Think all IPOs are tech-driven, are based on social media and roar right out of the gate? If you nodded to only one of these statements, then it had better be the last one. The hot IPO bowing this past week not only had legs, but sleeves and hoods too.
Richard Lautens via Getty ImagesSizzle
Williams-Sonoma: Challenges of the holiday retail season aside, Williams-Sonoma (WSM) reported results that were better than expected for the fourth quarter. This goes to show that retail need not be painted with broadest, sourest brush imaginable. The top line declined just a bit, but earnings per share was flat, indicating at least some margin control. The $1.55 notched in net income showed up at the high end of projections. The eCommerce sales stood out, at 51 percent of sales, and were up 2.2 percent year over year. CEO Laura Alber noted that the holiday quarter was relatively better than has been seen in the past, and the shares were up off recent lows, indicating some encouragement of eCommerce initiatives (and what may be conservative guidance) that may help right at least one retail ship.
Jobs: And one hint that retail spending may pick up at WSM and other outlets comes as job creation comes in resilient and higher than expected. The number has topped 200,000 in recent reports, far more than the 100,000 or so needed to keep pace with growth in the workforce population. Employment means pocket money and pocket money (ok, officially, disposable income, means retail spending. Perhaps.)
SME Lending from Big Banks: Is on the upswing. Along with job creation, SMEs behind at least some of that creation must see reason to be adding to rosters. The latest data from Biz2Credit shows that (big) bank approval rates for SME loans are at 24 percent, the seventh month in a row of increases.
Fizzle
Mobile Wallets: The uptake that had been promised just isn’t there, at least not now, as “can do” has not translated into “want to do” for mobile payments via wallet. Apple leads the pack with 21 percent mobile wallet penetration of potential users, meaning those who have tried the service. Other mobile wallets are in the low single digits on similar metrics. Not quite the deluge people had expected nearly three years ago. Data from PYMNTS and InfoScout shows much promise, along with much work, lies ahead.
Bitcoin as ETF: The SEC said no to the Winklevoss twins’ bid to list the bitcoin digital currency in an ETF, which would have boosted liquidity, visibility and trading, and perhaps even given a shine of additional respectability. The reason? Regulatory safeguards are absent from the cryptocurrency and this means that manipulation may be easier to conduct than might be seen in other corners of the market.
RadioShack: Goes bankrupt. Again. Yes, the second bankruptcy in two years for the beleaguered retailer means that another roughly 200 stores are being closed nationwide. The closures are about nine percent of total locations. Focusing on “mobility sales” in tandem with Sprint is not bringing in the business that had been hoped for by the ‘Shack. From bricks-and-mortar to shuttered and boarded, it seems.
Sizzle Of The Week: Canada Goose
Just because the weather was frigid nationwide this week – with an extra-special March blizzard rocking the East Coast just in time for Innovation Project – doesn’t mean that there weren’t sizzles to be had. In fact, it might even be the case that the “winter’s last revenge” cold snap spurred on our sizzle of the week winner – Canada Goose – to an IPO that has been ruled “red hot,” the “surprise success of the season” and “the winner of the week.”
For those not in the winter wear know: Canada Goose are the purveyors of high-end, high price outerwear, most notably the down-stuffed winter coats that have been making the rounds in the nation’s most fashionable cities. They are most easily recognized by brand’s signature red-and-white patches – or, alternatively, by the army of rich and famous folks who have become brand devotees over the last year-and-a-half, a list that includes Oscar winner Emma Stone, Alibaba Chairman Jack Ma, high-end style expert (and occasional actress) Gwyneth Paltrow and even the former James Bond himself – Daniel Craig.
Of course, being rich helps when shopping Canada Goose – adult coats range from $1,000-$1,500 retail, and kids coats clock in at a hefty $400.
But that high buy price for the goods didn’t have much influence on the investors, who came to call when Canada Goose IPO’d earlier this week and sent its stock price rocketing up. Canada Goose original priced its offering in Canada at C$17 — (or, about $12.78 USD) — but upon opening, GOOS popped in a big way: $18USD on the NYSE (stocks were listed in both New York and Toronto).
And, continuing in that sizzle story – Canada Goose has managed to keep that growth going. As of the writing of this story, Canada’s Goose’s stock was trading up another 5.5 percent on the NYSE.
Compare that to the most high profile IPO over at Snapchat, and the result is particularly notable. Snap, Inc. had a big first day of trading – with a 44 percent price bump on its first day of trading – but that SNAP stock price has also dropped fairly notably as investors seem to have remembered in the last week or so that Snap is not actually profitable as of yet.
Shares of SNAP are down 17 percent from their first-day closing price and have fallen more than 30 percent from the peak price they hit on their second day of trading.
As SNAP slumps, the experts are feeling much more positively about the Canada Goose IPO – even as they play in retail’s notoriously fickle waters.
“The truth is Canada Goose has a lot going for it,” CNBC’s “Mad Money” guru Jim Cramer noted of the firms respected brand, commitment to quality, and various growth opportunities.
“The company has been expanding from just a wholesaler that supplies various retailers worldwide to having a direct-to-consumer business where they use the web to cut out the middleman and sell to individuals. Combine all this info … and you’ve got a company with accelerating revenue growth, rising margins, and genuine profitability, a powerful winning combination that we rarely see among new IPOs. If Canada Goose can keep executing like this then I wouldn’t be at all surprised if the stock ends up having much more upside.”
Still, even this surprise sizzle isn’t without a hint of fizzle – as Canada Goose is working to fend off animal rights activists, who’ve been protesting the brand since its IPO for its practices of using animal fur and goose down in its high-end outwear.
“Your fur trim right here, you paid someone to murder a dog,” said a protester outside the NYSE on the day of the IPO yelled a passing woman in a Canada Goose parka.
And it is a threat the firm takes seriously:
“We have been the target of activists in the past, and may continue to be in the future,” the firm noted in its prospectus to investors pre-IPO. “Protestors can disrupt sales at our stores, or use social media or other campaigns to sway public opinion against our products. If any such activists are successful at either of these our sales and results of operations may be adversely affected.”
But Canada Goose’s New York flagship has been a popular haven for animal rights protestors since its opening – and, given the cavalcade of loyal followers and the successful IPO, they certainly aren’t enough to knock the shine of this week’s Sizzle.