Canada Goose Inc., the wildly successful company behind the ubiquitous high-end parka, has sold a majority stake to U.S. private equity giant Bain Capital in a move that allows it to aggressively push into new markets in the U.S. and overseas in places such as South Korea.
The two companies did not disclose the terms of the investment, but a source familiar with the deal said the transaction values Canada Goose at at least $250-million. Bain wrote a nine-figure cheque to buy majority control, this person said. Dani Reiss, the chief executive officer and grandson of the company’s founder, will remain in charge with his current management team and maintain a “significant minority stake” in the company, Mr. Reiss said in an interview.
Even as other international companies have cut Canadian jobs in favour of cheaper labour costs elsewhere, Mr. Reiss said he will not compromise on Canada Goose’s production operations across Canada, at two flagship facilities in Toronto and Winnipeg. Canada Goose executives, as well as the new investors and marketing industry veterans, believe that dedication to made-in-Canada authenticity has been at the core of the company’s furious growth, which helped get it on the cover of Sports Illustrated’s 2013 swimsuit edition – where supermodel Kate Upton wore a parka with the headline “Polar Bare.”
“I think the market’s tough out there, but we’re committed to manufacturing in Canada,” Mr. Reiss said.
“The world at large, they love our brand. We’re authentic and we’re real and we’re made in Canada.”
When Mr. Reiss went to the market in search of investment, he said he was explicitly looking for a partner that would agree with keeping production in Canada – a mindset that is out of step with a “cheap chic” apparel industry moving production to low-cost but accident-prone facilities in Bangladesh and other countries. The commitment to Canadian manufacturing is written into the deal, a company spokeswoman said.
Mr. Reiss chose Bain after more than 10 “expressions of interest” from various firms, according to David Kassie, chairman of Canaccord Genuity, which advised Canada Goose on the deal.
“Dani was looking to go to the next level and wanted some capital injection into the company, as well as the help of somebody who had a lot of experience helping to build companies to the next level,” Mr. Kassie said.
“It is a very fast-growing, very high-end, very high-margin [business] … Dani has been very careful about the brand. If anything, the growth could have been more if he wasn’t as careful about the brand. He’s done a very good job at supply and and where [the product] is found.”
The company is most famous for its popular high-end parkas, which are made from goose down sourced from Hutterite farmers across rural Canada, come with coyote fur-lined hoods and can cost upwards of $1,200. Maintaining Canada Goose’s high-end brand, while expanding from the polar explorers that once formed the company’s niche, has been Mr. Reiss’s legacy since taking over from his father in 2001. The Canadian Marketing Association (CMA) named Mr. Reiss its marketer of the year on Nov. 29.
“It is one of the few big international brand success stories with the name Canada in it,” said CMA president John Gustavson. “The word Canada has some power to it, and he’s capitalized on it with a great product. And he’s kept those manufacturing jobs at home.”
The company has grown briskly in the past decade, increasing annual revenue from about $5-million in 2001 to roughly $150-million in 2013. Canada Goose now has 1,000 employees and operates in more than 50 countries around the world. David Ian Gray, a retail consultant with DIG360 who has worked with retailers such as Mountain Equipment Co-op, said it is possible with high-end, high-margin businesses such as Canada Goose to keep production closer to home. “But there’s always pressure with scale to start moving things offshore,” Mr. Gray said.
Mr. Reiss said the firm’s growth hasn’t stopped in warmer climes, and that the company is experiencing a lot of growth in India and across the Middle East.
“It’s a global world, people travel a lot – people from those [warm] places, go to cold places,” Mr. Reiss said. “It’s like people owning a Land Rover in Toronto. They’re never going to take it off road. One of our biggest markets is Tokyo, where it never goes below zero.”