UBS Evidence Lab inside: 1Q Preview: We Don‘t Expect a Meaningful Catalyst

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UBS Evidence Lab inside: 1Q Preview: We Don‘t Expect a Meaningful Catalyst

Canada Goose Holdings Inc UBS Research

UBS Research THESIS MAP Thesisa guideMapto our thinking and what´s where in this report

Pivotal Questions Q: How much can Canada Goose's addressable market grow over the next 5 years?

We think its addressable market of luxury and premium winter jackets (est. sales at US$9.5B) should

rise at +3% CAGR over the next 5 years. Continued higher inflation and interest rate increases could

impact consumers' willingness to spend on luxury items.

Q: Will Canada Goose deliver above-industry sales growth?

Probably. We anticipate sales will rise at a ~5% 5-yr CAGR. GOOS' outperformance should reflect

further expansion in international markets via DTC initiatives like selective store openings and also

expansion into new categories. At the same time, we see downside risk to our forecast if the Canada

Goose brand image has lost more relevance than we realize.

Q: How much can GOOS expand operating margins given macro-economic pressures?

We don't expect GOOS' EBIT margin to return to peak levels. We think GOOS' margin can reach

~12% by FY29E vs. 14.7% in FY21. In the long run, we believe GOOS' main way to improve its

EBIT margin is by driving strong sales which allow it to leverage its fixed costs. At the same time, we

see risk lower comps result in further deleverage of fixed costs.

UBS VIEW Our rating is Neutral. We believe GOOS has long-term growth potential as it evolves into a global

luxury brand. However, we see significant execution and fashion risk. This means GOOS' actual

earnings could fall far short of our base case outlook. We model a ~16% 5-year EPS CAGR (FY26-

31E). We believe a 12x P/E fairly balances the potential upside and downside risks.