Think the trendy $1,000 fur trimmed Canada Goose puffer jacket is so 2016? Nope, far from it.
Shares of the outerwear maker exploded 17% on Wednesday following a much better than expected third quarter. The message from CEO Dani Reiss remains as consistent as when I talked to him months after a sizzling March 2017 IPO. Reiss said Canada Goose simply makes better stuff (which now includes $395 sweaters) than others, and the well-to-do are willing to pay up for that premium experience every winter season.
Not a bad position to be in for a brand founded in 1957 by Reiss’ grandfather.
“There is a lot of demand out there for our products and that overlays everything,” Reiss told Yahoo Finance. “The direct-to-consumer channel has been killing it, it has been doing really well.”
Yahoo Finance by the numbers: It’s hard to find any missteps in Canada Goose’s third quarter, it’s most important as it sells products to department stores and to consumers ahead of winter. Canada Goose said earnings came in at 46 cents a share Canadian (35 cents U.S. currency), smashing estimates by 16 cents. Sales increased 34% to C$230.3 million ($174 million U.S. currency). Profit margins rose to 55.8% from 50.6% a year ago.
The company saw sales increases in all lines of business: department stores, online and within its own budding network of stand-alone retail stores.
Canada Goose lifted its full-year sales growth guidance to at least 30% from 20% previously.
The bottom line: Canada Goose shares have been on a roll since the March 2017 IPO, up a sizzling 228%. That has pushed up the company’s valuation to pretty stratospheric levels. On a forward price- to-earnings multiple basis, Canada Goose is valued at 104 times according to Yahoo Finance data. For some perspective, the S&P 500 is valued about 15 times and accessory maker Tapestry clocks in at 13.3 times.
But, Canada Goose has done one key thing since its IPO. Reiss and his team have proven the Canada Goose brand is no flash in the pan. With the company only now venturing into knit shirts and a push likely in boots in 2019, following the acquisition of boot-maker Baffin, Canada Goose could grow into its valuation as it becomes a more complete retail brand.
Brian Sozzi is an editor-at-large at Yahoo Finance. Follow him on Twitter @BrianSozzi