At its Investor Day, Canada Goose Holdings revealed plans to nearly triple its growth in five years as it further double-downs on its direct-to-consumer push and ramps up expansion across geographies and enters categories, including eyewear, luggage, and home.
Sales are expected to reach Canadian $3 billion by its fiscal year ending March 31, 2028, representing a CAGR of approximately 20 percent over those five years. Sales are expected to land in the range of $1.175 billion to $1.195 billion for Canada Goose’s fiscal year ended March 31, 2023.
Adjusted EBIT margin is expected to reach 30 percent by fiscal 2028, which compares to an EBIT margin in the range of 15.1 percent to 15.8 percent forecast in its current fiscal year.
At the Investor Day event, Dani Reiss, chairman and CEO, elaborated on three strategic growth pillars expected to drive the top-line growth:
- Accelerate Consumer-Focused Growth: Reiss said, “We know that consumers know love and trust us for our quality craftsmanship as the ultimate purveyors of warmth and protection, but we want to go deeper with them. We plan to intensify customer relationship marketing to build stronger connections with our clients and to bring new consumers to our brand. We believe we’ve got a significant opportunity to grow lifetime value. And we see this opportunity to continue to focus on women, making sure we’re delivering the right product for her and making sure that she falls in love with a brand. As a key component of this. Today, women will represent approximately 40 percent of our sales, which means we have a lot of room to grow to reach a luxury average of more than 60 percent. We’ve also set our sights on increasing the number of younger consumers who shop with us. Gen-Z represents a significant segment of the global luxury market today and it’s a group that we already do quite well with. We have a long legacy of driving relevance with the younger generations.”
- Build DTC Network: Reiss said, “We will continue to build our DTC network and more than double our retail footprint growing from the 51 permanent stores we operate today. We see opportunity in new markets around the world and to deepen our penetration of existing markets and in evolving our structure in others, reaching consumers directly much like we’ve recently done with our joint venture in Japan. Traveling around markets around the world as I do, I know the opportunities out there, especially as we continue to expand the category offering.”
- Create New and Expand Existing Categories, Rapidly: Reiss stated, “Category expansion will add to the heritage we’ve built across our existing categories as well. We plan to further drive our year-round relevance by expanding into new ones. Our vision has our consumers shopping with us for all their wardrobe and accessory needs. Over the years we’ve established a proven track record of building and growing new categories. We’ve really learned a lot and now we plan to take that depth of understanding and accelerate a category expansion.”
The top-line growth over the next five years is expected to be driven by the acceleration of the consumer-focused growth initiatives, the buildout of the DTC network and the creation of new and more rapid expansion of existing categories.
Among categories, heavyweight down is expected to double in sales over the next five years, lightweight down to triple, and apparel and accessories to quadruple. By fiscal 2028, heavyweight down is expected to represent half of sales versus about 60 percent in fiscal 2023 and about 80 percent fiscal 2017.
By channel, DTC is expected to grow threefold over the next five years and wholesale by twofold. DTC revenue is expected to represent approximately 80 percent of total revenue in fiscal 2028, up from 70 percent expected for the current fiscal year and 29 percent at the time of its 2017 initial public offering.
The brand is expected to expand from 51 permanent stores currently to a range of 130 to 150 in fiscal 2028. By region, APAC and EMEA are expected to triple their store count and North America to double its store base.
By region, North America sales are expected to double over the next five years. Growth is expected to be driven by store openings in the western parts of the U.S. following recent openings in Denver and Las Vegas and an overall focus on deepening its foothold in key cities. Other growth drivers in North America include the expansion of omnichannel offerings, strategic wholesale partnership expansion, and its new Generations resale program.
EMEA’s growth is expected to triple by fiscal 2028 with a focus also on expanding in key cities, accelerating the women’s business, and executing an omnichannel rollout. APAC growth is expected to advance four-fold with a focus on Mainland China, Japan and Korea.
Other growth drivers include converting markets from distributor to in-house DTC operations as well as the entry into travel retail.
The profit margin improvement is expected to be achieved by largely maintaining gross margins, which are projected to be in the low-70s by fiscal 2028, up from 68 percent expected for the current fiscal year. Margins are expected to continue to benefit from favorable channel mix, pricing and leverage of manufacturing overhead.
SG&A expense rate is expected to decline due to increasing scale and as past growth investments leverage. The expense structure is also expected to benefit from actions being taken to increase efficiencies and reduce direct costs of goods, improve sourcing costs and leverage technology, among other initiatives. Taken together, Canada Goose expects to achieve $150 million in saved and avoided operating costs by the end of fiscal 2028 while focusing increased spend on the expansion of new categories and business initiatives.
The projected five-year CAGR for revenue of approximately 20 percent is in line with the historical performance for revenue CAGR from fiscal 2017.
At the Investor Day event, Reiss noted that the last time Canada Goose formally set a five-year plan was around its 2017 IPO and the company exceeded those plans. Reis said, “I’m proud to say that we’ve accomplished everything that we set out to do and more and we did that by following our North Star. We did that by staying true to ourselves, executing against our vision, and keeping our brand pure by being authentic.”
He described Canada Goose as “a brand like no other—Canadian based and built in the European style of iconic luxury brands.” This includes a focus on annual price increases, no discounting, and a vertically-integrated supply chain infrastructure that supports high margins.
“Among our competitive set, we consistently rank in the top three across the most important performance and luxury attributes,” said Reiss. “Within performance, we own warmth and we’re also known for durability, craftsmanship, high quality and being made in Canada. And within luxury, consumers love to be seen wearing Canada Goose. We are iconic, distinct, stylish and exclusive. Our brand sits at the intersection of performance and luxury. That is a sweet spot ahead of us to drive growth.”
He believes Canada Goose continues to benefit from a “bold” decision to keep most of its manufacturing base in Canada. He said, “At a time when many were offshoring their production, we knew that controlling our own destiny would set us apart.”
Reis highlighted the recent success Canada Goose has had expanding beyond parkas to add lightweight down, wind and rain jackets, apparel, accessories and most recently, footwear. New categories expected to be entered in the next five years include eyewear, luggage and home.
The CEO also cited the benefits of Canada Goose’s strategic partnerships with luxury retailers in elevating the brand as well as its recent direct-to-consumer push that has helped the brand further connect with consumers. Reis said, “Engaging with our customers directly where and how they want to shop has deepened our relationships with them, proven higher profitability for our business, and ultimately has strengthened our brand.”
Photo courtesy Canada Goose