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Canada Goose shares soar after debut IPO

Reuters

A woman wears a Canada Goose jacket at Times Square in New York on Thursday.

Bloomberg TORONTO (Bloomberg) — Canada Goose Holdings Inc.’s shares surged in their debut Thursday after the high-end coat maker went public with the richest valuation among its global peers.

Shares climbed almost 27 percent to close at C$21.53 in Toronto, where the company is based, after the retailer priced its initial public offering at C$17 apiece. That gives Canada Goose, which is also listed on the New York Stock Exchange, a market value of about C$2.3 billion ($1.72 billion). 

Known for its $900 parkas worn by celebrities from Toronto rapper Drake to Blue Jays slugger Jose Bautista, Canada Goose is trading at a richer multiple than its publicly listed luxury peers, Bloomberg Intelligence analyst Deborah Aitken wrote in a note Thursday.

If annual sales and earnings grow at a conservative estimate of 30 percent, the company would have a price-to-earnings multiple of about 39 times, beating out Hermes International’s 37.2 and Brunello Cucinelli SpA’s 33.5, Aitken wrote.

Investors are betting that the retailer can grow international sales of its flagship coats, and that it can expand into new products, said Bruce Winder, partner and co-founder of Toronto-based consultancy Retail Advisors Group.

“Investors have to be careful because there’s always that first day of trading halo,” Winder said. “The jackets across the world will work. It’s more about the other things and how much they are banking on that.”

The company plans to expand into markets including knitwear, footwear, hats and gloves as well as travel gear and bedding in the coming years, according to the deal prospectus. Chief Executive Officer Dani Reiss says it will do so thoughtfully, to avoid the brand dilution seen at other retailers that expanded too quickly.

“Every product we make needs to be a best-in-class product,” he said. “We don’t just put logos on products,” Reiss said in a telephone interview.

It’s not uncommon for high-profile IPOs to experience big gains on their first few days of trading. That first flush of success doesn’t always last long.

Snap Inc., the maker of the disappearing-photo app Snapchat, priced the biggest IPO in North America of 2017 on March 1, with a $3.4 billion offering. While shares are still 17 percent above the IPO price, they dipped below $20 for the first time Friday, well below the intraday high of $29.44 they hit on their second day of trading.Speech

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