Canada Goose targets $3B in sales and expansion into eyewear, luggage and home

Canada Goose (GOOS.TO)(GOOS) says it will increase sales to $3 billion over the next five years by focusing on women and younger customers, expanding into new product categories and more than doubling its retail store footprint.

The Toronto-based luxury parka maker unveiled its five year plan at its investor day on Tuesday, the first one since its initial public offering in 2017. The company plans to grow total revenue to $3 billion by 2028, with a compound annual growth rate of 20 per cent, by expanding to new categories such as eyewear, luggage and home, as well as doubling its store network from the current count of 51 locations.

The new target will be nearly triple Canada Goose's current sales. The company expects sales this fiscal year be in the range of $1.175 billion and $1.195 billion.

“We will focus on investing where we see high return, protecting our brand and delivering high quality, profitable growth, just as we have since our IPO (in 2017),” chief executive Dani Reiss said at the investor day on Tuesday.

"I'm as confident today as I was back in 2017. We know how to execute. Our track record shows that. Today, the wind is at our backs."

Reiss said women represent approximately 48 per cent of Canada Goose’s total sales, and that there is room to grow to reach the luxury industry average of more than 60 per cent. Generation Z, typically defined as those born between 1997 and 2012, will also be a focus for the company, as the cohort is expected to represent 30 per cent of luxury shoppers by 2030.

“Engaging this younger generation and maintaining our relevance with them is a top priority for us,” Canada Goose’s chief marketing officer Penny Brook said on Tuesday, adding that the factors driving purchasing decisions for Gen Z are “markedly different” compared to other generations.

“They value luxury, high quality, long lasting products. They care about social and environmental issues, and they expect brands they shop with to do the same… Canada Goose is starting from a position of strength with this demographic.”

At the same time, Canada Goose plans on expanding its product offering outside the winter parkas it is known for. When it first went public in 2017, less than 15 per cent of the company's sales were outside the parka category. That has since grown to its current rate of 36 per cent. By 2028, Canada Goose wants non-parka products to represent just under half of its total sales.

To do this, the retailer will expand within categories it has recently tested, such as rainwear, apparel and footwear, as well as launch new categories in eyewear, luggage and home. For both eyewear and luggage, the company will launch a "pinnacle product designed for extreme use" before adding more products for everyday styles. The home category will feature blankets and home accessories such as candles.

Wells Fargo analyst Ike Boruchow wrote in a note to clients on Tuesday that Canada Goose's targets "appear lofty."

"The main take was management outlining an extremely bullish five-year plan," Boruchow wrote.

"However, coming off multiple misses this (fiscal year), investors need to see a sharp direct-to-consumer inflection to begin to believe."

Shares of Canada Goose closed the trading day on the Toronto Stock Exchange at $28.61, an increase of 1.3 per cent. The company's stock has fallen nearly 13 per cent since reporting weaker-than-expected third-quarter earnings last week.

Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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