Canada Goose Holdings Inc. (“Canada Goose” or the “Company”) (NYSE:GOOS, TSX:GOOS) today announced financial results for the third quarter ended January 2, 2022.
“Canada Goose’s brand momentum and supply chain resilience drove a strong performance in our largest quarter,” said Dani Reiss, President & CEO. “Our digital business continued to exceed last year’s outsized gains, alongside a sharp improvement in retail productivity. We remain confident in our long-term trajectory for revenue growth and margin expansion, notwithstanding the emergence of temporary and unexpected COVID-19 disruptions in certain markets.”
Third Quarter Fiscal 2022 Business Highlights (compared to Third Quarter Fiscal 2021)
- Total revenue increased by 26.5%, excluding $10.7m of temporary PPE sales in the comparative quarter. Including temporary PPE sales, total revenue increased by 23.6%.
- Total non-parka revenue increased by 74.9%, reflecting growing year-round lifestyle relevance.
- Global e-Commerce revenue increased by 28.1%.
- DTC revenue in Mainland China increased by 35.1%.
Third Quarter Fiscal 2022 Results (compared to Third Quarter Fiscal 2021)
- Total revenue was $586.1m from $474.0m. As fiscal 2022 is a 53-week year, the additional week included in the third quarter ended January 2, 2022 provided $40.9m of revenue.
- DTC revenue was $445.4m from $299.4m. The majority of the increase was driven by higher sales from existing retail stores, complemented by e-Commerce growth and retail expansion.
- Wholesale revenue was $136.7m from $160.8m. The decrease was a result of earlier order shipment timing relative to fiscal 2021, driven by wholesale partner requests.
- Other revenue was $4.0m from $13.8m. The decrease was attributable to temporary PPE sales in the comparative quarter.
- Gross profit was $413.8m, a gross margin of 70.6%, compared to $316.4m and 66.8%.
- DTC gross margin of 77.1%, compared to 77.9%. The decrease was driven by a higher proportion of sales in non-parka categories (-50 bps), higher duty costs (-50 bps), government payroll subsidies in the comparative quarter (-50 bps) and an unfavorable shift in geographic mix (-30 bps). This was partially offset by pricing (+120 bps).
- Wholesale gross margin of 50.2%, compared to 51.5%. The decrease was driven by government payroll subsidies in the comparative quarter (-190 bps) and unfavorable impacts from product mix due to higher sales in non-parka categories (-190 bps). This was partially offset by a higher proportion of sales to wholesale partners compared to international distributors (+100 bps) and pricing (+170 bps).
- Other segment gross profit was $1.6m from $0.3m.
- Operating income was $205.9m, an operating margin of 35.1%, compared to $153.3m and 32.3%.
- DTC operating margin of 57.4%, compared to 55.0%. The positive impact of revenue growth was partially offset by the decrease in segment gross margin.
- Wholesale operating margin of 35.6%, compared to 42.9%. The decrease in operating margin was attributable to lower gross margin and higher SG&A expenses.
- Other operating loss was $(98.5)m from $(80.4)m. The increase in operating loss was attributable to incremental SG&A expenses including $15.3m of investment in marketing, $7.9m of personnel costs and $5.1m in strategic initiatives including digital capabilities and the launch of Canada Goose footwear. This was partially offset by $14.5m of favorable foreign exchange fluctuations.
- Net income was $151.9m, or $1.41 per diluted share, compared to $107.0m, or $0.96 per diluted share.
- Non-IFRS adjusted EBIT was $206.9m, an adjusted EBIT margin of 35.3%, compared to $157.9m and 33.3%.
- Non-IFRS adjusted net income was $152.6m, or $1.42 per diluted share, compared to $111.9m, or $1.01 per diluted share.
- Cash was $407.6m as at quarter end, compared to $469.0m. During the year, 3,865,136 subordinate voting shares were repurchased for a total cash consideration of $187.3m.
- Inventory was $368.1m as at quarter end, compared to $339.0m.
Revised Fiscal 2022 Outlook
Due to lower than expected revenue and retail traffic in APAC and EMEA in the current quarter, alongside new variant outbreaks and restrictions, the Company now expects the following for fiscal 2022:
- Total revenue $1.090Bn to $1.105Bn, compared to $1.125Bn to $1.175Bn.
- Non-IFRS adjusted EBIT $165m to $175m at an adjusted EBIT margin of 15.1% to 15.8%, compared to $186m to $208m at an adjusted EBIT margin of 16.5% to 17.7%.
- Non-IFRS adjusted net income per diluted share $1.02 to $1.11, compared to $1.17 to $1.33.
This is based on a number of assumptions, including the following:
- No material change in current economic conditions and operating disruptions, including those related to COVID-19.
- DTC revenue at approximately 68% of total revenue, compared to approximately 70%.
- Wholesale revenue growth 6% to 7%, compared to mid-single digits.
- Weighted average diluted shares outstanding 109.4m, compared to 109.3m.
Within the meaning of applicable securities laws, this outlook constitutes forward-looking information. The purpose of this outlook is to provide a description of management’s expectations regarding the Company’s financial performance and may not be appropriate for other purposes. Actual results could vary materially as a result of numerous factors, including the extent and duration of operational disruptions that may affect our business as a result of the COVID-19 pandemic and other risk factors, many of which are beyond the Company’s control. See “Cautionary Note Regarding Forward-Looking Statements”.
Conference Call Information
Dani Reiss, President and Chief Executive Officer and Jonathan Sinclair, EVP and Chief Financial Officer, will host the conference call at 9:00 a.m. Eastern Time on February 10, 2022. Those interested in participating are invited to dial (877) 804 7379 or (629) 228 0700 if calling internationally and reference Conference ID 9894131 when prompted. A live audio webcast of the conference call will be available online at http://investor.canadagoose.com.
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