CANADA GOOSE HOLDINGS INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the third and three quarters ended January 1, 2023 The following Management's Discussion and Analysis ("MD&A") for Canada Goose Holdings Inc. ("us," "we," "our," "Canada Goose" or the "Company") is dated February 1, 2023 and provides information concerning our results of operations and financial condition for the third and three quarters ended January 1, 2023. All figures are presented in Can ...

Financial Data and Key Metrics Changes - Total revenue grew 19% to $277.2 million, with a 22.3% increase on a constant currency basis [12][36] - Adjusted EBIT increased 70.1% to $29.6 million, exceeding guidance expectations [46] - Adjusted net income attributable to shareholders rose 63.1% to $23 million, translating to $0.22 per diluted share [47] Business Line Data and Key Metrics Changes - Direct-to-Consumer (DTC) revenue increased 15.6% to $94.8 million, with a 18.5% rise on a constant currency basis [36] - Wholesale revenue increased 21.2% to $180.7 million, with a 24.7% increase on a constant currency basis [38] - DTC comparable sales declined by 4%, but excluding Mainland China, growth was 3.2% [37] Market Data and Key Metrics Changes - North America saw revenue growth of 20.3% in the U.S. and 25.2% in Canada [40] - EMEA revenue grew 34.4%, with a 43.7% increase on a constant currency basis, driven by wholesale expansion [41] - Asia-Pacific results were negatively impacted by COVID restrictions in Mainland China, with a decline in store traffic [43] Company Strategy and Development Direction - The company aims to grow its DTC mix, deepen market presence, re-envision product offerings, and expand margins [16] - Plans to open more stores in key markets, including China, Japan, and South Korea, to enhance brand presence [17][19][20] - Focus on expanding women's business to align with industry standards, targeting a growth from 50% to a higher percentage [24][26] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing macroeconomic challenges but expresses confidence in the brand's strength and long-term growth potential [7][10] - Revised revenue guidance for the year is now $1.2 billion to $1.3 billion, down from previous expectations [53] - Anticipated adjusted EBIT for the year is now $215 million to $255 million, reflecting cost control measures [55] Other Important Information - Gross margins increased by 180 basis points to 59.8%, driven by pricing and lower product costs [45] - Inventory levels rose to $511.5 million, with a portion attributed to the Japan joint venture [49] - The company maintains a non-promotional brand strategy, focusing on long-term brand health [106] Q&A Session Summary Question: How does the company assess brand strength in Mainland China amid disruptions? - Management remains confident in brand strength, citing strong performance during key shopping events and continued lease signings in prime locations [65][66] Question: What cost control measures are being implemented? - The company is tightening discretionary spending and focusing on strategic initiatives while maintaining marketing investments [70] Question: What are the expectations for e-commerce trends in China? - E-commerce is performing well, with the website being the best-performing channel despite store closures [96] Question: How does the company view the role of Wholesale in the current macroeconomic environment? - The company continues to manage Wholesale closely, ensuring partners are set up for a successful holiday season without significant changes to the channel's role [99] Question: What are the inventory expectations moving forward? - Inventory is healthy, and the company does not foresee a need to adopt a promotional strategy, maintaining a focus on brand integrity [106]

Financial Performance - Revenue for the second quarter ended October 2, 2022, was CAD $277.2 million, a 19.0% increase compared to CAD $232.9 million for the same period in 2021[17] - Gross profit for the second quarter was CAD $165.8 million, representing a 22.8% increase from CAD $135.0 million in the prior year[17] - Operating income for the second quarter was CAD $4.7 million, a decrease of 62.7% from CAD $12.6 million in the same quarter of 2021[17] - Net income attributable to shareholders for the second quarter was CAD $3.3 million, down 66.7% from CAD $9.9 million in the previous year[17] - Adjusted EBIT for the second quarter was CAD $29.6 million, a 70.1% increase from CAD $17.4 million in the same quarter of 2021[17] - Adjusted net income attributable to shareholders for the second quarter was CAD $23.0 million, a 63.1% increase from CAD $14.1 million in the prior year[17] - The gross margin for the second quarter was 59.8%, an increase of 180 basis points from 58.0% in the same quarter of 2021[17] - SG&A expenses rose to CAD $161.1 million, a 31.6% increase from CAD $122.4 million, primarily due to foreign exchange fluctuations and costs associated with new store openings[61] - Adjusted net income attributable to shareholders was CAD $23.0 million for the second quarter of 2022, compared to CAD $14.1 million in the same quarter of 2021[122] - Net income for Q2 2022 was CAD $5.0 million, down from CAD $9.9 million in Q2 2021[74] Revenue Segmentation - Direct-to-Consumer (DTC) segment included sales through 56 national e-Commerce markets and 45 retail stores across North America, Europe, and Asia Pacific as of October 2, 2022[19] - Direct-to-Consumer (DTC) revenue was CAD $94.8 million, a 15.6% increase from CAD $82.0 million in the prior year, despite a 4.0% decline in comparable sales due to COVID-19 restrictions in the Asia Pacific region[49][57] - Wholesale revenue increased by CAD $31.6 million or 21.2% to CAD $180.7 million, driven by earlier order fulfillment and increased order book value[50] - Revenue from Canada increased by CAD $11.8 million or 25.2% to CAD $58.7 million, while revenue from the United States rose by CAD $12.5 million or 20.3% to CAD $74.2 million[53] - Revenue for the two quarters ended October 2, 2022, was $347.1 million, an increase of $57.9 million or 20.0% from $289.2 million for the two quarters ended September 26, 2021[78] - DTC revenue increased by $18.5 million or 16.7% to $129.6 million, driven by retail expansion with 45 permanent stores compared to 38 in the prior period[78] - Wholesale revenue rose by $38.7 million or 22.1% to $213.9 million, attributed to earlier order book fulfillment and increased order book value[79] Operational Challenges - The company anticipates potential risks from ongoing geopolitical events and the COVID-19 pandemic affecting its operations and market conditions[6] - The company continues to face global supply chain disruptions due to COVID-19 and political events, but these have not significantly impacted demand fulfillment or inventory levels[21] - Inflationary pressures may persist, potentially affecting gross margin and SG&A expenses as a percentage of revenue, although these pressures have not yet materially impacted operations[25] - Seasonal fluctuations in revenue are significant, with 82.4% and 86.8% of annual wholesale revenue occurring in the second and third fiscal quarters of fiscal 2022 and fiscal 2021, respectively[26] Strategic Initiatives - The company plans to invest in new product development, including Canada Goose and Baffin branded footwear, through distinct sales channels[22] - The direct-to-consumer (DTC) segment is expected to expand, although the scale of this expansion may be delayed due to global conditions[23] - The company has suspended all wholesale and e-commerce sales to Russia, which accounted for less than 1% of total annual revenue in fiscal 2022[24] - The company entered a joint venture in Japan, acquiring 50% of Canada Goose Japan, K.K. for a total purchase consideration of $22.6 million, which includes cash and deferred contingent consideration[43] - The joint venture is expected to align revenue recognition with the company's operating segments, impacting the timing of revenue in Japan[44] Financial Position and Cash Flow - Free operating cash flow was $(66.0) million for the second quarter, compared to $(48.1) million in the prior year[109] - Net debt increased to $(734.1) million from $(582.0) million, while net working capital rose to $482.4 million from $356.7 million[109] - Cash flows used in operating activities for Q2 2022 were $37.8 million, an increase of $8.9 million compared to Q2 2021, driven by lower net income and higher income taxes paid[131] - For the two quarters ended October 2, 2022, cash flows used in operating activities totaled $234.7 million, up $50.4 million from $184.3 million in the same period of 2021, primarily due to a higher net loss and increased inventory spending[132] - Cash flows used in investing activities for Q2 2022 were $14.7 million, an increase of $5.2 million from Q2 2021, mainly due to higher capital investments for retail expansion[133] Tax and Interest Rates - The effective tax rate for the quarter was 338.1%, a significant increase from (110.6)% in the prior year, reflecting a change in tax recovery[49] - Interest rates on borrowings under various facilities are currently at 3.85%, 0.37%, 4.98%, and 7.14%[184] - A 1.00% increase in the average interest rate would increase interest expense on the Term Loan Facility by CAD $1.9 million[185] Foreign Exchange and Risk Management - The company generated 72.5% of its revenue in currencies other than Canadian dollars in fiscal 2022, exposing it to foreign exchange fluctuations[26] - The Company has entered into forward foreign exchange contracts to mitigate foreign exchange risk related to U.S. dollar, euro, and other currencies[175] - A $0.01 depreciation in the value of the Canadian dollar compared to the U.S. dollar would decrease pre-tax income by CAD $2.9 million based on outstanding balances of CAD $407.5 million under the Term Loan Facility[180]

Canada Goose Holdings Inc. (NYSE:GOOS) Q1 2023 Earnings Conference Call August 10, 2022 9:00 AM ET Company Participants Amy Schwalm - VP of Investor Relations Dani Reiss - CEO Jonathan Sinclair - CFO Conference Call Participants Oliver Chen - Cowen Ike Boruchow - Wells Fargo Jonathan Komp - Robert W. Baird Michael Binetti - Credit Suisse Omar Saad - Evercore ISI Meaghen Annett - TD Securities Brooke Roach - Goldman Sachs Adrienne Yih-Tennant - Barclays Jay Sole - UBS Operator Good day, and welcome to the Ca ...

CANADA GOOSE HOLDINGS INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the first quarter ended July 3, 2022 The following Management's Discussion and Analysis ("MD&A") for Canada Goose Holdings Inc. ("us," "we," "our," "Canada Goose" or the "Company") is dated August 10, 2022 and provides information concerning our results of operations and financial condition for the first quarter ended July 3, 2022. All figures are presented in Canadian ("CAD") dollars, unless ...

Financial Data and Key Metrics Changes - Canada Goose achieved record sales, surpassing $1 billion for the first time in fiscal 2022 [7] - The company expects fiscal 2023 revenue between $1.3 billion and $1.4 billion, with EBIT margins projected between 19% and 21% [9][30] - Adjusted EBIT margin for fiscal 2022 was 15.9%, with adjusted EPS at $1.09 [29] Business Line Data and Key Metrics Changes - Direct-to-Consumer (DTC) revenue represented over two-thirds of total business at $740 million, with DTC gross margins at 76% [16][28] - Non-parka revenue grew by over 70% in fiscal 2022, indicating strong demand for year-round offerings [19][34] - Wholesale revenue is expected to increase by approximately 6% in fiscal 2023 [32] Market Data and Key Metrics Changes - North America was the biggest driver of growth, with consumer confidence returning to pre-pandemic levels [10] - The APAC region saw a decline due to COVID restrictions, particularly in Mainland China [10] - The joint venture in Japan is expected to contribute $60 million to $65 million in revenue for fiscal 2023 [32] Company Strategy and Development Direction - The company aims to increase its DTC mix and expand its retail network by adding up to 13 stores globally [17][81] - Canada Goose is focusing on sustainability, with a commitment to using more recycled and responsibly sourced materials [21][22] - The company is pursuing category expansion, particularly in non-parka offerings and footwear [19][91] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand and business despite challenges, citing a unique supply chain advantage [11][26] - The outlook for fiscal 2023 is optimistic, with expectations of strong consumer demand and improved retail productivity [46] - Management does not expect a full recovery of international tourism to impact their guidance significantly [94] Other Important Information - The company has appointed new leadership roles to strengthen its commercial operations and board [12][13] - Canada Goose has committed to net zero carbon emissions by 2025 and has signed onto the United Nations Global Compact [22][23] Q&A Session Summary Question: What are Carrie Baker's priorities in her new role? - Carrie Baker emphasized executing with excellence and creating impact from both consumer and financial perspectives [50] Question: Can you elaborate on the outlook for Mainland China? - Jonathan Sinclair noted that Q1 is expected to be heavily impaired, with a gradual improvement anticipated in Q2 and normal business levels expected in Q3 [51] Question: How is the wholesale channel performing? - Dani Reiss stated that the wholesale channel is progressing well, with strong sell-throughs and increased order books [54] Question: What is the rationale behind the revenue growth guidance? - Jonathan Sinclair explained that the guidance is based on healthy comparable growth and pricing power, with expectations for continued unit growth [58] Question: What are the capital allocation priorities for fiscal '23? - Jonathan Sinclair indicated that the best use of cash is to invest in the business, with ongoing investments in store estate and manufacturing facilities [68] Question: What assumptions underpin the confidence in achieving DTC growth? - Jonathan Sinclair mentioned expectations of pricing impacts, product development, and a gradual resumption of traffic as key factors [72]

Financial Performance - Total revenue for Q4 Fiscal 2022 was $223.1 million, an increase of 6.8% from $208.8 million in Q4 Fiscal 2021[6] - Direct-to-Consumer (DTC) revenue rose by 8.0% to $185.4 million, while e-Commerce revenue decreased by 12.3%[6] - Non-IFRS adjusted EBIT for Q4 was $12.5 million, representing a margin of 5.6%, compared to $4.8 million and 2.3% in the prior year[6] - The company reported a net loss of $9.1 million, or $(0.09) per diluted share, compared to a net income of $2.5 million, or $0.02 per diluted share in the previous year[6] - For Fiscal 2023, total revenue is expected to be between $1.300 billion and $1.400 billion, with non-IFRS adjusted EBIT projected at $250 million to $290 million[7] - Adjusted net income for the year ended April 3, 2022, was CAD $119.4 million, up from CAD $86.2 million in 2021, reflecting a growth of 38.5%[17] - Adjusted EBIT margin for the fourth quarter was 5.6%, an increase from 2.3% in the same quarter of the previous year[16] - Total adjustments for the fourth quarter amounted to CAD $16.1 million, compared to a negative adjustment of CAD $2.0 million in the same quarter of 2021[17] Cash and Inventory Management - Cash at the end of Q4 was $287.7 million, down from $477.9 million, with inventory increasing to $393.3 million from $342.3 million[6][13] Shareholder Actions - The company repurchased 5,636,763 subordinate voting shares for a total cash consideration of $253.2 million during Fiscal 2022[7] Market Strategy and Growth - The company anticipates DTC to account for 70% to 73% of total revenue, driven by comparable sales growth in the low to high teens[7] - The company is focusing on expanding into new markets and enhancing customer experience while leveraging its successful product strategy[3] - The company plans to enhance its global distribution structure through the transition of logistics agencies[19] Challenges and Risks - The company anticipates continued challenges due to the COVID-19 pandemic and evolving global economic conditions, impacting future performance[19] Accounting and Policy Changes - The company has adopted a change in accounting policy regarding the treatment of implementation costs related to Software as a Service (SaaS) arrangements[18] Taxation - The effective tax rate for Fiscal 2023 is expected to be in the low 20s as a percentage of income before taxes[11] Impairment and Losses - The company incurred impairment losses of CAD $7.7 million for the year ended April 3, 2022, with no impairment losses recorded in the previous year[17] - The company reported net excess overhead costs from temporary closure of manufacturing facilities of CAD $4.3 million for the year ended April 3, 2022[17] - Unrealized foreign exchange gain on the Term Loan Facility was CAD $1.1 million for the fourth quarter, compared to a loss of CAD $3.1 million in the same quarter of 2021[17]

Business Environment - The company operates in a seasonal business environment, which impacts its financial performance[166] - The fiscal year 2022 is a 53-week period ending on April 3, 2022, with the additional week added to the third quarter[15] Properties and Operations - As of April 3, 2022, the company leases 61 properties globally, including 41 permanent retail stores and eight manufacturing facilities[171] - The company has a diverse organizational structure, which supports its global operations[169] Compliance and Regulations - The company believes it is in material compliance with applicable laws and regulations across its operating jurisdictions[167] - The company monitors changes in laws and regulations that may impact its business operations and compliance[167] - The company’s financial statements are prepared in accordance with International Financial Reporting Standards (IFRS)[14] Risk Management - The company faces risks related to the ongoing COVID-19 pandemic and geopolitical events, which may affect its operations and financial condition[23] - The company is focused on managing its exposure to data security and cyber security events as part of its risk management strategy[25] Customer and Supplier Relationships - The company emphasizes the importance of maintaining strong relationships with customers, suppliers, and distributors for its growth strategies[23]

Financial Data and Key Metrics Changes - Total revenue increased by 26.5% to $586 million, excluding temporary PPE sales from last year [21][30] - Adjusted EBIT margin expanded by 200 basis points to 35.3% and adjusted EPS increased by 42% to $1.42 per share [9][30] - Total SG&A was $184 million, up 27% from last year [30] Business Line Data and Key Metrics Changes - Direct-to-Consumer (DTC) revenue increased by 49% to $445 million, driven by higher revenue from existing stores, eCommerce growth, and retail expansion [22] - Wholesale revenue decreased by 15% to $137 million, attributed to a normalization of timing with shipments [23] - Non-parka revenue grew by 75%, with strong performance in vests, lightweight jackets, and footwear [24] Market Data and Key Metrics Changes - DTC revenue in Mainland China increased by 35%, although store traffic slowed in December due to COVID restrictions [25] - Revenue in EMEA increased by 16%, impacted by the absence of international traffic [26] - North America saw revenue growth of 32% in Canada and 26% in the United States, with established retail stores performing near pre-pandemic levels [27][28] Company Strategy and Development Direction - The company aims to build an enduring global lifestyle brand and expand year-round roles, with a focus on innovative collaborations and product offerings [13][15] - The launch of the HUMANATURE collection emphasizes the company's commitment to sustainability and environmentally responsible materials [16] - The company is confident in its inventory position and ability to navigate inflationary pressures going into fiscal 2023 [11] Management's Comments on Operating Environment and Future Outlook - Management views recent disruptions as temporary and remains optimistic about long-term growth potential [9][34] - The company expects to achieve strong growth and margin expansion even without a full retail recovery globally [34][55] - Management is confident in the brand's momentum and lifestyle relevance, supported by a unique supply chain [10][34] Other Important Information - The company has launched its first-ever footwear collection, which has generated strong consumer interest [14] - The company is expanding its eCommerce capabilities globally, with a successful launch in North America [12] Q&A Session Summary Question: Thoughts on store traffic regionally and marketing spend - Management noted that store traffic in North America remains strong, while Asia and EMEA are experiencing lower traffic due to COVID [38] - Marketing spend is maintained at a constant percentage of revenue, with no expected changes [38] Question: Clarification on margin outlook - The decrease in margin outlook is primarily due to sales deleverage from lower traffic, with expectations for recovery as traffic normalizes [43][45] Question: Details on Asia and China performance - Management confirmed that the primary issue in China is COVID-related restrictions, but online sales have shown strong growth [60][61] Question: Brand equity and competitive positioning - The company sees strong brand equity across all markets, particularly among younger consumers, driven by collaborations [71] Question: Store sales productivity and growth expectations - New store cohorts are performing well, and the company expects to continue opening stores at a rate of around 10% annually [75] Question: Thoughts on share price volatility and buyback strategy - Management emphasized a long-term focus on building a strong business, with share buybacks considered when share prices are attractive [82][83]

Financial Data and Key Metrics Changes - Total revenue increased by 40% to $233 million, excluding temporary PPE sales from the previous year [30][41] - DTC revenue grew by 80% to $83 million, driven by strong retail recovery and a 34% increase in e-commerce [32][41] - Adjusted EBIT margin was just under last year at 6.9%, and adjusted EPS grew 20% to $0.12 per share [37][41] Business Line Data and Key Metrics Changes - Wholesale revenue increased by 25% to $148 million, reflecting a reversal of late order shipments from the previous year [31] - DTC gross margin was 73.7%, while Wholesale gross margin was 49.4% [34] - All geographic regions delivered total revenue growth greater than 30%, with Mainland China DTC revenue growing by 86% [33] Market Data and Key Metrics Changes - Mainland China was a standout performer, contributing significantly to DTC growth [33] - Retail traffic and store productivity showed strong recovery compared to last year, indicating positive market trends [24][25] Company Strategy and Development Direction - The company is focusing on expanding its DTC business, which is projected to account for nearly 70% of total revenue this year [24] - The launch of a new footwear collection is seen as a significant milestone, aiming to balance performance and luxury [14][20] - The company is committed to sustainability and has achieved certification under the Responsible Down Standard [123] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about entering the peak season, raising the financial outlook for the remainder of the year [13][41] - The company does not expect material revenue headwinds related to supply or shipping constraints [22] - There is confidence in the recovery of international retail traffic, which represents additional upside potential [44] Other Important Information - The company opened its first retail store in California, which features a unique snow room to enhance customer experience [23] - The footwear launch is expected to be a long-term revenue contributor, although it may not significantly impact this year's financials [68] Q&A Session Summary Question: Insights on the 1H-2H dynamic and confidence in revenue acceleration - Management noted a strategic shift towards DTC and resizing of the Wholesale business, leading to confidence in revenue growth for the second half [53][54] Question: Guidance on DTC and Wholesale performance - DTC performance is driving the upside in guidance, with recovery in store productivity and continued e-commerce growth [58][59] Question: Transition to fur-free products - The transition is on track, with non-fur parka styles performing well and contributing to increased outlook [65] Question: Footwear launch plans and financial expectations - The footwear category is expected to ramp up over time, with initial lower gross margins but potential for improvement as the category scales [70][86] Question: Impact of tourism on sales - International tourism is currently down, but management views its eventual recovery as a significant upside for the business [73] Question: Performance in China and e-commerce journey - China is a key market with strong growth, and the company is expanding its online presence through platforms like Tmall and JD [78] Question: Direct-to-Consumer growth drivers - DTC growth is attributed to strong performance in existing stores and e-commerce, with ongoing recovery compared to pre-pandemic levels [82][105] Question: Product mix and non-parka sales - The company continues to sell a diverse product mix year-round, with expectations for non-parka products to grow in the Wholesale channel [119][120]