Perhaps one of Canada’s most successful initial public offerings (IPOs) of late, shares of Canada Goose Holdings Inc. (TSX:GOOS)(NYSE:GOOS) have been on a tear, due in part to investor optimism surrounding the ability of the brand to generate much higher levels of profitability as the company increases its footprint of corporately owned stores and branches into e-commerce further.
And then there’s China.
Canada Goose has recently announced it intends to partner with Asian mega-giant Alibaba Group Holding Ltd. (NYSE:BABA) to grow its footprint in China, focusing on the Beijing and Hong Kong markets first.
This foray is expected to see the company’s Chinese division grow to potentially the same size as its U.S. market currently, a move which could propel shares of Canada Goose much higher in the intermediate to long-term.
The company’s scarcity strategy, whereby Canada Goose specifically chooses to produce only what it needs and not what the market may demand, has driven outages in many parts of the world, including China.
Excess demand for the company’s products, combined with untapped luxury markets that are some of the largest in the world, have investors salivating at the opportunity ahead for companies like Canada Goose which are, all things being equal, still gaining a foothold in such markets.
Time will tell how well Canada Goose’s international strategy plays out – I’m definitely on the side of the fence that says the upside may be higher than what most think. At more than $1,000 per U.S. parka, they’re doing something right.
Invest wisely, my friends.
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