in its key outerwear business but also room to grow accessories, knits and, eventually, footwear following the firm’s Baffin Inc. acquisition last year.
The ceo also said the company was not overheating.
“We’re growing responsibly and I think it’s important for us…to put stores in the right locations and not compromise on that and not to open too many locations or to take the wrong locations,” he said. “One thing we don’t want to be doing is closing stores five or 10 years from now.”
Canada Goose opened five stores this fiscal year for a total of 12.
“Execution is everything, authenticity is everything — I guess there are a few things that are everything,” Reiss said, catching himself as he underscored two of the key elements of Canada Goose’s rapid growth.
Those are a couple of the key themes Reiss likes to hammer home when he articulates his vision for luxury brand superstardom. He also likes to stick to the approach that built the company, however big the public market’s expectations become.
“It has been very important to me from before we were public, to make the point that…we’re going to run this company the same way we always have,” Reiss said. “We do that, that’s how we run the business. We’re continuing to build a long-term brand with a long-term strategy.”
One of the most important growth avenues for Canada Goose is China — a tricky reality right now, given the beef between China and Canada, which detained a Huawei executive on behalf of the U.S. The tensions came just as the brand was opening a flagship in Beijing last year and worries about a potential consumer backlash hit its stock hard.
The store is now open and humming along.
“I’ll leave the geo-political commentary to the experts,” Reiss said. “We’re really happy with how things are doing in China. Our business is growing according to plan. I really, truly feel we’re just getting started. There’s so much opportunity for growth there and Chinese consumers are very sophisticated and they’re interested in brands that have depth like ours.”
Canada Goose and its brand promise of warm, functional jackets are closely tied to its home market — the idea being that Canadians know their jackets the way the Swiss know their watches.
The company is deepening that association and said it would open a second factory in Montréal, its eighth wholly owned facility in Canada. The factory is expected to create more than 650 jobs over the next few years.
“We created demand ahead of supply and we have to make sure that we can now feed that demand,” Reiss said. “And it speaks to our commitment to Made in Canada. We’re very proud to be a part of helping build the economy and create jobs in this country.”