Five Reasons Why Canadian Goose Is Favored

According to the world clothing shoes and hats net, Canada's light luxury outdoor brand that just appeared in March this year.

(Canada goose) quickly became one of the most attractive companies in the North American stock market.

Recently, a number of financial institutions including Royal Bank Of Canada (hereinafter referred to as RBC), Montreal Bank (Bankof M Ontreal) and Wells Fargo (Wells Fargo) all gave an optimistic rating to the Canada Canada stock in the report. They are very optimistic about the future of this outdoor oriented Canada Company.

In a April 10th report, Brian Tunick, a stock analyst at RBC, said: "although Canada Goose has a history of over sixty years, they are still in the initial stage of growth."

His stock rating for Canada Goose is "Outperform (win win)", the target price is 25 Canadian dollars (about 18.76 U.S. dollars) per share.

Ike Boruchow, an analyst at Wells Fargo, has a "big win" rating for Canada Goose, with a target price of 25 to 26 yuan (18.74 to 19.49 dollars).

John D.Morris, a retail analyst at Montreal bank, also gave the same "Outperform win" rating for Canada Goose in his report, while the target stock price reached 28 Canadian dollars (about 21.01 dollars) per share.

Simeon Siegel, an analyst at Instinet, an electronic trading system operator, said Canada Goose did have a lot of room for development, but the stock rating he gave was neutral. He thought that the current market value of US $1 billion 350 million had fully reflected their growth potential.

Canada Goose was officially listed on the New York stock exchange and the Toronto stock exchange in March 16th. The stock code is "GOOS", and the final price of IPO is 17 yuan (US $12.78) per share.

In pre trading, Canada Goose's shares surged 40%, eventually opening at a price of $18 per share.

But then prices fell slightly, closing at $16.25 on Thursday at four p.m. local time, up 27.2% from IPO.

(see the report: Canada Goose shares are officially listed, the stock price has risen 27.2% on the first day). By the end of April 10th, the stock price of Canada Goose on the New York stock exchange was US $16.80 per share, which was 31.5% higher than that of IPO.

Canada Goose's share price chart since its listing

RBC said in the report that at present, the environment of clothing retail and wholesale market is very low, but if any company can perform well under such pressure, it must be Canada Goose.

In these analysts' reports, five main reasons why they are optimistic about Canada Goose can be summarized.

Canada Goose currently has only two separate stores, located in New York and Toronto.

The company plans to increase the number of stores to 13 to 18 in the next three years and eventually increase to 50.

The average number of Canada Goose competitors is 77, so RBC believes that considering the huge demand for Canada Goose products, 30 to 50 stores are a very reasonable figure.

Schematic map of Canada Goose growth plan for stores in the next few years

Canada Goose is now available in four countries around the world.

The websites are Canada, Britain, France and the United States.

So they still have huge potential for online sales, and the proportion of online sales in 2017 is expected to increase from 11% in 2016 to 20%.

RBC predicts that by 2021, the number of Canada Goose's e-commerce sites will increase to 21.

Despite the expansion of physical stores, the average sales per store may decline. RBC thinks that Canada Goose will be able to make up for the increase in online sales.

By 2021, the proportion of online sales is expected to increase to 24%.

RBC also mentioned that online sales will provide Canada Goose with consumer needs and

Customary and more intuitive information helps to improve overall sales performance.

Many investors worry that the downturn in the department store industry in North America may have an impact on the wholesale business of Canada Goose.

RBC said that although the year-on-year growth rate of wholesale sales may slow down, taking into account the positioning of Canada Goose luxury and the potential of expansion, Canada Goose should be able to keep the wholesale channel's year-on-year growth rate at a healthy level of 6% to 8%.

In addition, compared with other brands, Canada Goose has fewer commodity types, and the expansion of commodity types will also play an important role in promoting their wholesale channel sales.

Comparison of Canada Goose and its competitors in the sale of goods

At present, sales of Canada Goose are mainly concentrated in the United States and Canada, and only 29% of sales come from other countries, less than 49% of their competitors.

Therefore, expanding the international market will be the main driving force for the future growth of Canada Goose.

At present, Canada is the main market of Canada Goose, but RBC believes that they can still further develop the US market.

Compared with Canada, the United States has a larger market scale, and the strong exchange rate of the US dollar will also play a catalytic role in the performance of Canada Goose.

Boruchow said that Canada Goose's performance in the North American market is excellent, but the real potential of the company comes from outside the North American market.

"At present, the development of Canada Goose online and wholesale channels in Europe is still at an early stage, and the potential in Asia is immeasurable," he said.

Coupled with steady growth in the North American market, their future sales will increase from $380 million to $1 billion.

Schematic diagram of Canada Goose and other competitors' sales outside North America

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Most of the sales of Canada Goose are concentrated in the second and third quarters, mainly due to the sale of outdoor products suitable for low temperature weather.

The company is exploring the possibility of introducing more new products.

Surveys of consumers show that lightweight jackets and gloves are popular choices.

BMO believes that Canada Goose has the potential to become one of the dominator of the field of luxury clothing in winter.

At present, non outdoor goods account for about 10% to 30% of Canada Goose online sales.

Although analysts are generally very optimistic about the prospects of Canada Goose, many people have expressed concern about their future.

Boruchow said that in the next few months, the performance of Canada Goose is crucial, which will directly determine investors' confidence in them.

Siegel believes that as the scale of Canada Goose continues to expand, consumers' perceptions of brands may also change, which may affect brand sales.

He said: "Canada Goose is unlikely to maintain its current rapid growth. It is possible that profits and profits will not meet expectations in the future."

However, Siegel said that in the "foreseeable future", as Canada Goose continues to develop new markets and launch new products, their sales growth will still reach two digits.

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