Less than three minutes into the 2004 thriller The Day After Tomorrow, we see our first Canada Goose logo. No one so much as shivers throughout this entire sequence. And when Dennis Quaid breathlessly props himself up, we see a nice, clean shot of that pristine logo on an unblemished parka.
The film was a turning point for Canada Goose, part of a careful marketing strategy implemented by CEO Danny Reese. that allows the brand to sell parkas for more than $2,000. But with the company under fire for its use of animal products and with increased competition from other brands, can Canada Goose weather a changing luxury outerwear industry?
So how did a Canadian outerwear manufacturer transform into a globally recognized luxury fashion brand? And why are these coats so expensive? When I think of Canada Goose, one thing that really sticks out is how quickly it's managed to move from a real utilitarian private label company into the luxury space.
Before Canada Goose was Canada Goose, it was Snow Goose. And before that, Metro Sportswear Limited. Started in 1957 by Danny Reese's grandfather, Metro Sportswear began in a tiny Toronto warehouse with a focus on high-performance outerwear for Canada's working class.
Unlike the prominently branded coats modern-day Canada Goose offers, most of Metro Sportswear's products were meant for other companies to slap their logos onto, like L.L. Bean and Eddie Bauer. But then Danny's father, David Reese, joined the company in 1972, filled with ideas that would set Metro Sportswear on the path to becoming Canada Goose.
This was just one of his innovations, which changed the game not just for the company, but for the industry. David invented one of the first ever down-filling machines, which revolutionized Metro Sportswear's manufacturing process. Instead of filling every garment by hand, a slow, messy, and inexact process, this machine allowed workers to ramp up production with more control over quality.
The company became known for its down-filling expertise. It even sold the machines to other factories for a time. But crucially, the down-filling machines opened the door for the company to start making more parkas, its signature item to this day. So in our production lines we have the capability to manufacture multiple styles, but at any given time we are producing one style. When Business Insider visited, the factory was focused on the snow mantraparka.
This one thing This $1,895 parka takes 8.5 hours, 247 pattern pieces, and 45 craftspeople to come together. Unlike most garments, which might be sewn together by a handful of people, a single Canada goose jacket requires a small army. The sewing is the most critical part of it.
The fabric must first be cut. In order to support our cutting operations here of approximately 2,000 jackets every day, we consume about 14,000 meters each and every single day. The down, stuffed and fluffed. And don't forget the iconic logo. Each production line can pump out up to 300 jackets a day.
But Canada Goose declined to tell BI how many finished jackets are stored in the warehouse at any given time. I don't know. That's kind of sensitive, sorry. Each jacket goes through rigorous testing to make sure it will perform as advertised. Tests for strength, color transfer, and resistance check for flaws.
This machine rubs up to 40,000 circles on a piece of sample fabric. fabric. And after the test is finished, we check the appearance of the fabric to see if there's any pilling or any noticeable change to the look of the fabric. To capitalize on the company's reputation for quality, in the late 1970s, David started selling Metro Sportswear's parkas under an in-house brand, Snow Goose. You don't probably know the name of any private label company.
I don't. All of the luxury brands that we think of rely on branding. It sounds obvious, but they have a logo.
You think of Louis Vuitton's LV. You think of Gucci's horse bit. Snow Goose really took Canada Goose from something that only people in the clothing industry, in the garment industry, in the manufacturing industry would have heard about, into something that everyday people on the street would recognize and hear about.
They didn't cost a grand yet, but the private label... gave the company a stepping stone to the Canada Goose prices we see today. But how do you convince folks to buy your new brand name label?
Prove you can keep people warm. In the 80s, Metro Sportswear did. It developed the Expedition Parka for the United States Antarctic Program. This was the company's warmest parka yet, with a windproof outer shell and...
resistance to temperatures down to minus 30 degrees Celsius. And a logo that looks incredibly similar to the Canada Goose logo we see today. Scientists nicknamed the coat Big Red, and it became standard issue for the Antarctic program. You'll still see bright red scientists and staff scuttling through the snow at McMurdo Base and South Pole Station today. Canada Goose sells a civilian version of the Expedition Parka.
For $1,950, you can be as warm as an Arctic researcher. Until the early 90s, Metro Sportswear mainly served the Canadian market. But the early success of the Snow Goose brand helped the company take its first steps into Europe.
Enter current CEO Danny Reese. He discovered that snow goose was already trademarked in the region. So in 2000, snow goose became Canada goose.
One really important question, is Canada goose prepared to provide people with park as if we hit an apocalyptic ice age? Absolutely. That's a question I don't get every day.
Before Danny took over as CEO in 2001, he was already pushing the company into the future. I was our company's first customer service representative answering phones. I set up our first email.
I cannot operate a cell machine. But other than that, I've done pretty much every role, from packing jackets to sweeping floors, taking out garbage as a kid to answering the phones and typing letters. When Danny asked his father to step aside so he could run the company, company, revenue sat at just $2 million. Danny told Forbes that at the time, Canada Goose had a cult following in the coldest places on earth. But that cult following made for a small market.
He wanted to cast a wider net. But first, he needed to convince regular people they needed high-performance outerwear. So he made it a luxury.
Probably the most recognizable symbol of that shift is the logo. The first Canada Goose logo was a nod to the Snow Goose logo, featuring a goose with its wings outspread. But in the early 2000s came the emblem we know today.
The patch is supposed to make wearers feel like they belong to a club. Instead of solely catering to a niche market of folks who need these parkas, he shifted the company's focus to high-income urbanites in cold climates who might want these parkas. So going up market for Canada Goose meant going from something that people bought because they needed it to people buying it because they want to buy it.
It means raising prices, marketing to a more luxury clientele, selling in more luxury stores. The price of luxury came to about a grand. The issue was Canadian city dwellers didn't seem to be interested.
Every Toronto store owner Danny pitched the company's new catalog to turned him down. So he tried his luck abroad. Danny managed to persuade a handful of high-end retailers in Europe to purchase some parkas.
And funnily enough, once Canadian retailers noticed the coats catching on abroad, they started placing orders, leading Canada Goose to re-import its product. By 2008, the company's sales revenue had grown to $16.4 million. And this growth came with next to no traditional marketing budget. Instead of purchasing prime-time commercials or two-page spreads, Dani handed out parkas to people who would be seen working out in the cold.
Hockey players, bouncers, valets, even ticket scalpers were gifted jackets in the hopes that they become analog influencers. While this effort helped the brand build an aura of authenticity, it didn't quite capture the attention of the luxury consumers Dani was trying to reach. Things really picked up when Canada Goose entered Hollywood. with its appearance in 2004's The Day After Tomorrow.
Canada Goose did not pay for this inclusion, according to its former head of marketing, but it did provide parkas to the entire cast and crew. Months later, moviegoers saw the logo once again in national treasure. In 2012, Danny dove deeper into the entertainment world by sponsoring film festivals like Sundance and the Toronto International Film Festival.
He gave out hundreds of coats to attendees, filmmakers and actors, people in the industry who would be seen. It didn't take long for the Canada Goose logo to pop up in paparazzi photos of celebrities like Emma Stone, Hugh Jackman and Common. By the time Canada Goose filed for an IPO in 2017, it was reporting a revenue of $291 million.
Canada Goose really embraced gifting before the influencer era where gifting has become really popular. It's a lot more authentic to see someone wearing something because they're choosing to wear it versus being paid to. One thing that's important to remember is that gifting is a form of marketing.
It is a marketing budget. It's expensive to send hundreds, thousands, whatever it is. Dozens of these coats to people, but it's one that consumers believe, probably rightfully so, is a little more authentic. At this point, Canada Goose products have appeared in over 300 film and TV productions around the world.
Industry folks wearing gifted jackets is one thing, but leveraging that popularity to connect with the brand's actual consumer is something else. Been a wholesale brand for so long. And we decided that we wanted to have direct relationships with our consumers.
We wanted to sell online. We wanted to have stores. In 2014, the company launched its website. And in 2016, its first flagship stores in Toronto and New York City. Luxury is all about experience.
It's about feeling good when you wear the product, feeling good when you're buying the product, feeling good when you're browsing for the product. And you can control that whole experience in a brick-and-mortar boutique. And what you saw was when Canada Goose started opening brick-and-mortar stores, analysts reported that they were actively siphoning off sales from other outerwear brands like North Face. In just four years, Canada Goose's direct-to-consumer sales went from zilch to accounting for nearly half the company's revenue in 2018. And today, it accounts for over 70% of its business. The company currently operates 72 retail stores and plans to open more.
And while these plans reach across the globe, anchoring the company in Canada remains a priority. As other manufacturers in the industry picked up their operations and moved them abroad to cut costs, Danny made a bet. We thought, well, if we could stick around and stay Made in Canada for, like, say, five years while everyone else left. that we would be in this great position five years later because we'd be amongst the only people left making stuff in Canada, and that's what happened. And so, you know, as a result, we had this competitive advantage where we were an industry leader at Made in Canada.
Canada is really cold, and so you trust that if this is made in Canada and people in Canada wear it, it's going to keep me warm in New York or it's going to keep me warm in London. It also is a signifier of... Quality, whether fairly or not, people assume that if something is made in Canada versus made in China, there's going to be more dedication to quality and making sure it works as a performance garment. You see this with Hermes.
Most of their products are still made by hand in France. You see it with Brunello Cucinelli. Their sweaters are made in Italy in a factory town.
Yet the company has moved some of its manufacturing abroad. Its knitwear line, introduced in 2017, is manufactured in Italy, and some down-filled items come from Romania. Gloves and mitts are made in China. If you scroll down to product info on Canada Goose's FAQ page, you'll see that the company says it intends to find a Canadian manufacturer for gloves and mitts. But knitwear will stay abroad, the official reasoning for this being that's where the experts are.
Losing control over your supply chain, you just lose some of that authenticity that you have really capitalized on and kind of sold as your brand. So far for Canada Goose, this has not been a problem. The brand's most notable controversy comes from its use of fur and feathers.
In 2015, the organization Animal Justice filed a complaint with Canada's Competition Bureau. saying that Canada Goose's description of its coyote trapping practices as humane was false and misleading. The complaint was dismissed in 2016, but protests by PETA and other animal rights activists intensified. Protesters appeared at store openings, at the company's IPO, even outside Danny's house in 2021. Just over a month after that protest, Canada Goose announced its intention to end the use of all fur in its products.
Danny has never said outright that the backlash is what moved him to make the change. To us, it was an intuitive decision to stop using fur and to become a more sustainable company. But that didn't stop PETA from claiming victory. Luxury brands and fur have always gone hand in hand.
Fur is a limited product, which means exclusivity. It's expensive. warm.
What you're seeing in response to environmental concerns or animal welfare concerns is some luxury brands moving away from fur. Montclair, Dolce & Gabbana vowed to stop using fur. Canada Goose vowed to stop using fur.
It's really hard to tell how much of that is a business reason in terms of people are not buying fur and how much of that is a marketing, a marketing, not ploy, but it's a marketing move. to make the brand seem more palatable in response to critics. Canada Goose wouldn't stop cold turkey, however.
It laid out a multi-year plan for ditching fur, starting with ceasing the purchase of fur by the end of 2021 and the manufacturing by no later than the end of 2022. The functionality of fur worked in such a way as it protected a person's face in the extreme cold weather or in wind storms and things like that. There's no specific material that replaces it. We very much focus on the construction of our hoods and all the surrounding elements to make sure that they were equally as functional as they were before when they did have fur. Fur hasn't been Canada Goose's only animal rights controversy.
Activists have also taken issue with the company's use of down. In 2017, PETA released a video that supposedly depicted mistreatment of geese at Canada Goose's down supplier. A PETA spokesperson told BI that afterward, Canada Goose agreed to diversify its products away from down. PETA has since removed mention of Canada Goose from the video.
But there's little indication these controversies have hurt Canada Goose's sales. While profit has fluctuated for Canada Goose over the years, annual revenue has grown pretty consistently. It's been inching closer and closer to a billion dollars since 2022. The shift to direct-to-consumer has caused a dip in wholesale revenue that has analysts cautious about Canada Goose's future.
In response to the strategy change, wholesale revenue fell 41% this year. Direct-to-consumer has a lot of long-term growth potential, but moving away from wholesale so quickly has already caused some issues. Let me just, can I just check what it is today? Let's see. Canada goes stock.
Not good? Okay. Over the last five years, the company's stock value has plummeted about 70%. In October 2024, Wells Fargo downgraded the stock from equal weight to underweight. And basically that means that it's no longer going to perform, or they don't expect it to perform.
Similarly to its luxury peers, they expect it to perform not as well. The brokerage cited diminished brand heat as the main reason for the downgrade. Mentions of Canada Goose on social media fell 24% in the third quarter of 2024. At the same time, there was 11% growth in mentions of other outerwear brands.
A lot of luxury stocks have struggled this year, and it's a reflection of the macro environment. It's also a reflection of Canada Goose maybe losing a little of that brand heat. In May 2024, Canada Goose updated its long-term goals. It outlined three main areas of focus.
Strengthening the DTC experience in person and online. Expanding product lines. And simplifying internal operations.
The creation of new categories moves Canada Goose's focus away from its core line of down-filled products, including parkas with $1,000-plus price tags. Shoes, home goods, and rain and warm weather clothing entice customers to buy more from Canada Goose year-round. For a company like Canada Goose, which is built off one really high-quality product that's meant to last your lifetime, it's really hard to create repeat customers. And it's a balancing act because you want them to come back, but you don't want to move too far away from your niche because then you lose that core hero product. In May 2024, the company appointed the fashion designer Hader Ackerman as its very first creative director.
His first collection is true to form for Canada Goose, combining the old and the new in a 60-plus piece array based on the original Snow Goose line. It includes parkas, but also items from newer product categories like apparel and accessories. You want to be really careful when you're expanding your product range or... broadening your market because again it's a lot harder to go up market than it is to go down. Dani told Vogue Business that bringing Ackerman on was part of the strategy of infusing a new energy into the brand but in a way that stays true to our heritage.
It's classic Canada goose mixing its established authenticity with innovation. One thing that would be really smart for Canada Goose to do is move into different styles of winter jackets. So the key is to maybe make a new winter jacket style that people want.
They don't necessarily need it. Their old Canada Goose will keep them warm, but it's a new look. It's hot. It's what everyone's wearing.
Overall, analysts seem to be cautiously optimistic about the future of Canada Goose. But as the company navigates its strategic shift, only time will tell if it can soar to new heights or if it's just winging it.