Canada Goose Holdings, Inc. said it made progress across its key priorities for the year, including building a global retail network, driving customer growth and brand product expansion. However, in the same report, Canada Goose removed all financial targets it introduced in February 2023 and is targeting an additional 20 percent decline in Wholesale revenue in the current fiscal 2025 period after it declined 19 percent for the last fiscal year.
Still, the company reported better-than-expected results for the fiscal fourth quarter ended March 31, 2024, pushing GOOS shares up in the in the mid-20s in early trading on May 16, 2024.
Fiscal Fourth Quarter
Canada Goose also reported that total revenue increased 22 percent year-over-year (Y0Y) to CN$358.0 million in the fiscal fourth quarter ended March 31, 2024, or up 23 percent on a constant-currency (CC) basis versus the prior-year Q4 period.
Canada Goose reports in Canadian dollars (CN$) unless otherwise indicated.
The company reported that direct-to-consumer (DTC) revenue grew 19 percent (+21 percent CC) YOY to CN$271.5 million, driven by strong retail sales in the Asia Pacific and North America regions. DTC comparable sales increased 3.5 percent YoY, reportedly driven by higher e-commerce sales.
Wholesale revenue decreased 9 percent (-8 percent CC) YoY to CN$41.4 million, which the company reported was due to a planned lower order booking resulting from fewer orders from existing customers compared to the Q4 period in the prior year and the continued optimization of wholesale relationships as the company said it elevates the quality of its partners in this sales channel.
Other revenue increased 123 percent (+124 percent CC) to CN$45.1 million, primarily due to a higher number of Friends & Family sales events compared to the Q4 period in the prior year as the company actively exits slow-moving and discontinued inventory to create space for newness in its stores.
Canada Goose reported it grew its Non-Heavyweight Down category YoY in the fourth quarter, with its revenue share and units sold expanding within the overall mix. Non-Heavyweight Down sales represented 46 percent of total revenue for the company in fiscal 2024, up from 43 percent in fiscal 2023.
Gross profit grew 22 percent YoY to CN$233.0 million in the quarter, and gross margin improved 20 basis points to 65.1 percent of net sales in the quarter, compared to 64.9 percent in the fourth quarter of fiscal 2023.
Selling, general and administrative (SG&A) expenses were CN$209.9 million in fiscal Q4, compared to CN$172.7 million in the prior-year Q4 period. The increase in SG&A was primarily due to Canada Goose’s expanded retail network, including CN$40.1 million in non-recurring costs associated with its Transformation Program relating to consultancy fees and workforce reductions it implemented during the fiscal year.
Operating Income was CN$23.1 million in Q4, compared to CN$17.6 million in the prior-year Q4 period.
Adjusted EBIT was CN$40.1 million in the quarter, compared to CN$26.6 million in the prior-year comp quarter.
Net Income attributable to shareholders was CN$5.0 million, or CN$0.05 per diluted share, in Q4, compared with a net loss attributable to shareholders of CN$3.1 million, or a loss of CN$0.03 per diluted share in the prior-year Q4 period.
Adjusted Net Income attributable to shareholders was CN$19.3 million, or CN$0.19 per diluted share, in Q4, compared with an adjusted net income of CN$14.0 million, or CN$0.13 per diluted share in the prior-year Q4 period.
“Our fourth quarter results came in ahead of guidance, reflecting the power of our iconic brand and the disciplined execution of our strategy by our team,” said Dani Reiss, chairman and CEO of Canada Goose. “During the period, we increased revenue and gross profit, underpinned by positive comparable sales growth, and expanded our adjusted EBIT margin while navigating a difficult environment; this capped off a solid year, with noteworthy progress across our strategic priorities—we expanded our retail presence in key markets, grew revenue across product categories and streamlined our organization to accelerate decision-making and improve cost efficiencies.”
Full Year Fiscal 2024 Financial Highlights
- Total revenue increased 10 percent (+9 percent CC) to CN$1.33 billion compared to the prior year.
- DTC revenue grew 18 percent (+17 percent CC) to CN$950.7 million, with DTC comparable sales up 0.3 percent YoY.
- Wholesale revenue decreased 16 percent (-19 percent CC) YoY.
- Other revenue increased 97.2 percent to CN$70.8 million.
- Gross margin for the year expanded to 68.8 percent of net sales, up 180 basis points from 67.0 percent in fiscal 2023.
- SG&A expenses were CN$792.9 million for the year, compared to CN$667.6 million in the prior year.
- Operating Income was CN$124.5 million for fiscal 2024, compared to CN$147.6 million in fiscal 2023.
- Adjusted EBIT was CN$171.8 million, compared to CN$174.1 in the prior year period.
- Net Income attributable to shareholders was CN$58.4 million, or CN$0.57 per diluted share, for the year, compared with a net income attributable to shareholders of CN$72.7 million, or CN$0.69 per basic share, in the prior year.
- Adjusted Net Income attributable to shareholders was CN$101.0 million, or CN$0.99 per diluted share, for fiscal 2024, compared with an adjusted net income of CN$110.0 million, or CN$1.04 per diluted share, in fiscal 2023.
Balance Sheet Highlights
Inventory value CN$445.2 million at quarter-end, 6 percent lower compared to the fourth quarter ended April 2, 2023, with finished goods inventory declining approximately 7 percent YoY.
During the fourth quarter, Canada Goose said it repurchased 1,723,574 subordinate voting shares under its normal course issuer bid for a total cash consideration of CN$27.4 million, ending the quarter with a cash balance of CN$144.9 million, compared with CN$286.5 million at the fourth quarter ended April 2, 2023.
Retail Highlights
Canada Goose opened three permanent stores in the fourth quarter (Honolulu, HI; Nanjing, China; and Melbourne, Australia), totaling 17 permanent stores opened in fiscal 2024, bringing the total permanent store count to 68 at the end of fiscal 2024.
“These stores strengthen our position in key markets, offering additional touch points to connect with our customers and elevate their shopping experience,” the company said in a release.
GOOS also reported opening travel retail locations in South Korea and Germany in fiscal 2024, marking its first airport travel retail locations. Subsequent to year-end, Canada Goose opened a travel retail location in Istanbul, Turkey.
Canada Goose also pointed to launching its Generations re-commerce platform in Canada in fiscal 2024, “providing consumers the opportunity to shop and trade in pre-loved Canada Goose products on an authorized reselling platform.”
Transformation Program Update
As previously reported by SGB Media, Canada Goose implemented a workforce reduction in Q4 as part of its Transformation Program in March 2024 to streamline the business, accelerate decision-making and increase efficiencies across its operating platform, impacting approximately 17 percent of its corporate headcount. The move followed a roughly 10 percent reduction in corporate headcount in August 2023.
“These actions, combined with changes to our management team and a more focused set of priorities for fiscal 2025, are expected to lead to increased efficiencies, collaboration and an improvement in business processes,” the company reported. “The workforce reductions implemented in fiscal 2024 are expected to result in approximately CN$25 million of annualized cost savings, including approximately CN$10 million realized in fiscal 2024 and planned reinvestment into our talent base and our operating imperatives in fiscal 2025.”
Canada Goose reported that it generated approximately CN$20 million in productivity improvements and cost savings incremental to its workforce reduction in fiscal 2024 as part of its Transformation Program and is rolling the major workstreams of the program into its fiscal 2025 operating imperatives.
Fiscal 2025 Outlook
“We are excited about the opportunity ahead of us as we begin fiscal 2025,” Reiss shared. “We believe the initiatives planned for this year will elevate our business platform, increase operational excellence and enhance our brand and marketing to drive deeper connectivity with consumers, all while continuing to delight customers with both our iconic products as well as new and exciting offerings from our brand. Overall, I am confident that we have the right team and strategy in place to deliver against our priorities for fiscal 2025.”
Canada Goose issued an updated outlook that supersedes prior financial outlook statements made by Canada Goose. The fiscal 2025 financial outlook assumes global consumer spending will continue to be pressured amid persistently high interest rates and geopolitical uncertainty.
“Within our business, we assume continued operational discipline and execution of initiatives focused on delivering further cost efficiencies,” the company reported.
In fiscal 2025, Canada Goose expects:
- Total revenue to grow in the low-single-digits YoY, with an approximate 25 percent to 75 percent distribution split between H1 and H2 of fiscal 2025, respectively, which the company reported to be relatively consistent with fiscal 2024;
- DTC comparable sales growth in the low-single-digits year-over-year and incremental revenue from three new stores and four concession-based shop-in-shops to contribute to DTC revenue growth;
- An average mid-single-digit percentage pricing increase over fiscal 2024;
- A 20 percent YoY decrease in wholesale revenue due to a tightening of the company’s wholesale order book to largely offset the benefit contributed by DTC revenue growth and the planned pricing increase;
- Consolidated gross margin percentage to be similar to fiscal 2024;
- Non-IFRS adjusted EBIT margin to expand by approximately 100 basis points compared to fiscal 2024;
- Non-IFRS adjusted net income per diluted share to grow by a mid-teen percentage YoY; and
- Weighted average diluted shares outstanding of approximately 99 million for fiscal 2025.
Withdrawal of Long-Term Financial Targets
In a press release dated February 7, 2023, Canada Goose released initial guidance relating to its fiscal 2028 long-term targets and is now removing the long-term financial targets from that guidance.
“We believe it is prudent, however, to remove the long-term financial targets provided in our February 2023 press release due to the changes in business conditions since our long-term guidance was announced, including a more challenging consumer spending environment, as well as additional work required to strengthen the foundation of our retail operating platform, which has hindered the assumptions underlying the long-term guidance included in our February 2023 press release. Particularly, DTC comparable sales and wholesale revenue have not performed according to our expectations. Such business environment changes are reflected in our key operating imperatives for fiscal 2025,” the company reported.
Image courtesy Canada Goose Holdings, Inc.