For the first time, Canada Goose just reported its annual revenues exceeded C$1 billion ($860 million) in the year ending April 2, 2022. With sales down nearly 6% in 2021, it came back double-digit strong from pre-pandemic 2020, up 15%.
And it forecasts even stronger growth in the year ahead. Current guidance reflects an 18% to 27% increase in 2023 as pandemic disruptions diminish, especially in China, and its “Beyond the Parka” year-round strategy picks up momentum.
“We are ending fiscal 2022 with confidence and conviction in our brand, our business and our team,” CEO Dani Reiss said in his opening remarks during the earnings call. “Our brand relevance and pricing power enable us to move with confidence in pursuit of the tremendous growth opportunities in front of us.”
He was more candid in conversation with me in advance of the earnings call. “We have the right team in place and the right playbook to execute a long-term growth strategy to reach your next billion dollars. I’m very, very excited about next year.”
The team he refers to includes the promotion of long-time veteran Carrie Baker from president North America to president, Canada Goose, clearing Reiss’ plate to focus on long-term strategic initiatives. Another company veteran, Ana Mihaljevic, will add president, North America to her resume as she continues to manage her existing leadership over sales operations and planning.
In addition, Belinda Wong, chairman of Starbucks
The company has big plans for the Asia-Pacific region next year as business there is expected to return to normal in the third quarter, when roughly half of the company’s annual sales are made. Currently four of its 13 Mainland China stores are closed due to Covid.
Also ahead for the region is a new joint venture in Japan with its longstanding partner, Sazaby League. As the company’s second-largest market in Asia, it expects to double revenues in Japan over previous year and generate higher gross profit. And business will expand in South Korea through a recently signed distribution agreement with Lotte Group.
Supplying additional growth momentum will be the opening of 13 new Canada Goose boutiques, adding to its current fleet of 44 stores, including two popups in Amsterdam and Manchester, England.
The new locations were not revealed but Reiss said they will be “relatively balanced geographically” and include “significant contributions” in the U.S., EMEA (Europe, Middle East, Africa and Latin America), Mainland China and Japan. Of note, EMEA represented 22% of sales last year with Canada making up the remaining 20%.
The company direct-to-consumer (DTC) strategies are pivotal to both revenue and profit growth. By end of 2023, it is expected to reach between 70% to 73% of revenue, from 67% in 2022, with gross margins of 76% and contribution margin in the high 40s.
In its stores, Canada Goose can put its best face forward to the consumer. In recognition of its accomplishments in driving consumer loyalty, it was named to Forbes top 10 most consumer-centric brands in retail, reporting it “takes immersive retail to the next level.”
Perhaps the company’s greatest growth opportunity will be realized as it continues to pivot from a primarily winter season to a year-round brand.
Its progress so far, in what it describes as its “non-parka” offerings, has been impressive. Non-parka revenue was up more than 70% in 2022, with the greatest growth in apparel and lightweight down vests.
It got started in lightweight down some seven years ago and it now accounts for about 20% of company revenues.
“We make best-in-class in every single category we enter now,” he shared with me. “We’ve been able to capture the essence of our brand, our ethos, quality and functionality in other categories and it translates well with our customers.”
Slow and steady wins the race. That is the guiding principle for Reiss and team. “That’s how we grew our outerwear business over many years,” he shared. And it was the strategy used in the launch of Canada Goose’s new footwear collection in 2022.
“We start small. That’s typically how we manage new categories and we grow into them. That means it’s [footwear] not a significant revenue contributor today, but we do expect that it will be a material contributor to the long term,” Reiss said.
“This is standard. This is part of our playbook, which is to take a disciplined gradual approach to building new categories, and I’m really excited about what lies ahead,” he added.
For 2023, the company projects revenues will be generated 5% in first quarter, 20% in second, 50% in third and 25% in fourth. That distribution is likely to look very different when it hits its next C$1 billion milestone which is already in Reiss’ sights.