GOOS is a Canada-based maker of high-quality outerwear. Its products include heavy winter coats, lighter spring and fall coats, gloves, stocking hats, travel gear, and bedding. While the quality is high, the price certainly reflects that. Some of its coats cost upwards of $900-$1,000.
GOOS not only designs and manufacturers its outerwear, but, it also is a distributor and retailer of its products. This vertically-integrated model gives the company the control to design the products it wants, without outside influence, while also capturing higher margins. In regards to its retail business, its products are sold through two segments: Wholesale (88.6% of revenue) and Direct-to-Consumer (11.4). Its wholesale segment includes select online retailers and distributors in 36 countries (wholesale segment). Its DTC segment includes its e-commerce sites in Canada, the U.S., U.K, and France (direct-to-consumer segment). It also recently opened two retail stores in Toronto and New York City.
Geographically, the U.S. is by far its largest market with 35.5% of revenue being generated here. It has also been its fastest growing market with a CAGR of 75.5% from 2014-2016. Next is Canada at 33% with a CAGR of 15% . Rest of world accounts for the remaining 31%.
Taking a closer look at its most recent results, revenue jumped by 42% year/year to $352.7 million for the 9-months ended December 31, 2016. The growth was driven by both its wholesale and DTC segments, which saw increases of 20% and 298%, respectively.
GOOS' gross margin has been rising in impressive fashion, reaching 52.3% for this period, vs. 50.9% in the year ago period. The increase in gross margin was attributable to a significant increase in DTC channel revenues partially offset by higher inventory provisions on raw materials taken in F17, write-offs related to damaged products and, to a lesser extent, higher raw material costs from products sourced in U.S. dollars and a shift of sales mix to lower margin geographies.
On the expense side of the equation, SG&A, which includes headcount and brand investment costs, is its largest expense. SG&A expenses shot higher by 51% and represented 31.3% of total revenue for this period. That is up slightly from the same period a year ago, at 29.3%. The increase here is partially attributable to supporting new marketing initiatives and the entry into new markets.
GOOS' strong revenue growth and expanding gross margin more than offset the spike in SG&A expense. Specifically, operating income grew by 37% year/year to $69.1 million.