Taking A Deep Dive Into Canada Goose's First Publicly Reported Financial Statements

Canada Goose Holdings Inc. Subordinate Voting Shares (NYSE: GOOS) released its first annual report on June 6 and Baird took a deeper look into the company's financial performance.

After reviewing the company's financial statements, Baird senior research analyst, Jonathan Komp, remains bullish on the name based on the company’s fundamentals. However, Komp is still looking for a better entry point to invest and has placed a Neutral rating on Canada Goose.

Financial Highlights From The Report

• Total Revenue Growth: Up 38.8 percent year over year (y/y)

• Wholesale Growth: Up 11.9 percent y/y

• Direct To Consumer Growth: Up 249 percent y/y

• Gross Margin: 52.5 percent

• SG&A: Up 44.9 percent

• Expense Ratio: 33.2 percent

• Adjusted EBITDA Margin: 19.4 percent

By region, sales were up 63 percent in Canada, 28 percent in the United States, and 27 percent over the rest of the world. Komp noted, “The incredible growth in Canada undoubtedly reflected the strong reception to the Yorkdale flagship retail store performance and also led to strong DTC profitability.”

Canada Goose also continues to see huge growth from its most targeted wholesale accounts: Sporting Life in Canada and likely Nordstrom, Inc. (NYSE: JWN) in the U.S.

A couple of the negatives included a flat operating margin and a lower-than-expected gross margin that hit the bottom line of Baird’s 43-47 percent target. This lower margin was driven by Canada Goose removing a limited number of products from its inventory due to quality issues, and the brand’s spring collection currently has lower margins.

Other notable growth opportunities are the company's plan to open three retail stores in Chicago, London and potentially Tokyo. Canada Goose will also be launching e-commerce websites this Fall in Germany, Sweden, Netherlands, Ireland, Belgium, Luxembour and Austria, according to Komp. While he doesn't expect to see a huge sales growth from these additions, this should help spur both U.S. and international growth for Canada Goose.

Overall, Canada Goose has traded up over 30 percent since it went public on March 20, and was trading at $21.81 on Wednesday.

See Also:

3 Strategies That Could Result In High Growth For Canada Goose

Can Canada Goose Fly North To 25% Upside In The Next Year?

Latest Ratings for GOOS

Apr 2017	TD Securities	Initiates Coverage On		Hold
Apr 2017	Morgan Stanley	Initiates Coverage On		Equal-Weight
Apr 2017	CIBC	Initiates Coverage On		Sector Outperform

View More Analyst Ratings for GOOS
View the Latest Analyst Ratings

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