Canada Goose Holdings, Inc. reported progressing initiatives across its three key operating imperatives during the fiscal first quarter ended June 30. These included setting the foundation for brand and product evolution, implementing retail execution and simplifying and focusing its internal operations.
Canada Goose reports in Canadian dollars (CN$).
Total revenue increased 4 percent year-over-year to CN$88.1 million in the fiscal first quarter and posted 3 percent growth on a constant currency (CC) basis.
Direct-to-consumer (DTC) revenue grew 13 percent (+12 percent CC) to CN$63.1 million in Q1, reportedly driven by strong retail sales in Asia Pacific. DTC comparable sales decreased 4.4 percent year-over-year.
Wholesale revenue decreased 41 percent (-42 percent CC) to CN$16.0 million in the quarter, reported to be due to a planned lower order book resulting from fewer orders from existing customers compared to the same period in the prior year and the continued optimization of wholesale relationships as the company “elevates the quality of our partners in this sales channel.”
Other revenue increased from CN$7.1 million to CN$9.0 million due to incremental revenue from the knitwear facility the company acquired in the third quarter of fiscal 2024, higher employee sales and friends and family sales aimed at exiting slow-moving and discontinued inventory.
“Canada Goose had a solid start to the year, as our Spring/Summer 2024 collection attracted new and existing customers to shop in our stores and online, contributing to revenue growth in our first quarter, which was especially robust in the Asia Pacific region,” said Dani Reiss, chairman and CEO of Canada Goose. “I’m encouraged by the early progress we made across our fiscal 2025 key operating imperatives, evolving our brand and product, welcoming our first-ever creative director, Haider Ackermann, advancing our retail execution plans, and introducing new ways of working to inspire greater operating discipline and efficiencies across the organization.”
Gross profit decreased 5 percent to CN$52.6 million, compared to the same prior-year period. Gross margin for the quarter was 59.7 percent of net sales for Q1, compared to 65.1 percent in the first quarter of fiscal 2024, primarily due to lower margin revenue contribution from the European manufacturing facility acquired in the third quarter of fiscal 2024 and a higher proportion of non-Heavyweight down revenue within the product mix.
Selling, general and administrative (SG&A) expenses were CN$149.5 million, compared to CN$154.9 million in the prior year period. The reduction in SG&A was primarily due to cost savings resulting from the company’s workforce reductions implemented in fiscal 2024 and costs incurred associated with its Transformation Program in fiscal 2024 that did not repeat in the first quarter of fiscal 2025, partially offset by an increase in expenses related to the expansion of its global retail network.
Operating Loss was CN$96.9 million, compared to a loss of CN$99.7 million in the prior-year period.
Adjusted EBIT was negative CN$96.0 million, compared to negative CN$91.1 million in the prior-year period.
Net loss attributable to shareholders was CN$77.4 million, or a loss of CN$0.80 cents per basic share, compared with a net loss attributable to shareholders of CN$81.1 million, or a loss of CN$0.78 per basic share in the prior-year period.
Adjusted net loss attributable to shareholders4 was CN$76.1 million, or a loss of CN$0.79 per basic share, compared with an adjusted net loss attributed to shareholders of CN$73.1 million, or a loss of CN$0.70 per basic share in the prior-year period.
Balance Sheet Highlights
Inventory of CN$484.3 million at quarter-end was 7 percent lower compared to the first quarter of fiscal 2024, which ended July 2, 2023, with finished goods inventory declining 7 percent over the same comparable period due to a combination of sales through its DTC, Wholesale and Other channels and reducing production levels.
The company ended the first quarter of fiscal 2025 with net debt of CN$765.9 million, compared with CN$711.9 million at the end of the first quarter of fiscal 2024. The company said the net debt position includes borrowings on its revolving facility which is seasonally typical as it builds inventory to prepare for the peak selling season.
Fiscal 2025 Outlook
The outlook that follows constitutes “financial outlook” and “forward-looking information” within the meaning of applicable securities laws. It is based on several assumptions and is subject to several risks.
Canada Goose is maintaining the fiscal 2025 guidance issued with the fourth quarter and fiscal 2024 results published on May 16, 2024. As disclosed previously, the company continues to expect:
- Total revenue will grow in the low-single-digits, year-over-year, with an approximate 25 percent/75 percent distribution split between 1H and 2H of fiscal 2025, respectively, which is 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 pricing increase over fiscal 2024;
- A 20 percent year-over-year decrease in Wholesale revenue due to tightening its wholesale order book to largely offset the benefit of 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 year-over-year; and
- Weighted average diluted shares outstanding of approximately 99 million for fiscal 2025.
The company said its fiscal 2025 financial outlook continues to assume global consumer spending 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 said in a media release.
Image courtesy Canada Goose