Canada Goose vs. V.F. Corp: Which Outerwear Stock Will Soar?

Oct 15, 2024

As the winter season approaches, its time to change the wardrobe to acclimate to the colder temperatures to follow. Adjusting your wardrobe is akin to adjusting your portfolio, as seasonality plays a role in both. As interest rate cuts, the consumer discretionary sector attempts to stimulate spending. Here are two outerwear stocks that consumers and money flow will flock to this season.

Goosedown is one of the best natural insulators, both light and durable, and very expensive. Canada Goose Holdings Inc. NYSE: GOOS manufactures and sells goosedown jackets, parkas, footwear, and outwear. It's a status symbol brand known for its expensive $1,800 parkas, which are both functional, durable, and fashionable. The exceptional craftsmanship is evident in its garments, which can require up to 13 production steps and handcrafting.

Its iconic $1,800 Snow Mantra parka was originally designed for Canadian Arctic workers as uniforms to perform rugged jobs from the Canadian Arctic Rangers to First Air ground crew. The 7.5-pound jacket was field tested at temperatures of negative 70 degrees Celsius and made from over 247 pieces.

While Canada Goose sells year-round, casual wear, the autumn and winter seasons are where they get the bulk of their business. They've built a loyal following that is willing to pay up for quality from $175 for a Broadview T-shirt to $650 for a Lawson Fleece Jacket and $450 for a pair of Glacier Trail Sneakers.

While you may find some Canada Goose products at The TJX Companies Inc. NYSE: TJX off-price stores like TJ Maxx or Marshalls, Canada Goose is bending a little to accommodate the off-price trend and meet budget-conscious consumers halfway. Canada Goose has a trade-in program where customers can trade in their used Canada Goose garments to receive a gift card credit that can be spent in its stores or online. Canada Goose then cleans and resells them in their “Pre-Loved” section online at discounts of up to 50% off the original price.

Canada Goose’s fiscal first quarter is historically the slowest quarter with its spring and summer collections. In the fiscal Q1 2025, the company reported losses of 79 cents per share but still beat consensus estimates by a penny. Revenues were able to grow 4% YoY to $88.1 million. Its direct-to-consumer (DTC) channel showed an improvement of 13% YoY revenue growth to $63.1 million, driven by strong Asia Pacific sales. DTC comp sales fell 4.4% YoY. Wholesale revenues plunged 41% to $16 million as consumers flocked to the DTC channel. Canadian Goose is “elevating the quality” of its wholesale partners in its channel. Inventory fell 7% YoY to $484.3 million.

The company maintains its fiscal 2025 guidance. Total revenue growth is expected in the low single digits YoY with a 25% to 75% split between the first half and second half of fiscal 2025, which makes sense due to seasonality. DTC comp sales are expected to grow in the low single digits YoY. Incremental revenue growth from its three new stores and four concession-based store-in-stores are expected to contribute to the growth. Canadian Goose plans to increase prices by an average mid-single digit percentage over fiscal 2024. Wholesale revenue is expected to continue decelerating by 20% YoY. Consolidated gross margin is expected to expand by 100 bps, and net income is expected to grow by mid-teen percent YoY.

The China stimulus plan could also be a big booster for its sales in China, especially with the opening of two permanent stores in Wuhan, Mainland China and in Cotai, Macau, for a total store count of 70.

If you’ve ever seen North Face jackets or Timberland boots or sported a JanSport backpack, then you’re aware of V.F. Co. NYSE: VFC products.

The company operates 11 outdoor apparel and footwear brands also, including VANS, Dickies, Icebreaker, Eastpak, Altra, Kipling, Smartwool, and Napapijiri. The company sold its Supreme brand for $1.5 billion to EssilorLuxottica and is still considering potentially more sales under its Reinvent turnaround strategy.

The CEO of VFC is no stranger to turnaround stories, as the former CEO of Logitech International S.A. NASDAQ: LOGI, Bracken Darrell, was credited for its turnaround. Darrell expanded its product portfolio beyond just being accessories for the personal computer (PC) market to include video game consoles, audio, video streaming, and cloud-connected devices. Darrell assembled a team of world-class leaders restructuring the management to execute its Reinvent strategy, which includes streamlining operations, investing in brand building, bolstering its global commercial footprint, cutting costs, revitalizing the VANS brand, and strengthening the balance sheet. It also includes a strategic review and potential sales of some of its brands.

While VFC posted an EPS loss of 33 cents and revenue fell 8.9% YoY in its fiscal first quarter of 2025, the results still beat consensus analyst expectations by 4 cents and $50 million, respectively. The North Face sales fell 3%, but global DTC brands had a 6% YoY improvement.

VANS revenue fell 21% YoY but still showed modest sequential improvement. VFC reiterated its free cash flow guidance of approximately $600 million, which includes the sale of Supreme, which is expected to close by the end of the calendar year.

Before you consider Canada Goose, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Canada Goose wasn't on the list.

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