Canada Goose Holdings Shares Surge In Stock Market Debut

Canada Goose Holdings (NTSE:GOOS) shares surged 40% in their trading debut on Thursday after the high-end parka manufacturer raised $340 million in an initial public offering.

by BNN.ca

The maker of $900 parkas priced the offer above the marketing range on Wednesday, underscoring strong investor appetite for a brand that celebrities have made popular.

By 12 p.m. ET, the Toronto-listed shares were trading at $21.13, compared with an IPO price of $17, after opening at $23.86. The benchmark Canadian stock index was up 0.44 per cent.

Founded in a small Toronto warehouse 60 years ago, Canada Goose was acquired by private equity firm Bain Capital in 2013. The company's fur-laced jackets and hoods are sold in 36 countries around the world.

The company sold 20 million shares at $17.00 each after pitching them to investors at $14 to $16. Part of the proceeds of the IPO, which valued the company at about $1.8 billion, will go to paying down debt.

“It’s a great Canadian story; but it’s trading at 36x earnings, which is close to the valuation for Hermès. I think a Hermès scarf is much nicer than a Canada Goose jacket, but that’s just me,” said Paul Harris, partner and portfolio manager at Avenue Investment Management, in an interview with BNN. 

Avenue Investment Management portfolio manager Bryden Teich, who did not participate in the IPO, was cautious about the company's growth prospects.

"It is a very niche product at the high end of the retail market, and the retail market is under pressure overall," Teich said. "In light of an over-indebted Canadian consumer, a really tough retail environment, I have a hard time seeing how it becomes a big growth story."

CIBC Capital Markets (CM.TO 0.54%), Credit Suisse (CSGN.S), Goldman, Sachs & Co (GS.N 0.58%) and RBC Capital Markets (RY.TO 1.10%) managed the share sale.