Benefitting from healthy sales and margins from its direct-to-consumer (DTC) Canada Goose Holdings Inc. reported a smaller-than-expected loss in its fourth quarter ended March 31. The report was the company’s first since going public.

The net loss in the quarter expanded to Canadian$23.3 million ($17.3 mm), or C23 cents a share, from a deficit of C$9.9 million, or C9 cents, in the same period a year ago, largely due to expenses tied to its IPO.

Excluding non-recurring charges and assuming the IPO occurred prior to the year-ago period, the adjusted net loss per share was C15 cents against a loss of C8 cents a year ago. Wall Street’s’ consensus target had been C19 cents a share.

Shares of Canada Goose on the U.S. stock exchange rose U.S.$2.93, or 15.7 percent, to close at U.S.$21.64.

“Our fourth quarter performance capped off another extremely successful year for Canada Goose,” said Dani Reiss, CEO, on a conference call with analysts. “We saw growth across channels, geographies and seasons which we believe is a strong testament to the continued and growing demand for Canada Goose products around the world.”

Total revenue in the quarter expanded 21.9 percent to C$51.1 million ($37.9 mm), well above analysts’ average target of C$31.25 million. On a currency-neutral basis, revenue expanded 27.0 percent.

Wholesale revenue tumbled 49.0 percent to C$14.6 million ($10.8 mm) due to an expected shift in wholesale shipments to the third quarter. On the positive side, DTC revenue, which includes e-commerce sales and company-owned retail store sales, nearly tripled to C$36.5 million ($27.0 mm) from C$13.3 million a year ago.

Gross profit jumped 47.9 percent to C$27.8 million ($20.6 mm). As a percent of sales, gross margins expanded to 54.4 percent compared to 44.9 percent in the year-ago quarter due to the increased penetration in DTC revenues.

Wholesale gross profit was C$0.1 million ($700,000) versus C$9.7 million in the year-ago quarter. DTC gross profit increased to C$27.6 million ($20.4 mm) from C$9.1 million in the same period a year ago.

SG&A expenses in the quarter nearly doubled to C$54.7 million ($40.5 mm) from C$27.3 million a year ago. As a percentage of revenues, SG&A was 107.0 percent compared to 65.0 percent in year-ago quarter. Fourth quarter 2017 SG&A included C$15.2 million ($11.3 mm) of net non-recurring expenses, primarily related to the IPO.

For its full year ended March 31, total revenue jumped 38.8 percent to C$403.8 million ($299.1 mm) and expanded 41.6 percent on a currency-neutral basis. Wholesale revenues increased 11.9 percent to C$288.5 million ($288.5 mm) while DTC sales reached C$115.1 million ($82.3 mm), up from C$33.0 million a year ago.

Net income for the year reached C$21.0 million ($15.6 mm), or C21 cents a share, down from C$25.8 million, or C26 cents, in the prior year. Adjusted diluted net income per share, which excludes net non-recurring expenses, was C43 cents a share, a gain of 43.3 percent versus the adjusted C30 cents in fiscal 2016.

On the call, Reiss highlighted the progress Canada Goose made in the year “strengthening and expanding” its geographic footprint, extending into newer offerings, and continuing to drive brand awareness.

But he singled out the “tremendous success” of the DTC channel, which made up 28.6 percent of sales last year, up from less than 5 percent two years ago. Said Reiss, “Not only has it driven higher margin expansion due to higher profitability versus wholesale, it also enables us to engage directly with customers and bring the brand to life through a rich brand experience which is presented through our own filter.”

The first two stores that opened in Toronto and Soho in New York City “far exceeded our expectations and established themselves as true retail destinations with visits from local consumers and tourists from 31 countries in the first six months,” he added.

So far, two more openings are set to open this fall on The Magnificent Mile in Chicago and on Regent Street in London.

E-commerce doubled its footprint with the launch of online stores in France and the U.K. in fall 2016. But overall online traffic in the year increased “significantly” and expanded double digit in almost every market.

From a product standpoint, Canada Goose is seeing “very solid sell-through” of spring products so far this year, “highlighting the positive response from customers through our ultra-lightweight down product and windwear styles,” he said.

Reiss also said the company continues to elevate its core collection by introducing new silhouettes and styles in its fall winter 2016 collection, including HyBridge 2.0 and other mixed material styles “which met with positive consumer response,” said Reiss.

In addition, there’s “continued strong momentum in lightweight down, especially in European markets, which enable a national transition into spring product at retail,” he said.

Regionally, Canada and the U.S., its largest markets, “continue to experience strong growth,” said Reiss. Internationally, the company still has “significant runway” for the brand, including the U.K., Germany and Russia. The firm is “pleased” with the brand’s performance in Japan and Korea. And while it’s “just scratching the surface of the business that we see in China,” many products are selling out quickly. Reiss added, “We look forward to capitalizing on increasing demand in Asia and other parts of the world in fiscal 2018 and beyond.”

Reiss noted that the company during the year hired Lee Turlington, who formerly worked for Nike, Patagonia, The North Face and Fila, as its chief product officer and Jackie Poriadjian-Asch, who was most recently SVP of global brand marketing at UFC, as its chief marketing officer. Kevin Spreekmeester, its chief brand officer, will be retiring in early June.

Looking ahead, Canada Goose provided expectations for revenue, adjusted EBITDA and adjusted net income per share over the next three fiscal years. Over that period, the company expects annual revenue growth on a percentage basis in the mid-to-high teens, adjusted EBITDA margin expansion in excess of 75 basis points per year, and growth in adjusted EPS of approximately 20 percent per year.

For the current year, revenue is expected to grow on a percentage basis in the mid-to-high teens. Adjusted EBITDA margins are expected to be flat or expand modestly, partly because as profits normalize at its New York City and Toronto locations following their strong reception. Over the two-year period from fiscal 2016 through fiscal 2018 adjusted net income per diluted share is expected to grow at an average of 28.1 percent per year

Photo courtesy Canada Goose