Canada Goose Holdings Inc. reported sales jumped 79.6 percent in its fiscal first quarter, boosted by its direct-to-consumer segment and earlier-than-expected wholesale shipments.

“Fiscal 2018 is off to a strong early start, as we see the power of the Canada Goose brand continue to resonate around the world. Our team continues to execute our growth strategies in both wholesale and direct-to-consumer channels and we remain confident in our ability to deliver this year,” said Dani Reiss, president and CEO. “Our direct-to-consumer operations continue to grow as we move into new markets with e-commerce sites and retail stores. As of today, we have announced five retail stores opening in Fiscal 2018, including one operated by our distribution partner in Japan, and we have already launched four of the seven new e-commerce markets we planned for the year. We also continue to see strong consumer demand for our new lighter weight products designed for warmer climates and seasons. Financially, our first quarter is a seasonally small quarter and this year we experienced favourable timing on wholesale revenue that drove particularly strong results. Overall, we believe we are well positioned for our upcoming peak selling season and beyond.”

Fiscal 2018 first-quarter results in Canadian dollars, compared to the same period in Fiscal 2017, are as follows:

  • Total revenue increased by $12.5 million to $28.2 million from $15.7 million in the first quarter of fiscal 2017.
    Wholesale revenue was $19.9 million as compared to $14.4 million in the first quarter of fiscal 2017. This increase was primarily driven by earlier timing of $5.1 million in shipments that were expected to be delivered later in the year.
  • Direct-to-consumer revenue increased to $8.3 million from $1.3 million in the first quarter of fiscal 2017 driven by strong growth in our North American e-commerce sites, and incremental revenue from new retail stores in Toronto and New York City and new e-commerce sites in France and the United Kingdom, which were not operating in the same period last year.
  • Gross profit increased to $13.2 million from $4.7 million in the first quarter of fiscal 2017. As a percentage of total revenue, gross profit was 46.9 percent compared to 29.7 percent in the first quarter of fiscal 2017.
  • Wholesale gross profit was $7 million, a gross margin of 35.1 percent, as compared to $3.9 million, a gross margin of 27 percent, in the first quarter of fiscal 2017. Consistent with the first quarter of fiscal 2017, sales to distributors comprise a higher proportion of this period’s revenue and carry a lower margin than comparable units sold to retailers. In addition, an inventory provision of $1 million was included in the first quarter of fiscal 2017 that negatively impacted the gross margin.
  • Direct-to-consumer gross profit increased to $6.3 million, a gross margin of 75.3 percent from $0.8 million, a gross margin of 60.2 percent, in the first quarter of fiscal 2017.
    Selling, general and administrative expenses (SG&A) were $25.8 million compared to $18.1 million in the first quarter of fiscal 2017, which followed seasonal revenue trends in this period and reflected a higher cost base associated with the company’s direct-to-consumer channel. SG&A grew more slowly than planned as timing of spending shifted between quarters. SG&A benefited in the first quarter of fiscal 2018 from an unrealized foreign exchange gain and was reduced in the same period in fiscal 2017 from foreign exchange gains.
  • Net loss for the first quarter was $12.1 million, or 11 cents per share, compared to a net loss of $14 million, or 14 cents per share, in the first quarter of 2017. Wall Street’s consensus estimate had called for a loss of 19 cents.
  • Adjusted EBITDA was $(13.6) million compared to $(7.5) million in the prior year. The decline in profitability was driven by SG&A investments that the company made in this small revenue quarter in support of its growth objectives as well as elimination of a $4.4 million one-time benefit related to settlement of foreign currency forward contracts in the first quarter of fiscal 2017. Adjusted EBITDA benefited from stronger than anticipated growth in the direct-to-consumer channel and from favorable timing of wholesale shipments and lower SG&A spending that is expected to be incurred later in the year.
  • Adjusted net loss per share for the first quarter of fiscal 2018 was 13 cents, based on 106.5 million shares outstanding compared to an adjusted net loss per share of 10 cents, based on 100 million shares outstanding in the first quarter of fiscal 2017. Adjusted pro forma net loss per share for the first quarter of fiscal 2017, which includes the effect of the Initial Public Offering (IPO) in the calculation of the weighted average number of shares outstanding as if the IPO had occurred at the beginning of fiscal 2017, was 9 cents per share.

Separately, Canada Goose said it would open flagship stores in Boston, Calgary and Tokyo, and is on track to open stores in London and Chicago as planned, later this year.

Photo courtesy Canada Goose