As most readers are aware, GOOS is a designer and maker of higher-end outdoor apparel products. Over the past couple of years, the brand has caught fire, thanks to the high-quality of its products, and, the simple yet distinguished look of its apparel (the logo with the outline of Canada makes it instantly recognizable). It sells a wide variety of winter coats, stocking hats, gloves, etc. and despite its rapid growth, it still is in the early innings of its growth curve. Revenue in FY16 was $291 million. By contrast, competitor Columbia Sportswear (COLM) did nearly $2.4 billion in sales last year.
Not only does GOOS have plenty of runway still with its winter product lines, but, very recently the company has expanded its product line into spring and fall categories, looking to capitalize on its strong brand name. Furthermore, the company is selectively launching new retail stores to complement its e-commerce channel, and, it is only scratching the surface in terms of international exposure.
With that set of catalysts in place, it isn't overly surprising that GOOS delivered impressive results again. For its fiscal Q1, it reported a loss of CAD ($0.13), beating the Capital IQ consensus by CAD $0.06. Revenue surged 80% year/year to CAD $28.2 million, easily topping the CAD $16.5 million consensus. Primarily driving this growth was a 538% surge to CAD $8.3 million in its Direct-to-Consumer channel, due to strong growth in North American e-commerce sales, as well as some incremental revenue from its new retail stores in Toronto and New York City.
Another impressive metric was gross margin, which soared to 46.9% from 29.7% in the year ago period. What's mainly pushing its gross margin higher is its pricing power as consumers have been willing to pay high prices for its products. This is evidenced by the fact that gross margin in its direct-to-consumer line expanded sharply to 75.3% from 60.0%.
Still, despite the spike in revenue and gross margin, its operating loss was virtually the same as a year ago at CAD ($14.8) million. The reason for this is its SG&A costs ramped up by 43% to CAD $25.8 million, reflecting a higher cost base in its direct-to-consumer channel. However, given that GOOS is still considered an "up-and-coming" name, early in its growth curve, the lack of profitability at this point isn't too concerning to many investors.
Wrapping up, GOOS followed up its Q4 report with another impressive quarterly performance, proving that its brand remains in high demand. In a tough retail space, GOOS certainly is a diamond in the rough. With that said, consumers can be fickle and trends can change seemingly on a whim. But, at this moment, the future looks bright for GOOS and its shareholders.