The well-known Canadian outerwear brand Canada Goose is in dire straits. They’re facing an enormous $8.4 trillion net loss and facing compounding impacts with waning sales in their most vital markets. In the most recent quarter—ending June—the company lost a net CA$125.5 million, a loss more than double what analysts were expecting. This figure is a considerable leap from the CA$74 million loss they recorded over the same period last year.
The company’s top line withstood a challenging market environment. On a constant currency basis, it was down 1.1% to CA$1.35 billion for its fiscal year ended in March. Sales have particularly struggled in several critical regions: Canada experienced a 2.4% decline, China saw a 1.7% decrease, and the Europe, Middle East, and Africa (EMEA) region faced a staggering 12.1% drop.
Inspite of these losses, Canada Goose saw itself on the receiving end of an incredible boom to its Chinese market. Real estate sales soared by an astonishing 47% throughout fiscal year 2024. Surprisingly, this growth ranked China as Canada Goose’s biggest market, surpassing Canada for the first time ever. Currently, about 40% of Canada Goose’s worldwide retailers are in China.
Bain Capital bought Canada Goose in 2013 for $250 million. Now, they are allegedly exploring options to take the company private once more. The KKR-controlled company has received takeover offers valuing Canada Goose at about C$1.9 billion. This amounts to a significant 177 to 1 return on their original investment. Industry experts argue that this possible deal is an example of a standard loop in private equity. They explain how Bain’s ownership experience—buying the brand, taking it public, and now looking for an exit—has tracked the typical pattern found all across the industry.
“Bain’s Canada Goose deal represents a classic PE fund cycle — acquiring the brand, taking it public and now looking to exit,” – industry veteran
According to available public data as of March, Bain Capital controlled over 60.5% of Canada Goose’s multiple voting shares. This dual-class ownership provided them with 55.5% of the company’s total voting power. This major holding highlights Bain’s powerful role in any upcoming strategic move much challenged Canada Goose will have to make.
The outerwear company had been embroiled with related backlash on the quality of their products, primarily in China. Consumers are concerned about how a brand can be thought of as a luxury brand when it’s sold at mass-market retailers. Writing as an industry analyst, Yaling Jiang pointed out the difficulties currently plaguing Canada Goose. For the brand, it’s an ongoing challenge to maintain its luxury cachet in the face of repeated quality issues.
“It’s awkward when they bank on lifelong quality and then they face a number of quality scandals in China … and when they call themselves luxury fashion but many consumers expect to buy them at [mass market] outlets,” – Yaling Jiang
The company has a long history of superb revenue growth. On a constant currency basis, it was up 23.2% in 2022, 10.9% in 2023 and 9.6% in fiscal year 2024. These numbers are a stark reversal from today’s often bleak performance measures and highlight the perilous nature of the retail landscape.
Canada Goose would not be successful today without its ingenious, by-design manufacturing chops. Having 75% of all of its products manufactured in Canada, the company already received an exemption from U.S. tariffs under USMCA (United States-Mexico-Canada Agreement). This natural advantage has uniquely set the company up to withstand some of the trade headwinds better than its rivals.