Toronto's Canada Goose sets sights on markets overseas
The head of Canada Goose is setting his sights on India and other parts of Asia as he looks beyond cold weather for future growth in the jacket business.
Dani Reiss concedes that stocking shelves in warm climates might seem usual, but he says it makes sense for the company's high-end outerwear, which has become a fashion statement as well as a way to stay warm.
"Cold is relative. Tokyo is our best market in Asia and it never goes below zero," the chief executive said in an interview at the company's headquarters in midtown Toronto.
"Just like someone in Toronto buys a Range Rover, someone in Tokyo buys a Canada Goose jacket."
Canada Goose is at a turning point.
Take a glimpse of any city street this time of year and you'll likely see Canadians wrapped in the jackets emblazoned with the company's trademark badge on the sleeve and a fur-trimmed hood.
Each jacket costs between $500 and $1,200, depending on the style, and while that qualifies as a prestige product, its popularity transcends other pricey brands.
Reiss wants to boost the company's reputation beyond Canada where it sometimes seems like the jackets couldn't get any more popular.
Last week, Canada Goose struck a deal with Bain Capital that gives the U.S. private investment firm a majority stake in the brand and promises the kind of financial support that will the help it push into new markets. Reiss will maintain what he calls a "significant minority position."
Bain Capital, which manages about $70 billion in assets, has a history of investments in Canada.
The Boston-based private equity firm spent $2.55 billion to buy a stake in Shoppers Drug Mart (TSX:SC) before selling most of it off over a five-year period.
Bain was also part of a group of investors that paid $960 million for Bombardier Recreational Products and more recently, the firm acquired a stake in Dollarama (TSX:DOL), the successful discount retailer.
'Beyond just coats'
"What Bain Capital really likes is the reputation," said David Detomasi, assistant professor of international business at Queen's University.
"They'll consider expanding the brand beyond just coats."
Think Canada Goose watches, sports equipment or even down duvets that are marketed as the warmest bedding in the world. While the company hasn't laid out any ideas yet, the possibilities are limitless, as long as Canada Goose maintains its reputation.
"For us, we're always very careful with our product extensions," Reiss said.
He emphasized that Canada Goose plans to stick with its current high quality standards, which means cheaper jackets are not in the works.
"I think it's a lot more exciting and fun to go upmarket," he said.
"If there ever was pressure to go down-market it was in the early days when we were really small, wondering what we were going to do."
Reiss remembers those days well because it wasn't that long ago.
Even though Canada Goose was founded in a Toronto warehouse more than 55 years ago by his grandfather, the company only became a major brand over the past decade.
Reiss had just graduated from the University of Toronto with an English Literature degree when he took a job at the company in 1997. He didn't plan to stick around the family business either, he said. The job was purely to help fund a trip to Europe where he planned to pursue a career as a short story writer.
"I said yes to my folks because it paid $12 an hour," he said, noting that he was skeptical of the job at first.
"I'm not a business guy, I'm not a brand guy ... I probably am now."
"I definitely am now."
Growth prompted search for new financing
The growth of Canada Goose has been fierce with its jackets making appearances in Hollywood movies like "The Day After Tomorrow" and more recently on the cover of Sports Illustrated's swimsuit edition featuring shot of model Kate Upton in a partially open jacket and a bikini bottom.
The momentum encouraged Reiss to turn to investors in an effort to drum up additional financing for the private company's growth. The process was whittled down to about eight interested parties before Bain Capital emerged victorious.
Critics have questioned whether the investment will signal an end to the made-in-Canada promise that helped build the Canada Goose name, though David Kassie, chairman of Canaccord Genuity and an adviser on the transaction disputes those suggestions.
"Dani made it hugely clear to everyone through the process that (made-in-Canada) was, in his view, a big part of the Canada Goose success," he said.
Canada Goose products are manufactured at the company's facilities in Toronto and Winnipeg, or contracted out within the country, with the exception of its gloves, which are made in China. The company said it can't find a Canadian facility with the technology to make down-filled gloves.
Next month, Canada Goose, which employs more than 1,000 people, will move to a new factory in Toronto that nearly doubles the size of its workspace to 94,000 square feet and increases its capacity.
Kassie said he believes Bain Capital will look south of the border to drive more sales of the jackets.
"The U.S. is right beside Canada and it is hugely underpenetrated for this brand," he said.
"That's a huge growth opportunity that is pretty low hanging fruit."
Over the coming years Reiss said Canada Goose will prove to skeptics that maintaining its operations in Canada is a primary goal. He said he has no intention of leaving the company, but will be focused on the future.
"I don't think we're a household name," Reiss said. "In a lot of ways we've only touched the surface."