Canada Goose – Shifting Away from Third-party Retailers
– 20 August 2021
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Jordan Searle (JS)
Specialist:
Former SVP, D2C at Canada Goose Holdings Inc
Title:
Moderator: Nyree Hinton (NH), Third Bridge Sector Analyst
Agenda:
1. Retailer disruptions and continued store traffic headwinds
2. D2C strategy, focusing on e-commerce
3. Canada Goose's (TSE: GOOS) brand perception and product pipeline including apparel footwear
4. 2022 fiscal outlook
Contents
Q: Could you give us an overview of how the luxury outerwear industry has evolved over the last five years? 3
Q: You mentioned Moncler led that charge into footwear. It seems Canada Goose has similar aims. Why do
you think it took Canada Goose this long to try to make a significant presence into this market?
4
Q: You mentioned that Canada Goose’s innovation process is organic. Could you speak to why this has such
a hard time expanding into other categories? Why do you think there’s so much hesitancy, or do you think
it’s a lack of know-how to jump into another category outside of parkas?
4
Q: How does that strategy coincide with Canada Goose’s target audience? The product is functional, but
then, like you said, the industry is shifting to more of a street wear, on-trend type of product. If the company
is so disciplined and the company approaches it from more of a VF Corp way, isn’t that a little bit
contradictory to the target audience and the younger consumer it wishes to keep up with?
5
Q: Canada Goose announced it will stop using fur used in its core parka products. How do you think this
move will impact demand? Is it likely to result in a decline? How will it affect the target market?
5
Q: Are Canada Goose’s category offering demographics 50% men and 50% women, or do you think there are
6
opportunities to cater to one or the other?
Q: What are your thoughts on Canada Goose as a whole to drive revenues? It seems it has been stuck at CAD
6
1bn. What’s holding it back from mass market?
Q: Could you discuss Canada Goose’s ability to continue to keep its price points at a higher level?
Q: What are your thoughts on the overall decision to pivot away from these third-party retailers? Do you
think there are some partners that Canada Goose can’t necessarily walk away from, or should?
6
7
Q: China is a big growth driver for Canada Goose. How does the direct-to-consumer model work in a country
or a region like that, where a lot of people or companies have to sell through these online marketplaces and
then reach the consumer because that’s just such a significant part of the culture? What might be the impact
on margins?
7
Q: What are your thoughts on potential growth avenues or opportunities in the US and Canada? Do you
think the market is a bit too mature or do you still there’s plenty of opportunity to really revitalise sales?
Q: Could you speak to why the margins are so low in wholesale for Canada Goose, given that Canada Goose
is able to control its price point, to not have some of these third-party retailers discount heavily, or is that
just a structure of the partnership in a relationship?
Q: Could you discuss Canada Goose’s D2C strategy compared to other players in the market such as
Moncler? How much of the re-sale market plays into some of the dynamics of Canada Goose? How
important is that secondary market to Canada Goose?
8
8
8
Q: What are your thoughts on more of a macro standpoint about Canada Goose’s overall performance and
adjusting to coronavirus through the disruptions and stores closures? What’s your assessment of the firm vs
other retailers or brands that have performed a little poorly, given the resurgence in Delta and winter is
approaching? Do you think Canada Goose is thinking about prioritising one of its highest moments to
capture sales, given that there’s a high risk we might go through lockdowns?
9
Q: How do you think Canada Goose is thinking about the expansion into new category offerings as we
approach a prime time of its cycle? You mentioned that it hired design for its footwear brand almost a year
ago. Could you elaborate on other categories you think it has done well in? I think you mentioned that it
could have expanded more. What are some strengths in the portfolio and where could it get out of?
10
Q: You mentioned Canada Goose expanding into the California or the warmer markets. How much does
Canada Goose actually listen to its consumer? Are consumers asking for products that they want to wear in
the summer, or is it the company’s own way of organically driving new product innovation?
10
Q: How does the D2C approach work from a marketing perspective when trying to build out digital
capabilities and drive traffic to your site? Could you discuss how Canada Goose thinks about marketing on a
digital playing field?
10
Q: How do you think Canada Goose assesses this shift to lifestyle? You’re buying all of these so-called
functional products, but people are wearing them in the casual market. Does Canada Goose recognise this or
will it still very much be a functional brand?
11
Q: We talked about Canada Goose exiting from fur and you highlighted its ability to command that price
point, given that we won’t have any more fur. Could you talk about what it would do for the company’s costs?
Is there much upside from a margin accretion perspective if it does exit from this part of the manufacturing
process?
11
Canada Goose – Shifting Away from Third-party
Retailers
Transcription begins at 00:00:08 of the recorded material
NH: Welcome to Third Bridge Forum’s Interview entitled Canada Goose - Shifting Away from Third-party
Retailers. I’m Nyree Hinton and I’ll be facilitating today’s Interview with Mr Jordan Searle, former SVP, Direct
to Consumer at Canada Goose Holdings Inc.
Jordan, before we get started with today’s Interview, please state I agree or I disagree to the following
statement: You understand the definition of material non-public information and agree not to disclose any
such information, or any other information which is confidential, during this Interview.
JS: I agree.
NH: Thank you, Jordan. Could you start by giving the audience an overview of your background and various
that you’ve held in the industry?
JS: Hello, everyone. As Nyree said, my name is Jordan Searle, I was former Head of Direct to Consumer for
Canada Goose. In that role with Canada Goose, I was responsible for the development of the retail and e-
commerce channel globally, and also in-store build and design and location selections, as well as after-care,
warranty and customer experience. I was based in Canada for that role and I had operational responsibility
with P&L responsibility for North American business for Canada Goose.
[00:01:34]
Q: Could you give us an overview of how the luxury outerwear industry has evolved over the last five years?
JS: I think in general, the luxury industry has become more conducive towards the outerwear industry, in the
respect that there has been a move towards more investment pieces and there’s a closer link with garment
technology and luxury and there’s a recognised value in products that are performing those sort of functions.
It’s really allowed certain types of clothing, outwear being one of them, sneakers and footwear being another,
to really get into that industry in a bigger way and become a bigger part of that industry. I think one player led
the charge there and Canada Goose has been able to get into that industry as well, through affiliation with
certain celebrities and sectors and industries, and just having an awesome product. What we’re seeing is a
development towards products that are long-lasting, made from premium materials, and then it’s really an
area of clothing which didn’t see a lot of innovation in terms of it was very function driven, and still is in many
respects, but brands have been able to start to innovate on those styles. I would say most notably brands like
Moncler with their Genius project, where they’ve really been able to change the perception of what outerwear
is. That has filtered through into people’s wardrobes globally. There’s also been a move towards technical wear
becoming more casual, more accepted, which has also allowed for outwear to enter into the space. Some of the
other bigger shifts in the industry, bigger move towards sustainability, that’s also starting to impact into
outwear space, so much so that Canada Goose has produced its first carbon-neutral product, and then there’s
also been away from traditional materials in that space such as fur. Some brands are even starting to move
away from down products now.
Then, to look at upcycling and also the resell market, it’s become a piece of clothing which you would find in a
RealReal or a Rebag or a StockX. Then there’s also, it’s also been the digital shift, not just in terms of
development of e-commerce, but in terms of some of the investment in product tracking, like block chain
Private and confidential 3
adoption and verification of the brands within that sector. Again, these sorts of items are very susceptible to
those sort of technologies and that’s been developed as well. Then there’s been a huge category shift overall in
luxury, so a move away from some of the fashion goods into more street culture, footwear, leather goods. You
can see that in a lot of fashion houses making acquisitions. Moncler purchasing Stone Island, LVMH
purchasing Off-white. Even lower down the funnel, when you think of North Face’s purchasing of Supreme.
It’s really been adopted into the luxury industry and it’s really about luxury extending its reach and reaching a
different customer.
[00:06:05]
Q: You mentioned Moncler led that charge into footwear. It seems Canada Goose has similar aims. Why do
you think it took Canada Goose this long to try to make a significant presence into this market?
JS: Moncler, it’s interesting, Moncler is often compared to Canada Goose, but they are quite different
companies. Moncler would class as a true fashion house. Canada Goose is not a fashion house, it’s a brand, a
utility brand which has happened to resonate with luxury consumers. The way that Moncler has developed is
to push its brand into lots of different categories. Moncler spans from scents to sunglasses all the way to
footwear and t-shirts, whereas Canada Goose has a much more specific product offering. The way that Canada
Goose develops its category segments is very organic. Right now, it only operates in outerwear. Outerwear
consists of wind wear, rain wear and parkas. Then it has knitwear and then some accessories like gloves and
hats and neck wear, and of course it has purchased Baffin a couple of years ago to start developing its own
footwear, but it has yet to come to market with footwear. When it does come to market with footwear, I don’t
expect it’s going to be a huge range. I think the way it will introduce it, it’s probably five or six SKUs and those
would be featured in its stores to complement and to round out its existing categories.
The way it develops its products, like I said, is very slowly, so it won’t release anything into market just for a
brand play. It’s really got to be functional footwear and it’s really got to have a point of difference. I think this
is why it’s not got to the point where it has wanted to release something into market yet. I think, I’m imaging
COVID has also put some dampers on its plans to hit market. I know that it had originally said that it would
launching something in 2022 at the earliest and it could still be online for that deadline., but I think it’s more
like 2023 in reality. The brand has only recently hired someone in to to head up footwear design and
development. I think that was about a year-and-half ago now. We know it’s been on the journey for a long
time. I don’t think it’s been really operational in that journey for that much amount of time.
[00:09:19]
Q: You mentioned that Canada Goose’s innovation process is organic. Could you speak to why this has such a
hard time expanding into other categories? Why do you think there’s so much hesitancy, or do you think it’s a
lack of know-how to jump into another category outside of parkas?
JS: I think one breeds the other. I don’t think Canada Goose is a brand that is looking to emulate the luxury
model to the extent of developing a Canada Goose t-shirt. That’s not what the brand is about. The brand is
quite true to itself and one of its key points is that it’s an authentic brand. One of the challenges the brand has
is to maintain its authenticity while introducing new categories. Canada Goose isn’t a brand that would be
looking to add categories simply to flesh out its product line and build the brand that way. Firstly it has to
figure out which categories make sense for it authentically as a brand. Then secondly, it doesn’t have the
structure that a fashion house has. Although it does collaborate with designers externally and does try and
build the brand with special editions and limited editions, that’s a very limited part of the business and it’s
very spot. It’s not like it’s a whole programme built around it. The company itself doesn’t have a creative
director. There’s not one huge visionary in the company that’s driving product development. It’s very much
more the utility and a more traditional way of developing a product which you probably find under in a VF
Corp or a Patagonia, more closely aligned with those kinds of brands than it is with a fashion house. Therefore,
you don’t get this huge development of garments going to market to jump on consumer trend or to just build
Private and confidential 4
the brand across categories. You get a more organic growth, more considered, more disciplined way of going to
market.
[00:12:01]
Q: How does that strategy coincide with Canada Goose’s target audience? The product is functional, but then,
like you said, the industry is shifting to more of a street wear, on-trend type of product. If the company is so
disciplined and the company approaches it from more of a VF Corp way, isn’t that a little bit contradictory to
the target audience and the younger consumer it wishes to keep up with?
JS: I don’t know if it’s contradictory. I think it’s slightly different from the perception that most people have of
the brand. Like I said at the beginning, I feel that Canada Goose is swimming in the slipstream of luxury. In
many respects, it has all of the markers you would expect a luxury brand to have, so high price points, no sales
discounts, disciplined distribution, premium quality, premium materials, investment in the garments which
could go up in value. They hold their value well. A lot of those indicators are there, but when you come through
the innovation part of it and building it out as a fashion brand, that isn’t there. I don’t necessarily say that that
makes it not appealing to younger people. It just means that it’s a different class of product. What I feel about
the consumers that buy the brand, there is a huge group of consumers, principally Asian, that like the brand. A
lot of the reason that it is bought, and if you look at it in some of the maturer markets like a Canada, it isn’t
considered a young brand in Canada, it’s a more mature brand. It’s a little bit about where the brand initially
developed and where it’s been able to go into new markets with a retail model and a a purely D2C model. Like
to China, it has been able to track the different consumer and it resonates with a different consumer. I don’t
think it necessarily hinders it in terms of its development, but it doesn’t make it the most innovative brand.
[00:14:32]
Q: Canada Goose announced it will stop using fur used in its core parka products. How do you think this move
will impact demand? Is it likely to result in a decline? How will it affect the target market?
JS: Canada Goose has been experimenting. It has recognised that it’s a very polarising brand. It’s recognised
its image has been hit by the activism that it’s faced from organisation such at PETA since the beginning and
since when it really started to become visible in its retail stores. It has internally been struggling with the
solution on fur for quite a number of years. It started to develop fake furs, realised that wasn’t quite the way it
was going to go. Then it, in 2019, started developing ruffs that could be removed from the jackets and swapped
out with non-fur ruffs. It seems like they’ve decided that they can survive without fur ruffs. They said they’d
start manufacturing in 2022, so they’ve still got a few years to go. In some respects, the way that the fashion
industry is moving and so many retailers have announced and brands have announced they will stop using fur
and sustainability being such a strong message these days, I don’t think really Canada Goose had an option not
to move away from fur. I think they’ve jumped as opposed to slowly just fading it out. I think in some markets
it’s going to hurt them. I don’t think the aversion to fur is as strong in markets such as China, but certainly in
the fashion centres of the world it’s become a real movement and I don’t think they could afford not to be
selling non-fur items.
As to whether it’s going to impact the business, I think it will impact the business. I think the biggest question
I have is how they maintain the price points without having a fur ruff. Will people, consumers, perceive the
value to be as high when the fur isn’t in the clothing? From what I know, my opinion is that when the company
has had two items, fur and non-fur, they have sold equally as well in markets. I don’t necessarily think it’s
going to destroy the business, but for sure, I think they are walking away from a certain type of consumer by
not offering fur. I think it puts a lot of pressure on their women’s wear, because the fur really was a way to
feminise the jacket in a lot of their styles, and Canada Goose’s styling is quite North American, it’s not fitted.
Without the fur marker, it could actually hurt some of the ladies business in making the jackets less feminine
in style. I think the jury is out to see if fur is going to be, non-fur jackets are going to be as successful fur
jackets. I think on the price point, the perceived price of the product will also be a challenge. At the end of the
Private and confidential 5
day, the macro trend is saying that fur is out, it’s done. Fur is like smoking, basically, so I think it was a smart
move from a brand perspective for them to do that. I guess the next question is how long they can keep going
with down. That’s a question for a lot of fur brands out there.
[00:18:44]
Q: Are Canada Goose’s category offering demographics 50% men and 50% women, or do you think there are
opportunities to cater to one or the other?
JS: It skews heavier to men, a big percentage, I have no idea what it looks like now, but it was around 60-40
during my tenure. The challenge that the brand has always had has been that the jackets are quite masculine,
so in order to address that for the Asian market, they did introduce a fusion fit, which is more of an Asian fit,
and I think that has been extended out across a lot of the products and the range now, that gives a slightly
more feminine cut to the jacket as well. That fit does sell also in North America and Europe well, but it has
always been a focus for the company and the brand to feminise their women’s offering more. That was always
a challenge and the one of the feedbacks that were received from consumers, that their jackets weren’t as
feminine as they could be.
[00:20:19]
Q: What are your thoughts on Canada Goose as a whole to drive revenues? It seems it has been stuck at CAD
1bn. What’s holding it back from mass market?
JS: There are a couple of things. I feel that the brand’s real opportunity for growth is in distribution. It still
has a very relatively small footprint. You’re talking 30, maybe 31-32 stores now and I think you’ve got another
four stores in the pipeline. The brand has always said that it doesn’t want to be a goliath when it comes to
retail. The general feeling was that around 60 stores globally would be about the right size, which is still tiny if
you compare it to a Moncler, which is like 200 or 180 stores globally. The way that the brand strangles the
distribution in order to really control their supply and drive pricing high and drive demand is a key tenet of the
brand. I feel like it could grow a lot more if they really drive the geographic growth. Online as well, that’s
principally where they have driven growth. They’ve gone quite quickly from about a distribution of around 30
countries to over 50 countries where products are available via e-commerce, and they’ve done that fairly
efficiently by leveraging the current platform they’re running and distribution they have, and working with
third parties in order to do that.
In terms of innovation and growth in the product and merchandise. I think that’s where the brand is relatively
weak. I don’t expect there to be huge growth because they’re adding new categories and revenue. I think that’s
principally what the market, or the street and whoever is following Canada Goose, is looking at and thinking
Canada Goose could grow from that potential. I don’t think there’s a lot of ambition in the company to do that.
I think there’s this feeling of small is beautiful, keeping it really, really upmarket and growing slowly and
organically.
[00:23:17]
Q: Could you discuss Canada Goose’s ability to continue to keep its price points at a higher level?
JS: I still think they are the best at what they do in the category the are operating in. I’m talking principally to
the outerwear. They control their own manufacturing, they also have very, very, a high degree in the continuity
in the styles from season to season, a loyal customer base. I feel that they are very strong at controlling the
market offering and they have a lot of the levers in place to ensure that they don’t need to discount a lot. I
think their strategy with this wholesale distribution as well is very disciplined. They’re constantly scaling it
Private and confidential 6
back, constantly assessing whether they’re with the right partners. You’d rather take the product and then
discount it, and they cross all their distribution, so they really control what they’re shipping. They always,
basically, under-ship in order to ensure that there isn’t a lot of merchandise or inventory left over. Their ability
to control the pricing is good. The ability to increase the pricing, I think, is really around how much newness
they can introduce and how much of that newness is adopted in the continuity. That, they haven’t been
(inaudible 25.13). Some examples would be around lightweight down. Lightweight down, it should be a
massive category. It’s a big part of Canada Goose’s business, but it could be a lot bigger. It has potential to go
across the calendar as opposed to being very specific, like parkas are to cold weather. It’s in those categories
which are definitely more competitive that it’s yet to be proven that they can keep maintaining higher prices.
There are certainly are price limits in the market when you’re looking at products like that.
[00:25:52]
Q: What are your thoughts on the overall decision to pivot away from these third-party retailers? Do you think
there are some partners that Canada Goose can’t necessarily walk away from, or should?
JS: I think, again, they have come out publicly and said they are walking away from them, but they also said
that there are key partners that they’d be working with. I think it’s very interesting that they would come out
so publicly and say that. I’m not sure how smart that is, considering how things are in the globe right now.
Anyway, they have. I feel that there are certain partners that they definitely cannot walk away from. When you
start thinking global, wholesale, there’s a physical side to it which is super important, like some of the iconic
stores around the globe, like a Bergdorf or a Nordstrom or a Harrods or Harvey Nicks or Selfridges, or (?
26.57) in Tokyo, for example, or Lane Crawford in Hong Kong. I think those will always be part of the mix.
Then there’s a whole new breed of wholesale which they definitely will maintain, and that’s like a Farfetch.
This is online wholesale or retail, or a Sense. The new distribution that’s coming through, they will endeavour
to continue to work with.
I think then there’s a whole other side which is around street cred, and something, if you think of a Kith or a
Sneakerboy, those sorts of doors are also super important in terms of being relevant with the younger
demographic. For sure, there is a hard core of retail or wholesale that they will definitely need to maintain a
presence in. Whether that’s the same presence they have now, like a Nordstrom presence, where they have a a
very, almost a shop-in-shop scenario with a lot of the top sellers just stacked in, or it’s a more refined
approach, that’s yet to be seen.
[00:28:21]
Q: China is a big growth driver for Canada Goose. How does the direct-to-consumer model work in a country
or a region like that, where a lot of people or companies have to sell through these online marketplaces and
then reach the consumer because that’s just such a significant part of the culture? What might be the impact
on margins?
JS: Canada Goose has been phenomenally successful in China. Not so much the rest of Asia yet, so they’ve had
a big focus on China and they were able to establish themselves there very quickly. They are out on the luxury
(? 29.20) in Tmall and they work with a partner within China to operate the stores. All of the stores that
they’re operating in China and Hong Kong, I think there are about 30 now, have been super successful and
that’s the principal way that they’re accessing the market. It is still a branded play there. It’s complemented by
the online portion of it and I’m sure during the pandemic that side of the business boomed, but it is driven by
the company, so it’s not like a third party is doing the business for them there. It’s kind of reduced operating,
which is not always the case for luxury brands in that market.
Private and confidential 7
[00:30:10]
Q: What are your thoughts on potential growth avenues or opportunities in the US and Canada? Do you think
the market is a bit too mature or do you still there’s plenty of opportunity to really revitalise sales?
JS: In Canada, I think there is a little bit of saturation. I think they’ve opened a few stores they probably
shouldn’t have opened. I think there are nine stores in Canada, I believe, plus very healthy wholesale
distribution and e-commerce business. The brand is super well-known and, as I said, the consumer tends to
skew a more mature consumer in Canada. I do feel that there is some sort of saturation level with the current
way that they’re doing business and the current price points that they’re at in Canada. It’s probably the market
where this kind of pull-back from wholesale will be front of mind for them. In the US, there’s a lot more
growth to be had. The number of stores in the US has, I think they’re about five stores. There’s one coming,
which is the Costa Mesa store in South Coast Plaza. The thing with the US stores, if you look at the footprint,
they’re very much focused in cold weather markets, Chicago, Boston, New York, where the weather is
conducive to the product that they’re selling. All of those stores perform exceedingly well, so they’ve built solid
businesses there. What has yet to be seen is Canada Goose actually opening a store in a warmer weather
market and proving out that they can sell their merchandise in those sort of weather environments and still
maintain the revenues that they are achieving in other stores. I think a good canary for that is the store that
will be opening in California where the weather is a lot warmer and the brand is not as well known. What
they’re relying on there is the fact that the store, the mall revenues are very high, you’ve got a huge amount of
wealthy individuals, high net-worth individuals and a consumer base that is very cosmopolitan and used to
travelling globally.
If they can make that still work, I think it opens up a lot more geography for them as a brand. Then I think that
will spur on more growth in the States. Of course, they’ve got very established e-commerce business in the US
as well, so they are able to see where those consumers are. It’s not like the store openings are random. I feel
like they will be able to do that. I think, again, it’s going to be a slower growth. I don’t expect to see 10 stores
opening in a year. I think it’ll be 2-3 stores every year opening and it’ll be markets where they’re reliant on a
lot of travel, a lot of tourists, consumers shopping them as well. It will be interesting to see if they can do that.
[00:33:46]
Q: Could you speak to why the margins are so low in wholesale for Canada Goose, given that Canada Goose is
able to control its price point, to not have some of these third-party retailers discount heavily, or is that just a
structure of the partnership in a relationship?
JS: I’ve got some theories on it. Canada Goose principally set up as a wholesale brand. A lot of its distribution
agreements are old and they were built before the retail existed and before the brand is really booming. I think
some of it is legacy and that’s why they haven’t been able to secure the sort of revenues, and I also think that,
unlike some other brands like a Moncler, they have stuck to purely wholesale within wholesale environments
and not looked at proper shop-in-shop set-ups. Again, I think that those sort of relationships just structurally
aren’t as good as some of the other brands have secured.
[00:35:20]
Q: Could you discuss Canada Goose’s D2C strategy compared to other players in the market such as Moncler?
How much of the re-sale market plays into some of the dynamics of Canada Goose? How important is that
secondary market to Canada Goose?
JS: The first part of your question, in terms of the direct-to-consumer strategy and the retail strategy, I feel
that they’re very well poised and they have a very good concept to roll out globally. I think they definitely
punch above their weight, considering that the organisation isn’t a traditional luxury organisation. The stores’
sales per square foot are very, very high, the number of SKUs in the store, very low. They’ve been able to
Private and confidential 8
secure some fantastic real estate globally and the concept is original. It has some award-winning elements
such as snow rooms and it’s also getting quite experimental. They opened a store which had no inventory
which is running here in Canada with a full-on experience. It does invest into consumer experience and the
store environments are awesome. I think when you compare to a Moncler, Moncler’s store (? 37.21), also very
nice, but they are a little bit more standardised and they are less focused and they have a lot more product in
them, so I feel, from an executional perspective, very strong. They’ve also got a very strong after-care business,
warranty business, which is built into the price of the jacket. Again, there’s a reason to go back to the store and
people often do, which other brands don’t necessarily have. The e-commerce platform is a Salesforce
environment, which is running very well for them. They’ve been able to continue to build that out. They’re a
forefront of development with Salesforce, so there’s a lot of things they are doing behind the scenes in terms of
the analytics that they’re able to pull, and that is only getting stronger. Moncler actually is little bit behind in
terms of its e-commerce development. I think this year it is implementing a new platform.
From those angles, I would say that it’s strong and it’s been able to prove that its store concept works and it’s
been to secure the real estate in order to put it against the best-in-class globally. From that angle, very strong.
In terms of reseller activity, like all luxury brands, Canada Goose is exposed to that and does, in certain
markets it’s probably indexing too high. Say, for example, Canada, which is its home market, and probably the
cheapest place globally you could buy a Canada Goose jacket, there is a lot of reseller activity. Not so much in
the US and not so much in other markets either. A little bit in the UK, perhaps. There is a strong component
there of reseller, they do control it, it’s something which the brand isn’t building, it’s aware of it. It sees it as a
risk, and it has tried to ensure that it has protection by limiting the amount that can be bought, but it also does
make sure that when we reselling is happening, it’s done discretely and stores are designed to have certain
spaces in them where you can have these sort of reselling-feeling events going on as well. Selling events, live
selling events going on. I guess what I’m saying is, no more than any other luxury brand, it’s happening for
every luxury brand, Canada Goose is also taking advantage of that. As to how much of the business is driven by
reseller activity, true reseller activity, difficult to say. We could be 15-25%, somewhere around there.
[00:40:45]
Q: What are your thoughts on more of a macro standpoint about Canada Goose’s overall performance and
adjusting to coronavirus through the disruptions and stores closures? What’s your assessment of the firm vs
other retailers or brands that have performed a little poorly, given the resurgence in Delta and winter is
approaching? Do you think Canada Goose is thinking about prioritising one of its highest moments to capture
sales, given that there’s a high risk we might go through lockdowns?
JS: I think Canada Goose is quite an agile company in the respect to its business, so it does pivot when it
needs to pivot, and I think the way it did during the lockdown was pretty amazing. You’ve got to remember
they are actually vertically integrated to a greater degree and they were able to keep their workforce going
throughout that. They had some downsizing, but the manufacturing part of the business was kept running.
They were able to get involved and make that a win from a brand perspective in terms of civic duty and giving
back to the community. They also managed to insulate themselves from any cost associated with that. From
that side, good. I think people did pull back, but you’ve got to remember, even though, like I said at the
beginning, Canada Goose plays in the luxury space, it’s still considered by many a utility brand and the
product does serve a purpose. The fact that it had inventory issues, unlike other companies, it hasn’t
necessarily meant that it’s had to go out and discount its inventory. It was able to repurpose its manufacturing
and then, because there’s such a degree of continuity in the line, the inventory they had, they were able to still
use and still sell down at full price. From those kind of angles, I think it’s been quite well-insulated.
In terms of consumer demand, of course consumers weren’t out shopping and buying and most companies
were hurt by that, but it is a product where, kind of a little bit cyclical. If we go into a very cold winter in
certain parts of world, than Canada Goose is going to have a very, very good season, especially in light of the
fact that it’s increased its online distribution points considerably from March 2020, so it’s got another 30
countries which it can now ship to. It’s built out a lot of functionality online, like being able to have an online
consultation. Its last-mile service online is also very good, so I feel like it’s going to have a really good winter
season, simply because there is pent-up demand and a lot of consumers wouldn’t have been able to buy a new
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jacket, or weren’t in the mood to buy a new jacket at the end of last year. I think these sort of things become a
necessity, especially if the weather dictates.
[00:44:45]
Q: How do you think Canada Goose is thinking about the expansion into new category offerings as we
approach a prime time of its cycle? You mentioned that it hired design for its footwear brand almost a year
ago. Could you elaborate on other categories you think it has done well in? I think you mentioned that it could
have expanded more. What are some strengths in the portfolio and where could it get out of?
JS: The big area I think for them in terms of jackets still is around lightweight down. They could definitely
increase that offering and build more lightweight winter jackets into their offering. On the parkas, it’s still such
a huge part of their business, so I still think they have a massive, not struggle, a massive job, to move away
completely from that category and really drive some other categories. The knitwear category that they offer, I
still think they’re struggling there to really brand that, even though I can see there’s a lot of newness coming
thorough in that category. The other types of jackets they’re offering, such as wind wear and the rain wear,
they don’t seem to be landing. I still feel that they haven’t cracked that, and I don’t hold out for a lot of growth
there. I think there’s a lot more they can do as I said, with feminising the product, so growing the overall
women’s section. In terms of new category being offered, the one that I think the whole world knows about is
the footwear, and I think a lot of people are anticipating footwear, but when it lands, I don’t know if it’s going
to be as big as a lot of people expect. I am imagining there is going to be a pinnacle Arctic boot of some sort
and then perhaps three or four more styles which are more conducive to normal footwear or normal
surroundings, normal weather. Really I think it’s more of the same for Canada Goose and I think they really
have to increase the newness in their line.
[00:47:28]
Q: You mentioned Canada Goose expanding into the California or the warmer markets. How much does
Canada Goose actually listen to its consumer? Are consumers asking for products that they want to wear in the
summer, or is it the company’s own way of organically driving new product innovation?
JS: They do listen to consumers. They’re not a consumer-first brand, they’re a product-first brand I would say,
and as I said before, they’re very big on their cultural heritage and their authenticity. I think there are probably
a lot of consumers out there that would like to see the brand on a lot of different types of clothing, but I don’t
think it’s ever going to happen. Are they market driven? I don’t think they’re a market-driven company. Do
they listen to their consumer? I think they do within the realms of their product offering and definitely in
terms of clienteling, so maintaining relationships with consumers is something that the brand is very hot on,
but I don’t know if that trickles through into product design and build.
[00:49:05]
Q: How does the D2C approach work from a marketing perspective when trying to build out digital
capabilities and drive traffic to your site? Could you discuss how Canada Goose thinks about marketing on a
digital playing field?
JS: Like most companies these days, the majority of the marketing is digital for the brand. The brand does
operate a CRM platform, but the CRM platform is very much, it’s less of a community, it’s more driven by the
brand and the brand speaking to individual consumers as opposed to consumers talking to consumers. It’s
active on social. It does operate, what it’s usually driving, it drives a lot of brand activity. Again, there’s not
much in terms in terms of promotional. It really is brand activity. The brand activity focuses largely around,
there was a lot of localisation going on, so working with artists or people that are active in the community
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which resonate with the brand’s own culture and ethics are usually the way that the marketing is filtered
through. Then there is a lot of focus around doing tie-ups with designers and celebrities. Every year, there are
about six or seven drops which are kind of high focus, very low units, designed to build brand equity an to
appeal to the hype beasts, the kind of collectors and people that are very fashion forward.
[00:51:12]
Q: How do you think Canada Goose assesses this shift to lifestyle? You’re buying all of these so-called
functional products, but people are wearing them in the casual market. Does Canada Goose recognise this or
will it still very much be a functional brand?
JS: They definitely recognise it. They are fully aware of the space they’re playing in, so it’s not a case of they’re
just blind to it. I think it’s really about staying authentic and that is what’s driving interest from a luxury
perspective. Like Moncler, they have worked with designers to take all of these very serious authentic Arctic
features of product and put them into clothing which is, you definitely couldn’t wear it if you were in the
Arctic, but it has every feature for an Arctic jacket but maybe oversized or in crazy colours, or in different parts
of the jacket where you wouldn’t necessarily see it. They definitely play with that, I just don’t think it’s a big
part of their business. It hasn’t filtered through to the normal wear. They have a few styles which are very
serious, like Snow Mantra is probably the most important jacket for them in the expedition jacket. All of the
other jackets in the line are kind of taking, feeding from that DNA, so the jackets that you would see people
wearing in New York, like a Langford or something like that, they have elements of that jacket in, and they are
serious enough to feel too serious for the environments they’re in, but they’re very functional. They are fully
aware of what they’re doing, but would they take some of those elements and put them on a t-shirt? Definitely
not. There is still that very much focused mindset about the products, the function of the product being super
important, even if they are playing with the elements in a very, very small way for a very, very small line of
jackets.
Up until recently, they were running a section of clothing called Branta. Branta was their pinnacle category
and every season they would have a drop of about three or four jackets which were made with premium
materials, having crazy prints in them, elements that are very fashion orientated and there would be a huge
media focus on that, but in terms of the units, very, very low units but big exposure, but not necessarily any
sort of serious revenue behind it.
[00:54:23]
Q: We talked about Canada Goose exiting from fur and you highlighted its ability to command that price
point, given that we won’t have any more fur. Could you talk about what it would do for the company’s costs?
Is there much upside from a margin accretion perspective if it does exit from this part of the manufacturing
process?
JS: That’s a really difficult one for me to comment on that. I think what they have said is that they wouldn’t be
using any new furs. Recycled fur, upcycled fur, they might be doing some stuff with fur like that. The cost of it,
it’s a natural material so it’s a supply and demand. One problem is the amount of jackets they’re making, the
problem there isn’t enough fur in the world to keep making these jackets like that and they’ve already said
they, even when they’re using fur, they only use wild fur, trapped fur. It’s not farmed fur they’re using, so
they’ve already limited the supply down there. For sure, if they can command the prices that they’re
commanding now without fur, I think it’s got to have an impact on the margin, a direct impact, a positive
direct impact into the margin, unless they’re planning to use some other crazy environmental material
somewhere in the jacket which will cancel that cost out, but for sure, it’s going to be a positive.
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[00:56:07]
NH: We will now end the Interview. Let me just close by saying thank you, Jordan, for your time today, we
were able to cover a lot. I appreciate your insights and thank you, clients, for joining Third Bridge Forum’s
Interview today. Clients, if you wish to speak with our specialist in a private call or meeting then please let
your relationship manager know. Have a good one.
JS: Thanks a lot, bye-bye.
Transcription ends at 00:56:22 of the recorded material.
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