Canada Goose Holdings Inc. reported total revenue for the fiscal third quarter ended December 31 increased 6 percent year-over-year (YoY) to C$609.9 million, or up 5 percent on a constant-currency (CC) basis. The company reports in Canadian dollars (C$) unless otherwise indicated.

Direct-to-consumer (DTC) revenue grew 14 percent to C$514.0 million, up 14 percent CC, reportedly driven by the growth of in-store retail sales.

  • Sales from DTC channels reportedly increased to 84 percent of the total revenue mix from 78 percent in the prior year’s corresponding reporting period.
  • DTC comparable sales decreased 1.6 percent YoY due to lower e-commerce sales, partially offset by higher comparable in-store sales compared to the prior-year period.

Wholesale revenue decreased 28 percent (-30 percent CC), said to be primarily due to a planned lower order book value resulting from lower orders from existing customers, compared to the prior-year period, and the ongoing streamlining of wholesale relationships as we optimize for greater DTC sales. In addition, we estimated higher returns from wholesale partners as GOOS proactively manages its inventory.

Asia Pacific revenue grew by 62 percent YoY, with the company reporting higher sales across all channels.

EMEA Revenue was reported down 26 percent.

North America Revenue was down 14 percent YoY primarily due to the decline in e-commerce and wholesale revenue, partially offset by contribution from new stores.

Gross profit grew 8 percent to C$449.7 million, compared to the prior-year period. Gross margin for the quarter expanded 150 basis points to 73.7 percent of sales, said to be primarily due to pricing, partially offset by higher product costs due to input cost inflation.

SG&A expenses were C$250.9 million, compared to C$225.7 million in the prior-year period. The increase in SG&A was said to be primarily due to the company’s expanded retail network and set-up costs related to its Transformation Program.

Operating lncome was reported at C$198.8 million for the quarter, compared to C$190.7 million in the prior-year period. The increase in operating income was said to be attributable to higher gross profit, partially offset by higher SG&A costs.

Adjusted EBIT was C$207.2 million, compared to C$197.1 million in the prior-year period.

Net Income attributable to shareholders was C$130.6 million, or C$1.29 per diluted share, compared with a net income attributable to shareholders of C$134.9 million, or C$1.28 per diluted share in the prior-year period.

Adjusted net income to shareholders was C$138.6 million, or C$1.37 per diluted share, compared with an adjusted net income of C$134.5 million, or C$1.27 per diluted share in the prior year period.

Inventory totaled C$478.4 million at quarter-end, and was said to be “relatively flat” compared to the third quarter ended January 1, 2023.

During the third quarter of fiscal 2024, the company repurchased 3,609,932 subordinate voting shares under its normal course issuer bid for a total cash consideration of C$56.6 million, ending the quarter with a cash balance of C$154.3 million, compared with C$344.2 million at the third quarter ended January 1, 2023.

“Our third-quarter results were in line with our guidance, highlighted by progress across our strategic priorities, including robust growth in the Asia Pacific region, increased revenue across categories, with particular strength in apparel, the delivery of elevated experiences across all touchpoints, and increased efficiencies driven by our transformation initiatives,” said Dani Reiss, chairman and CEO of Canada Goose. “While we continue to operate in a challenging consumer spending environment, we are encouraged by our holiday performance, which saw record traffic levels and strong revenue generated during key consumer moments. We remain confident in our strategy and our ability to capitalize on the unique heritage of our iconic, luxury brand to deliver long-term profitable growth.”

Fiscal 2024 Full Year and Q4 Outlook:

Based on quarter-to-date trends, Canada Goose expects the following for fourth quarter fiscal 2024:

  • Total revenue between C$310 million and C$330 million.
  • Non-IFRS adjusted EBIT between C$14 million and C$27 million.
  • Non-IFRS adjusted net income per diluted share between C$0.02 and C$0.13.

For fiscal 2024, the company expects:

  • Total revenue between C$1.285 billion and C$1.305 billion, compared to previous guidance of C$1.2 billion to C$1.4 billion.
  • Non-IFRS adjusted EBIT between C$146 million and C$158 million, representing a margin of between 11 percent and 12 percent, compared to previous guidance of non-IFRS adjusted EBIT of C$135 million to C$225 million, representing a margin of 11 percent to 16 percent.
  • Non-IFRS adjusted net income per diluted share between C$0.82 and C$0.92, compared to previous guidance of C$0.60 to C$1.40.

The updated outlook assumes:

  • DTC revenue as a percentage of total revenue of approximately 70 percent, representing a low-single-digit decrease to a low-single-digit increase in year-over-year DTC comparable sales growth, and continued channel expansion.
  • Wholesale revenue growth to decrease by a high-teens percentage rate year-over-year, reflective of the continued editing of our wholesale door count, returns from wholesale partners, revised re-order expectations, and expansion of our retail store network.
  • Gross margin as a percentage of total revenue to be in the high 60s, with DTC and wholesale gross margins in the mid-70s and low 50s, respectively.
  • Three permanent stores are planned in the fourth quarter, bringing the total permanent store count to 68 at the end of the fiscal year.
  • SG&A expense to grow at a mid-teens percentage rate on a year-over-year basis due to a larger DTC network and operating cost base, moderated by cost savings initiatives, including approximately C$15m in savings from the Transformation Program in fiscal 2024.
  • Effective tax rate in the high teens as a percentage of income before taxes for fiscal 2024.
  • Weighted average diluted shares outstanding of 101.7 million for fiscal 2024, reflecting share buybacks executed year-to-date and assumed dilution effective of outstanding share-based payments.

Image courtesy Canada Goose