Canada Goose and the Paradox of Going Public

 

On February 15th, popular Toronto-based winter coat company Canada Goose announced its intention to file for a public offering on the Toronto and New York Stock Exchanges. Although the company dates back 57 years, the move comes after a surge of popularity it has experienced since 2005.

Canada Goose became popular in the mid-aughts by becoming the standard bearer for the film and television industry in cold weather climates. Since then, the company has expanded to numerous retail outlets, made a large segway into higher-end department stores in the US, and had sold off 70% of its interest to Bain Capital in 2013 on the condition that the manufacturing of its products will always remain in its home and native land.

The IPO intentions will bring Canada Goose to a new crossroad and the company will raise roughly $300 million to help expand operations internationally. However, the demand of the shareholders for endless growth can often lead to an expansion | oversaturation paradox that we have seen with large clothiers many times before.

Since quarter after quarter growth is the driving factor for investors, fashion companies that go public usually attempt to maximize all retail opportunities, which inevitably leads to discounting and sometimes factory outlet stores. The problem with this model, however, is that the core customer base becomes disillusioned with the brand once it is widely available. It may be superficial, but the allure of a brand is often predicated by its aspirational qualities and “just-out-of-reach” characteristics. Once discounting and over-availability become prevalent, the brand’s image is devalued, and the customer moves on to something else. At first, it may just be the initial fanbase, but eventually it trickles down to the mainstream buying public as well.

Canada Goose is far from the first company to potentially face this type of dilemma. In the mid-1990s, American clothier Tommy Hilfiger experienced its own surge of popularity through celebrity ad campaigns and whirlwind promotion after going public in 1992. Yet by the early 2000s, the company’s red, white and blue logo had been licensed to countless products and had transitioned its designs towards the urban, hip-hop image popular at the time. It too was sold at countless department stores and factory outlets all across the United States. By 2001, sales began to fall dramatically as the brand’s North American appeal dissipated. By the mid 2000s, the company was looking to reorganize operations. This has happened to Lacoste, to Cole Haan, to Coach and is even arguably happening right now to the mightiest giant of all when it comes to fashion; Ralph Lauren.

Dani Reiss, the CEO of Canada Goose, has done a fantastic job rebranding and building the company since he took it over from his father in 2001. Still, becoming too big is a problem that many clothing companies experience when it comes to the long-term. The IPO might make Riess a much wealthier man today, but keeping the attention of the famous and pricing exclusivity up is a much better strategy if he wants the brand to stay as relevant as it has over the past decade for the next one to come. 

Defending a Children’s Hospital Ad Campaign

Believe it or not, an advertising campaign that has been put out by a children’s hospital in Toronto is under attack. The SickKids Hospital “VS'” Campaign features big, bombastic pieces that are not only strikingly visual but are designed to attract new donors and help bring in millions of dollars in fundraising revenue. Yet there are people who have come out against the effort. They argue that the “battle” metaphor used in the ads to depict children overcoming their illnesses and disabilities does so in a way that is not inclusive to kids with more severe circumstances, and that the ads are not sensitive to those who will never improve from a medical standpoint either. The leading article against the campaign, titled “Why I can’t be ‘for’ the SickKids vs’ ads” points out the various issues she and a few others believe to be problematic.

I found out about this movement by my sister who is in the process of becoming an MD, and who herself spent time at SickKids hospital as a child and teen. I have to admit that at first I was enraged and could not believe that anyone would be against measures taken to bring millions of dollars and new donors into the fold. Reading the article and opinion pieces against the campaign, I tried to rationalize the arguments to the best of my ability but couldn’t get away from what only felt naturally logical: great ads = more funding = cures tomorrow and better treatment today. Originally, I planned on writing a lengthy rebuttal in the comment section of her post, and tear the critique apart point-by-point. However, just before lighting the piece up, I decided to look into the author first. When I discovered that she personally was the mother of a child with severe mental and physical disabilities, I immediately had a change of heart. An epiphany if you will. It’s was not my place to tell her or any other parent in that situation how to feel about something that I don’t live with myself and can’t even begin to imagine. If the ads had hurt her or anyone in that situation in any way, or worse, made their child feel lesser, invalid or unrepresented, then, of course, I don’t like that at all.

Yet I still do believe that the merits of the ads far outweigh the negatives, and I would like to quantify that by drawing upon a similar turn of events that happened many years ago.

In the 80s and 90s, there were a few people, also in Canada, who argued that the fanfare surrounding a man named Terry Fox and his “Marathon of Hope” was in fact, detrimental to other persons with disabilities; especially those with extreme circumstances. For those who don’t know, Fox became a national icon in Canada back in 1980 after losing his leg to cancer and then attempting to jog across the country on his prosthetic leg at the age of 22. Though his cancer eventually metastasized and took his life before he could complete the journey, the awareness the marathon created, and the millions of dollars raised pushed Terry to become forever ingrained in the Canadian national lexicon, right up there with moose, hockey, healthcare, Mounties and maple syrup. That being said, there were people out there who felt that the publicity of his run across the country created an environment where all disabled people were made to feel as if they had to achieve something extraordinary, or were expected become “Supercrips” in order to be validated by mainstream society. In the same way that many children cannot partake in the “battle” metaphor proposed by the new SKH ads, many people couldn’t achieve grandiose tasks like the one taken on by Terry Fox. Though even he ended up “losing” his battle against cancer, since that time, awareness has increased ten-fold, and over $700 million dollars has been raised as a direct result of his legacy. Many cancer treatments that didn’t exist in 1981 do today and the survival rate from Osteosarcoma, the type Fox in particular, has increased to over 80% without amputation. That is huge.

After speaking to a friend of mine who has kids with disabilities, I’ve come to believe that there was one image in the campaign of questionable nature that should be removed from future ads. It is the one of a girl standing atop a mountain of twisted wheelchairs as if she had conquered them in a match to the death. This is okay for someone who breaks a leg and will eventually walk again, but for those who will be confined to the chair for life, I can certainly understand why it may have been viewed as offensive. Besides, for the rest of the general public who don’t have a kid in a chair, leaving out that one image or using something else would have the same strong result anyways. As my friend put it, still “Lots of awareness for the hospital, and more money to thrive.”

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For the rest of the “VS” ad campaign in general, nobody wants their child or loved one to be a martyr or the “loser” of a battle, but they certainly don’t want others, including those in the future to experience the same disabilities and illnesses either. The campaign may not have shed light on every circumstance or individual battle that children with major illnesses and disabilities faces, but the funds, awareness and new donors that they do bring in will no doubt help win the overall war against all of these issues in the long term; just like The Terry Fox Run did.

“Mad Men” is the Reason You Can Eat Well in Smalltown, Nowheresville

It’s hard to imagine the legions of plaid-wearing, beard-sporting, vinyl-listening restauranteurs with knife tattoos having anything in common with a show that re-popularized tailored suits and mid-century modern everything, but the truth is that they do.

The “democratization of food” that’s occurred over the past ten years through the chef-driven restaurant and demise of the white table cloth is unprecedented. Spawned out of the 2008 economic downturn and changing demands of the millennial market, the food industry has transformed into something that the Patrick Bateman Dorsia crowd of yesteryear could never have imagined. These changes have not been exclusive to the coasts either as towns everywhere are experiencing major developments commonly referred to as “food scenes.”

Yet as different as share plates in rustic atmospheres with Edison lights and exposed brick walls may be, there is one constant in the industry that always stays the same. The risk and cost of doing business.


Mad Men and the existentialist adventures of Donald Draper debuted in the summer of 2007 quickly giving rise to a new found interest in mid-century art, clothing and interior design. But for the sake of the food industry, Draper’s exploits often revolved around his penchant for liquor, and cocktails in particular. While Don, Roger, and the other characters were off boozing in the office, having three-martini lunches and sipping Old Fashioneds’ in countless wood-paneled enclaves, real bartenders and creative types were quick to take note. Eventually craft cocktail bars like The Summit in NYC, The Aviary in Chicago and The Bourbon & Branch in San Francisco began to pop up in all of the major cities. For a time, the term “Mixologist” replaced “bartender” as the general nomenclature, but then quickly reverted back after falling into comically pretentious territory. Super niche and often catering to an upper middle class, liberal arts hipster crowd, the popularity of the “cocktail bar” would soon make way for what food-oriented establishments now refer to as “The Cocktail Program.”

With the rise of this phenomena, new restaurants were able to adopt an extra course, and thereby an extra layer of margin, over something that the customers would come to view as a mandatory part of their overall dining experience.

Prior to the recession, restaurants could be categorized into two groups, fine dining and casual dining. Of course there have always been countless differences between takeout, fast food, ethnic cuisine and so on, but for the most part, all of these would still fall under one of the two groups. Also in 2004, you would be very hard-pressed to find a casual restaurant serving Squid Ink Ravioli in a Lemongrass Broth with Goat Cheese Profiteroles, and Roasted Partridge Breast in a Raspberry Coulis with a sorrel Timbale. Today, you can eat food like that in an off part of a small town, with no table cloth or pretension anywhere to be found. It will also be served to you by a guy covered in tattoos and facial piercings. Arguably, fine food has been liberated from its conservative, and often too-stuffy roots.

Jack and Coke, Gin and Tonic and Cranberry Vodkas set the customer back a mere $6.00, but were ordered far less than diners now who inevitably order a round of $14.00 cocktails before their meal, not instead of, but in addition to bottles of wine. While there is little argument to be made about the quality of a Jameson-Soda versus a properly made small-batch Rye Manhattan, the actual cost difference for the restaurant is marginal, yet the price modern drinks can command are virtually double their boring predecessors.

The restaurant business is a difficult proposition thanks to high labor, food costs, spoilage, overhead and fierce competition. From my limited understanding of what some successful people in the industry have told me, the goal is to keep food cost below 35% and payroll under 25%. Given overhead and all of the other expenses, that doesn’t leave much room for error. With the cocktail program, the restaurant may be using slightly more expensive liquor than what tenders in Canada call “bar rail, domestic,” and they may be forking over a bit more cost in the time it takes to make the drink, but they still see in excess of six or seven times the return on a $14 cocktail with a $1.50 to $2.00 backend cost.

Thanks to the extra $10 to $12 of per head profit for each diner who chooses to order a cocktail, and a demographic that increasingly considers it a mandatory part of the dining experience, there is a lot more money to be made; affording more restaurants the opportunity to open up serving weird and interesting food, in remote, random locations. This is partially why smaller towns like Frankenmuth Michigan, Driftwood Texas and Traverse City have what people like to call great “food scenes.”

So the next time you find yourself eating pork belly tacos with a side of miso-soy cauliflower and Shishito peppers, be sure to order a cocktail and don’t forget to toast Don Draper and the show that inspired it all in the first place.

 

Ring Shopping & Realistically Prioritizing the Four C’s

Here is the trite statement that all writing on this topic begins with: Shopping for an engagement ring can be one of the more daunting tasks of a man’s life. Expectations, as well as nerves are high, finances concern most, and the unrealistic jewelry you know she’s read about in celebrity trash mags is completely out of touch with reality.

After some investigation, we all come to know the “Four C’s,” being Cut, Color, Clarity, and Carat, but few of us have the means to purchase a ring that excels across all four factors. Yet we and virtually every other article on the subject like to sugarcoat and pretend that size isn’t our primary concern. So the question remains: In what order should the Four C’s be prioritized. The answer… depends primarily on the shape of the stone. Or to be more precise, how can we get her the biggest stone possible without dropping the ball too much on the other three concerns…

Whether you have chosen to include your future fiancé and bride-to-be in the purchasing process of the ring or not, deciding the actual shape of the diamond is arguably the most important factor. For guys keeping the process and proposal a secret, this is where you should hit up her close friends, siblings and perhaps even her mother for advice. No matter what, if she is worth marrying, she is going to tell you that the ring is beautiful and that she absolutely loves it. However, on the inside, she may have grown up imagining something completely different while you go into it blind with zero knowledge of what she likes at all.

The most common shapes are Round Brilliant, Emerald, Princess, Cushion, Oval, Pear, and Marquise.

Round Brilliant, or just round, is the most common and the cliché image that pops into your head when you simply hear the word “diamond.” The brilliant part refers to what jewelers call brilliance, or what we regular folk call “sparkliness.” Though they are circular on top, because of their cone-like overall shape, Round Brilliant diamonds reflect a ton of light, basically creating the sparkle factor that many women love. On the downside, since Round Brilliant diamonds are historically the most popular, they can often carry up to a 15% cost premium over other shapes for no other reason than demand.

Cushion, Oval, Pear and Marquise shaped diamonds are known as Fancy Shapes, but are generally considered offshoots of Round Brilliant as well. In a similar fashion, their rounded edges create brilliance, or again, “sparkliness,” just not to the same extent as a true Round Brilliant. While Oval and Pear are self-explanatory, Marquise are shaped like footballs, and Cushions, which have enjoyed a surge in popularity over the past few years, are rectangular-like with rounded off edges.

Princess and Emerald shapes are far different in look and taste to Round Brilliant. Princess diamonds are square, and Emerald diamonds, not to be confused with the green color emerald, are flat and truly rectangular. With these Square edged diamonds, their flatness trades away brilliant “sparkliness” for a clear, elegant, window-like appearance.

Taking this all into account, the question remains: In what order should someone prioritize the Four C’s? Which C should be afforded the highest grade you can get, and conversely, where should sacrifices be made?

Although admittedly ridiculous and so obviously rooted in male insecurity, as a guy reaching out primarily to other guys here, I am not going try to convince you that Carat or size shouldn’t be priority number one. Having gone through the process myself, it would be completely hypocritical to pretend that getting her “a rock” wasn’t always on the back of my mind as if the difference between something large and something small separated the men from the boys; and those who have cocks, from the those with little weewees. Beyond the masculinity component, there is no arguing that the most blatant characteristic which people notice is size. Like comparing a Hummer to a SmartCar, it’s just that obvious. Still, I had no interest in getting her a three-Carat browneye either.

After size, things get a bit more interesting, and a little more tricky. For those in the round camp, and by that I mean Round Brilliant, Oval, Pear, Marquise and Cushion included, the goal is to get the stone as sparkly, or brilliant as possible. To do that, you need to ask your jeweler to show you stones with greater Cuts. For round shapes, not only do better-cut stones hide inclusions (more on that later), they also help reflect light more, thus making the diamonds shine. Words like “Excellent,” “Ideal,” and “Signature” are used by various suppliers to label their better “Cut” diamonds.

On the flip side, since you can’t have it all as we have already discussed, where you choose to make a sacrifice will rely on the remaining two C’s; Color and Clarity.

The Color grading system starts with the letter “D” and can go all the way down to “Z.” However, unless you don’t mind getting your significant other a mustard yellow to brown stone, “K” is the lowest most buyers go on the color scale. The Color is also important because it is something that the naked human eye can detect, albeit the very slight differences between each letter. “D” may be the clearest and colorless grade money can buy, but on average “H” is the most common color grade sold for diamonds in North America. For round shaped diamonds, I advocate prioritizing Color as the third most important C of the four. Yes, you see color with a naked eye, but unless she’s holding up her ring right next to someone else’s, it is virtually impossible to decipher the slight differences of “D” through “H” grades from afar. Once you drop below “I” however, the yellowish hue becomes much more noticeable.

Finally, when discussing the priority of the 4C’s for round shaped diamonds (again RB, Oval, Pear, Cushion, Marquise), the C that finds itself at the bottom of the list is Clarity. Two reasons back up this argument. First, the brilliance or “sparkliness” of the stone will help hide imperfections in the diamond which jewelers refer to as “inclusions.” Next, because of the cone-like shape of round stones, inclusions can also be masked by the various facets in the bottom portion of the gem. For extra help hiding inclusions, you can also play around with the setting and rest of the ring to try and conceal any imperfects on or near the diamond’s edges and sides.

For Princess and Emerald shaped diamonds, the game is completely different and arguably not even the same sport. The goal with these shapes is not brilliance or sparkliness, but clear “clarity” all the way through the stone as if you are looking through a freshly windexed window. If these diamonds were TV’s, they would be those Samsungs with the almost-too-realistic 1080P picture that makes you feel like you can put your hand right through the screen.

With Princess and Emerald diamonds, inclusions towards the center of the stones are much more visible to the naked eye because they are not hidden by brilliance and facets. The Clarity scale ranges from Flawless/Internally Flawless (F/IF), and from there decreases across nine levels all the way down to what is known as “i3.” On the high end, I will strongly advise you against spending the money to purchase a stone labeled “Flawless” as the very act of setting it in a ring setting will likely change its grade to “IF.” To put this in perspective, even Tiffany & Co. who is arguably the standard-bearer in the diamond industry does not classify its diamonds as flawless because they know that actually putting it in any form of jewelry will likely degrade it to some point. On the low end, unless you’re really trying to stretch a budget, you should try to avoid the “i1,” “i2” and “i3” Clarity grades at the bottom of the spectrum; even if that means sacrificing Carat weight and size. Yes, I said it. In general, more reputable jewelers and wholesalers won’t carry diamonds of those three Clarity grades and will offer what is known as “Si2” as the lowest rated stones in their inventory.

In contrast to diamonds which are sought after for their brilliance, sacrifices can be made on the Cut grade of Princess and Emerald stones because they don’t rely on the sparkle factor to show off their beauty.

All in all, what I am advocating is that for those of us who have less than multi-million dollar budgets, Carat and Color never change their positions of being number one and number three on the priority of the 4C’s. However, it is the Cut and Clarity that swap being in second and fourth place depending on the type of stone that you are trying to buy.

To be as clear as a Flawless diamond:

If choosing a Round Brilliant, Oval, Pear, Marquise or Cushion Diamond, try to follow this order:

  1. Carat
  2. Cut
  3. Color
  4. Clarity

If choosing a Princess or Emerald Diamond, I recommend this order:

  1. Carat
  2. Clarity
  3. Color
  4. Cut

Good luck in your ring search, it’s a big pill to swallow but try to enjoy it as much as you can. When it’s all over, treat yourself to a tall drink, and really start to pat-down just how you’re going to ask the question. Believe me, it won’t be long till that diamond ring starts burning a hole in your pocket.

P.S.

The minute it arrives you’ll need to get insurance across the trifecta too. Loss, theft and damage coverage. You won’t sleep until you do.

P.P.S.

There is a reason “Heart Shaped” Diamonds weren’t mentioned in this post. Believe me, it was on purpose.