Canada Goose made-in-Canada guarantee may be impossible

This time last year China’s 1.3 billion people were shivering through the country’s frostiest winter in decades. Average temperatures across the vast country fell to minus 3.8 degrees C, while those living farther north saw the mercury dip to minus 15.3 degrees, the lowest in 42 years.

Admittedly, that may not seem like such a big deal on this side of the world. Torontonians, after all, braved minus seven degrees on their morning commute Wednesday, while folks in Thunder Bay and Saskatoon are gritting their teeth through temperatures well below minus 20.

But China’s extreme weather patterns are proving increasingly important to Canada -- most certainly to Canada Goose.

The historic Toronto family firm that made the winter parka chic is banking on a big return from a planned expansion into Asia, where an unprecedented rise of the middle class makes for an attractive market destination for consumer goods of all sorts, particularly luxury items.

And who better to keep folks in this corner of the world warm than the company that`s been profiting from Old Man Winter since 1957?

The global push comes on the heels of a purchase deal announced Tuesday between Canada Goose Inc. and Bain Capital, a Boston-based private equity firm.

The two companies have not disclosed the purchase price but acknowledged Bain will own a majority stake in the company. Canada Goose Chief Executive Dani Reiss will remain in his position and maintain minority shares, somewhere above 10 per cent.

Just what this means to the rest of Canada now that its national bird has taken flight is a question many are asking. The company has famously resisted off-shoring its manufacturing operations to cheaper markets such as Bangladesh. It currently employs more than 1,000 people, most of them in Toronto and Winnipeg.

Reiss says we shouldn't worry about the jobs. He told Reuters Tuesday he wouldn’t have sold to Bain if he thought there was a risk of losing the “made-in-Canada” guarantee that has made the brand so popular.

"Our partners in Bain are 100 per cent behind us in that manufacturing philosophy," he said.

More troubling is how the company will maintain quality control as production scales up to meet greater demand.

Canada Goose currently enjoys an enviable reputation for making the “warmest jackets on earth.” The goose-down jackets with their coyote fur-lined hoods and hefty price tags above $600 are a must-have among ordinary citizens and celebrities alike.

Model Kate Upton set social media on fire in February when she donned a Canada Goose jacket, and little else, for the cover of the Sports Illustrated swimsuit edition.

David Ian Gray, a retail analyst with DIG360, said the brand is such a hot fashion trend right now, pulling in annual sales of roughly $200 million, there will likely be little pressure for Bain to make any significant changes to how and where the clothing is made.

But, Bain is a financial investor. They are in this deal for the numbers, not the passion of the craft.
Should demand flatten, for whatever reason, watch out.

“All bets are going to be off,” said Gray.

Earlier this year, Reiss admitted it’s a struggle to stay true to the promise of authenticity during periods of corporate expansion.  

"The bigger you get, the harder it gets to manage a brand," he said.

Few companies understand those pressures better than Lululemon.

No sooner had the Vancouver-based yoga-clothing giant begun to recover from a costly recall of thousands of pants that left customers feeling too exposed, than it found itself the centre of another crushing controversy this year. Chip Wilson, company founder, rubbed millions of loyal fans of the brand the wrong way when he suggested in a televised interview the fashion flaws had more to do with the size of some women’s thighs than how the pants are manufactured. He resigned as chair of the company Tuesday.

 

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