Canada Goose Holdings, Inc. forecasted annual earnings and revenue well above Wall Street expectations after reporting a surprise fiscal fourth-quarter profit.

“We closed fiscal 2022 with record sales for the year and confidence in our ability to accelerate earnings growth in Fiscal 2023 and beyond,” said Dani Reiss, CEO. “We are expanding to new markets with new partnerships and stores complemented by a laser focus on customer experience. At the same time, we are leveraging our successful playbook to continue to expand product categories and year-round product relevance. Our brand momentum, team and track record of execution gives us the ultimate conviction in the road ahead.”

The figures are in Canadian dollars.

Fourth Quarter Fiscal 2022 Results
(Compared to Fourth Quarter Fiscal 2021)
  • Total revenue increased by 6.8 percent to $223.1 million from $208.8 million. Due to a 53-week fiscal year, the current quarter ended April 3, 2022 started and concluded one week later than the comparative quarter. Using the same trading weeks as the comparative quarter in both periods, total revenue would have increased by 23.8 percent.
  • DTC revenue increased by 8.0 percent to $185.4 million from $171.6 million. The increase was driven by higher revenue from existing stores, partially offset by a 12.3 percent decrease in e-commerce revenue. Using the same trading weeks as the comparative quarter in both periods, DTC revenue would have increased by 27.8 percent, with e-commerce growth of 1.2 percent. In the comparative quarter, last year reported e-commerce growth was 123.2 percent.
  • Wholesale revenue increased by 3.5 percent to $35.1 million from $33.9 million. The increase was driven by higher-order values. Using the same trading weeks as the comparative quarter in both periods, Wholesale revenue would have increased by 7.7 percent.
  • Gross profit was $154.1 million, a gross margin of 69.1 percent, compared to $138.6 million and 66.4 percent. The increase was attributable to pricing (+180 bps) and a higher proportion of sales to wholesale partners compared to international distributors (+110 bps) partially offset by higher sales in non-parka categories, typically with lower margins.
  • Operating income was $0.9 million, an operating margin of 0.4 percent, compared to $7.2 million and 3.4 percent. Operating margin decreased due to higher operating costs and lease impairment costs, partially offset by gross margin expansion and a higher Wholesale operating margin.
  • Net loss was $(9.1)m, or $(0.09) per diluted share, compared to $2.5 million, or $0.02 per diluted share.
  • Non-IFRS adjusted EBIT was $12.5 million, with an adjusted EBIT margin of 5.6 percent, compared to $4.8 million and 2.3 percent.
  • Non-IFRS adjusted net income was $4.1 million, or $0.04 per diluted share, compared to $0.7 million, or $0.01 per diluted share.
  • Cash was $287.7 million at quarter-end, compared to $477.9 million. During fiscal 2022, 5,636,763 subordinate voting shares were repurchased for a total cash consideration of $253.2 million, including $65.9 million for the fourth quarter.
  • Inventory was $393.3 million at quarter-end, compared to $342.3 million to support future growth.

The adjusted profit of 4 cents topped Wall Street’s consensus target calling for a loss of 1 cent. Sales at $223.1 million topped estimates of $222.7 million.

For the full year, sales reached $1,098.4 million against $903.7 million a year ago. Earnings were $94.6 million, or 87 cents a share, against $70.3 million, or 63 cents, a year ago. On an adjusted basis, EPS came to $1.09 against 78 cents a year ago.

Fiscal 2023 Outlook
For fiscal 2023, the company currently expects total revenue of $1.300Bn to $1.400Bn. Non-IFRS adjusted EBIT of $250 million to $290 million, representing a margin of 19.2 percent to 20.7 percent. Non-IFRS adjusted net income per diluted share of $1.60 to $1.90. Wall Street’s consensus estimate had been C$1.61 on sales of $1.30 billion.
For the first quarter of fiscal 2023, the company currently expects Total revenue of $60 million to $65 million. Non-IFRS adjusted EBIT $(80)m to $(75)m. Non-IFRS adjusted net loss per diluted share $(0.64) to $(0.60). This outlook is based on a number of assumptions for fiscal 2023, including the following:
  • Improved traffic and lower levels of operating disruptions globally, including mandatory closures, in both company and partner-operated retail stores, relative to fiscal 2022;
  • A return to regular trading levels in Mainland China during the peak selling season. Four of 16 retail stores in this market are currently closed as a result of COVID-19 restrictions, with the remainder currently facing significant traffic impacts;
  • Approximate  percent of fiscal 2023 total revenue by quarter is Q1 5 percent, Q2 20 percent, Q3 50 percent, and Q4 25 percent;
  • DTC percent of total revenue 70 percent to 73 percent, driven by low- to high-teens comparable sales growth and continued channel expansion;
  • Wholesale revenue growth of 6 percent;
  • Gross margin in the high 60s as a  percent of total revenue, with expansion driven by DTC mix shift;
  • Effective tax rate in the low 20s as a  percent of income before taxes for fiscal 2023; and
  • Weighted average diluted shares outstanding of 107.7m for fiscal 2023.
Photo courtesy Canada Goose