Canada Goose: A Buyout-Driven Turnaround with Upside in DTC Growth

The recent buzz around Canada Goose (GOOS.TO) has centered on its reported take-private bids at 8x EBITDA, a valuation that appears to undervalue the brand's long-term potential. While the luxury outdoor apparel sector trades at an average of 12.58x EBITDA, Canada Goose's current valuation reflects its recent financial struggles, including a 1.1% revenue decline in fiscal 2025 and a CA$125.5 million net loss in Q1 2025. However, a closer look at the company's accelerating DTC growth and strategic assets suggests that this undervaluation may be temporary—and that a private equity-led turnaround could unlock significant upside.

The Buyout Catalyst: 8x EBITDA as a Floor, Not a Ceiling

The reported $1.35–$1.4 billion take-private offers, valued at 8x EBITDA, have sparked debate. On the surface, this multiple appears low for a brand with Canada Goose's heritage and global recognition. Yet, the valuation aligns with broader private equity trends in the luxury sector, where deals like Dr. Martens' 9x EBITDA buyout and Tommy Hilfiger's 10x EBITDA acquisition suggest a focus on operational turnaround rather than premium brand equity.

The key question is whether this valuation captures the company's intrinsic value. Canada Goose's 75% U.S. tariff exemptions under the USMCA agreement, its Canadian manufacturing base, and its recent diversification into eyewear, footwear, and all-season apparel position it to capitalize on the sector's projected 6.2% CAGR through 2034. A private equity buyer could leverage these assets to reposition the brand as a year-round luxury label, mitigating its reliance on seasonal winterwear.

DTC Momentum: A 15.7% Q4 Surge and Strategic Execution

The most compelling catalyst for a re-rating lies in Canada Goose's DTC segment. In Q4 2025, DTC revenue surged 15.7% to $314.1 million, driven by a 6.8% comparable sales increase and new store openings. This growth, even on a constant currency basis (11.6%), underscores the company's ability to execute its retail strategy and engage consumers directly.

DTC growth is critical for luxury brands, as it offers higher margins, direct customer data, and brand loyalty. Canada Goose's DTC revenue now accounts for 75% of total sales, up from 70% in 2024. This shift has already improved gross margins, which expanded to 69.9% in FY2025 from 68.8% in 2024. A private equity owner could further accelerate DTC momentum by investing in digital tools, omnichannel experiences, and data-driven personalization—strategies that have proven successful for brands like Lululemon and Allbirds.

Margin Expansion and Strategic Assets: The Path to Re-Rating

While the 8x EBITDA offer reflects near-term challenges, it overlooks Canada Goose's long-term margin potential. The company's gross margin expansion in FY2025, coupled with a 14% year-over-year inventory reduction in Q4, signals improved cost discipline. A private equity buyer could further optimize SG&A expenses through supply chain rationalization and store consolidation, while maintaining brand equity.

Strategic assets like USMCA tariff exemptions and Canadian manufacturing provide a competitive edge in a post-trade-war environment. These advantages could be amplified by a buyer with global distribution networks, such as Anta Sports or Bosideng International, who could integrate Canada Goose into their existing ecosystems. Additionally, the brand's recent Snow Goose collection under Haider Ackermann and its foray into all-season apparel suggest a pivot toward fashion-forward, year-round relevance—a shift that could attract younger, aspirational consumers.

Investment Thesis: Buyout as a Catalyst for Re-Rating

The 8x EBITDA valuation represents a floor for Canada Goose, not a ceiling. A successful private equity-led turnaround could drive a re-rating to sector averages (12.58x EBITDA) or higher, particularly if DTC growth accelerates and margins expand. Key metrics to monitor include:
- EBITDA growth: A return to consistent profitability would justify a higher multiple.
- DTC momentum: Sustained double-digit growth in direct sales would validate the brand's strategic shift.
- Product diversification: Success in all-season categories could broaden the customer base and reduce seasonality risks.

For investors, the current valuation offers a compelling entry point. If the take-private process concludes with a strategic buyer capable of executing a coherent turnaround, Canada Goose could see a re-rating of 30–50% over the next 12–18 months. Even if the company remains public, the buyout speculation has already driven a 21.3% year-to-date stock rally, with further upside likely if DTC growth continues to outperform.

Conclusion: A Buyout-Driven Turnaround with DTC as the Engine

Canada Goose's reported take-private offers at 8x EBITDA may seem modest, but they represent a strategic opportunity for a buyer to unlock value through DTC growth, margin expansion, and product diversification. The brand's heritage, combined with its operational improvements and sector tailwinds, positions it for a re-rating once the right owner executes a coherent turnaround. For long-term investors, this is a rare chance to capitalize on a mispriced luxury brand with a clear path to reinvention.

Investment Advice: Consider a long position in Canada Goose ahead of the buyout decision, with a focus on DTC growth metrics and EBITDA expansion. If the company remains public, monitor its ability to sustain double-digit DTC growth and reduce inventory costs—key drivers of a potential re-rating.