Canada Goose shares soar 26% in New York debut

The parkas that have made it to the top of Mount Everest and the cover of Sports Illustrated's swimsuit edition have found their way to Wall Street.

Shares of Canada Goose, the maker of down winter coats with coyote fur trim and a circle patch logo, soared in their New York debut on Thursday, rising 26 per cent to $16.08 after pricing at $12.78 a piece, above the anticipated range. The debut gives the company a market value of $1.7 billion (€1.58 billion).

Shares trade on the Toronto Stock Exchange and New York Stock Exchange.

The interest in the shares highlights investors’ appetite for well-known brands. Snap, the owner of the messaging app Snapchat, earlier this month raised more than $3 billion (€2.79 billion) with a listing that was the largest for a tech company in the United States since 2014 and delivered a first-day “pop” of 44 per cent on its issue price of $17 a share.

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US listings were in the doldrums in 2016 – the slowest year since the aftermath of the financial crisis in 2009. Bankers and investors hope high-profile floats such as Snap and Canada Goose will encourage more companies to go public.

Even investors who bought Canada Goose shares in the IPO were cautious, however, about its flight on day one. Shares hit a high of $18.40, an increase of 44 per cent.

Expensive business

“It is priced as an expensive business because it is growing, but it got a little carried away with where it opened,” said Sean Stiefel, a portfolio manager at Navy Capital. “Whenever there is a brand that people recognise whether it is Snap or Canada Goose, there is an artificial pop based on retail demand.”

Snap, for example, has since fallen from a high of $29.44 to trade at $19.89, burning buyers who were lured by the early rally and bought at the top of the market.

Founded in a small warehouse in Toronto in 1957 as Metro Sportswear making outerwear such as woollen vests and snowmobile suits, Canada Goose went on to develop a parka for scientists at Antarctica’s McMurdo Station and one that was worn by the first Canadian to reach the summit of Mount Everest.

“Along the way we have found a home in urban centres, too,” Dani Reiss, chief executive and the grandson of company founder Sam Tick, said in a letter to prospective shareholders in the company’s listing paperwork. “In doing so, we have played a leading role in the creation of a new category, premium outerwear, and established Canada Goose as an iconic brand.”

Fans of the trendy brand are willing to pay upwards of $1,000 (€930) for the overcoats.

Revenue up 42%

For the nine months ended on December 31st, revenue rose to 353 million Canadian dollars (€246 million), up 42 per cent, from C$249 million (€173 million), while earnings increased by a quarter to 44 cents a share from 35 cents a share.

The IPO raised C$340 million (€237 million) for the company as well as shareholders Bain Capital and Mr Reiss. The company plans to use the proceeds to pay down debt.

The stock sold in the IPO carries fewer voting rights than those held by existing shareholders enabling Bain Capital, which bought a majority stake in the company in 2013, to control 68 per cent of the voting rights after the IPO, while Mr Reiss holds 29 per cent.

Canada Goose shares also drew an unlikely new investor. People for the Ethical Treatment of Animals, or Peta, said on Thursday it bought shares to pressure the company over its use of fur and feathers in its products.

– (Copyright The Financial Times Limited 2017)