Will Canada Goose's Trapping Techniques Hurt Its Stock Price?

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About: Canada Goose Holdings Inc. (GOOS)
by: Ryan Waldoch
Summary

Public outcry against fur has lead to many luxury retails avoiding the material, but Canada Goose will continue to ethically source their coyote fur.

Canada Goose sources its fur from coyotes which can actually be deemed as ecologically beneficial.

Canada Goose is not in any immediate threat of a declining stock price due to how it sources its fur.

Thesis:

Throughout the past couple of months, I have written three articles on Canada Goose and a common issue I see arising in the comments section is the ethicality of how Canada Goose sources their fur. In this article, I will explore if Canada Goose’s trapping techniques will hurt its stock price by looking at how responsibly it sources their fur and what would happen in the event of a public outcry to stop fur use.

Overview:

In Canada Goose’s (GOOS) fur and down policy, it states they use three animal products; coyote fur, down from geese, and wool from sheep. The biggest public concern has been their use of fur in their jackets while Canada Goose insists that they are compliant with all regulatory measures and are helping thin the numbers of the overpopulated coyotes.

Public Outcry:

In the past few years, numerous high-end companies have deviated from real fur to synthetic fur due to public demand. Stores like Gucci, Burberry, and Ralph Lauren have all moved taken a stance against fur practices and plan to remain fur-free. Some luxury retailers do still sell fur, including Louis Vuitton and Moncler.

Fashion has moved away from exotic and endangered animals, but now there seems to be a current movement among designers to banish all fur with Sandra Campos, a councilwoman for the fashion designers of America, saying “we need to change and accept responsibility to ensure that we don’t promote killing animals for the sake of fashion”. This can also be seen as local governments are taking action against fur use with Los Angeles voting to outlaw fur, a law that could go into effect in 2021.

Why Coyotes?

Although many people are fundamentally opposed to the killings of any animal, coyotes are seen as a nuisance in Canada where they routinely attack pets and livestock and it is deemed necessary by the government to keep their population under control. The coyote population is widespread across Canada and is listed as a species of least concern in terms of possible endangerment. A study conducted in 2004 said that coyotes killed over $10 million worth of sheep and lambs alone while inflicting damage to numerous family pets. In that same time period, the United States had population control measures to reduce the population by 90,000. Canada faces a similar issue and it even views Canada Goose as a public helper reducing the need for tax dollars on coyote catchers.

I am not trying to take a stance for or against fur, simply state the facts that are associated with the coyote industry. Many forms of trapping are opposed by regulators, but Canada Goose adheres to all regulatory ventures in association with fur trapping.

On the Fur & Down page, they cite:

The program mandates that all fur sourced by Canada Goose is in accordance with the Agreement of International Humane Trapping Standards in Canada and the Best Management Practices in the United States. It also requires that we only use wild fur from North American suppliers and that we never use fur from fur farms or endangered species.

These regulations mandate that each company has the responsibility to trap in the most humane way possible. There will be suffering from an animal stuck in a trap but Canada Goose requires all of their vendors to comply with the regulations and limit the harm. The practice includes rubber leg traps with a "quick shot to the brain" to limit any further suffering of the animal.

In all, coyotes are seen as a problem as they are slowly creeping into urban areas and inflict damage on livestock. Local governments of both Canada and the United States do not want to see the total extinction of the coyote but want to see a thinner, healthier population.

Will This Hurt Their Stock?

This is not new, groundbreaking information and I believe that any previous activist activities have been factored into who purchases their jackets. Based on the last quarter of Canada Goose breaking yet another quarterly sales record, there has been little influence to deter buyers of these jackets.

Now in regards to Canada Goose stock owners, it is held overwhelmingly by institutions at 91.81%. This means that it is unlikely that a sudden retail investor anti-fur movement rally would send the stock plummeting.

Overall, any morally objectionable industry is subject to activists and if they don't want to purchase the companies product, they have countless other options. At this point, I believe that the large majority of Canada Goose jacket owners/potential owners are aware of the sourcing of Canada Goose's fur and are comfortable with how it is obtained. In all, as long as Canada Goose adheres to all trapping regulations, their stock price should not affected.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.