Canada Goose Reports Fourth Quarter Fiscal 2021 Results

Rhea-AI Summary

Canada Goose reported a significant 33.7% revenue increase for Q4 2021, reaching $208.8 million, compared to $140.9 million in Q4 2020. The company experienced 123.2% growth in global e-Commerce revenue and a robust DTC revenue of $172.2 million. DTC operating margins improved to 44.4%. Despite challenges in Canada, overall performance led to a net income of $2.9 million or $0.03 per diluted share. The outlook for FY 2022 predicts revenues exceeding $1 billion, driven by strong DTC performance.

Positive

• Total revenue increased by 33.7% to $208.8m.
• Global e-Commerce revenue surged by 123.2%.
• DTC revenue reached $172.2m with a margin of 44.4%.
• Improved cash position of $477.9m, up from $31.7m.
• Projected revenue for FY 2022 expected to exceed $1 billion.

Negative

• Wholesale revenue had a lower margin at 29.1%, down from 34.8%.
• Operating income was only $7.8m, with a low margin of 3.7%.
• Increased operating loss in other segments to $64.7m.

Canada Goose Holdings Inc. (“Canada Goose” or the “Company”) (NYSE:GOOS, TSX:GOOS) today announced financial results for the fourth quarter ended March 28, 2021.

“Canada Goose has shifted from recovery to growth beyond pre-pandemic levels,” said Dani Reiss, President & CEO. “We achieved our largest ever fourth quarter by revenue. With triple digit e-Commerce growth and a resilient retail performance despite disruptions, we served our global consumer base through agile and flexible DTC distribution. Our new Cypress and Crofton collection, as well as the NBA All-Star collaboration, also showcase our ability to relentlessly drive brand heat. Recognizing pandemic uncertainties remain, we are highly confident in our potential for meaningful growth as we move into fiscal 2022.”

Fourth Quarter Fiscal 2021 Business Highlights (compared to Fourth Quarter Fiscal 2020)

• Total revenue increased by 33.7% relative to the comparative quarter in Fiscal 2019 which was prior to the onset of COVID-19.
• Global e-Commerce revenue increased by 123.2%, driven by high double-digit and low triple-digit growth rates in all major existing markets.
• Revenue increased significantly in all geographic regions except Canada, which only decreased by 6.9% despite elevated mandatory retail closures relative to other markets.
• DTC revenue in Mainland China, which was heavily impacted by COVID-19 disruptions in the comparative quarter, increased by 101.4%.

Fourth Quarter Fiscal 2021 Results (compared to the Fourth Quarter Fiscal 2020)

• Total revenue was $208.8m from $140.9m.
• DTC revenue was $172.2m from $114.2m driven by e-Commerce growth and continued retail expansion in Mainland China, offset by lower store revenue in other markets due to COVID-19 disruptions.
• Wholesale revenue was $33.3m from $25.0m. The increase was due to the higher in-season orders relative to the comparative period. 
• Other revenue was $3.3m from $1.7m.
• Gross profit was $138.6m, a gross margin of 66.4%, compared to $93.6m and 66.4%. Gross margin was flat with gains from a higher proportion of DTC revenue offset by margin declines in the DTC and Wholesale segments. This includes a $4.1m increase in provisions for raw materials and finished goods for certain colours on the basis of Fall / Winter sales velocity.
• DTC gross margin of 74.9%, compared to 75.5%. The decrease was driven by a $2.4m increase in inventory provisions (-140 bps), offset by the favourable impact of pricing and volume (+90 bps) driven by parkas.
• Wholesale gross margin of 29.1%, compared to 34.8%. The decrease was attributable to a $1.7m increase in inventory provisions (-530 bps) in a period with seasonally lower revenue.
• Other segment gross loss was $0.1m from $1.3m.
• Operating income was $7.8m, an operating margin of 3.7%, compared to an operating loss of $(17.2)m and an operating margin of (12.2)%.
• DTC operating margin of 44.4%, compared to 38.2%. The increase was driven by the positive impact of e-Commerce growth, which had higher operating profitability than retail stores. This was partially offset by the impact of retail expansion and operating disruptions as a result of COVID-19.  
• Wholesale operating margin of (11.7)%, compared to (22.0)%. The increase was attributable to cost reduction initiatives in response to COVID-19, partially offset by a lower gross margin.
• Other operating loss was $64.7m from $55.3m. The increase was attributable to $10.2m of  higher performance-based compensation, $6.8m of incremental marketing costs, and $2.2m of product development costs. This was partially offset by $10.1m of favourable foreign exchange fluctuations related to working capital and the Term Loan Facility, net of hedge impacts.
• Net income was $2.9m, or $0.03 per diluted share, compared to $2.5m, or $0.02 per diluted share.
• Non-IFRS adjusted EBIT was $5.4m, an adjusted EBIT margin of 2.6%, compared to $(9.7)m and (6.9)%.
• Non-IFRS adjusted net income was $1.1m, or $0.01 per diluted share, compared to $(13.3)m, or $(0.12) per diluted share.
• Cash was $477.9m as at year end, compared to $31.7m, alongside $181.2m of available borrowing capacity in the undrawn revolving facility. The increase was driven by positive free operating cash flow and refinancing proceeds.
• Inventory was $342.3m as at year end, compared to $412.3m. The decrease was attributable to a planned drawdown in finished goods of $71.5m, supported by a strong Fall / Winter sales performance and reduced production levels during fiscal 2021. 

Outlook

Based on existing economic and operating conditions, the Company currently expects total revenue to exceed $1Bn in fiscal 2022. This is based on the following assumptions:

• Annual DTC revenue approaching 70% of total revenue, with continued distribution expansion in-line with historical levels. Annual Wholesale revenue in-line with fiscal 2021.
• Total revenue in Q1 fiscal 2022 is assumed to be less than double the $26.1m of total revenue from Q1 fiscal 2021.

The outlook above constitutes forward-looking information within the meaning of applicable securities laws. The purpose of such 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 risks and uncertainties, many of which are beyond the Company’s control, including risks and uncertainties relating to retail closures as a result of COVID-19 restrictions, retail traffic and global tourism recovery, and changes to consumer shopping behaviour. See “Cautionary Note Regarding Forward-Looking Statements”.

As of the date of this release, 6 of 28 Canada Goose retail stores, representing 21% of the network, are closed.

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 May 13, 2021. Those interested in participating are invited to dial (877) 715 0767 or (918) 922 6441 if calling internationally and reference Conference ID 1254355 when prompted. A live audio webcast of the conference call will be available online at http://investor.canadagoose.com.

About Canada Goose

Founded in 1957 in a small warehouse in Toronto, Canada, Canada Goose (NYSE:GOOS, TSX:GOOS) is a lifestyle brand and a leading manufacturer of performance luxury apparel. Every collection is informed by the rugged demands of the Arctic, ensuring a legacy of functionality is embedded in every product from parkas and rainwear to apparel and accessories. Canada Goose is inspired by relentless innovation and uncompromised craftsmanship, recognized as a leader for its Made in Canada commitment. In 2020, Canada Goose announced HUMANATURE, its purpose platform that unites its sustainability and values-based initiatives, reinforcing its commitment to keep the planet cold and the people on it warm. Canada Goose also owns Baffin, a Canadian designer and manufacturer of performance outdoor and industrial footwear. Visit www.canadagoose.com for more information.

Condensed Consolidated Statements of Income and Comprehensive Income
(in millions of Canadian dollars, except share and per share amounts)

		Fourth quarter ended							For the year ended
		March 28, 2021			March 29, 2020				March 28, 2021			March 29, 2020
		$			$				$			$
Revenue		208.8			140.9				903.7			958.1
Cost of sales		70.2			47.3				349.7			364.8
Gross profit		138.6			93.6				554.0			593.3
Gross margin		66.4		%	66.4		%		61.3		%	61.9		%
Selling, general and administrative expenses		111.6			95.9				367.3			350.5
SG&A expenses as % of revenue		53.4		%	68.1		%		40.6		%	36.6		%
Depreciation and amortization		19.2			14.9				69.8			50.7
Operating income (loss)		7.8			(17.2)				116.9			192.1
Operating margin		3.7		%	(12.2)		%		12.9		%	20.1		%
Net interest, finance and other costs		8.2			4.5				30.9			28.4
(Loss) income before income taxes		(0.4)			(21.7)				86.0			163.7
Income tax (recovery) expense		(3.3)			(24.2)				15.8			12.0
Effective tax rate		825.0		%	111.5		%		18.4		%	7.3		%
Net income		2.9			2.5				70.2			151.7
Other comprehensive (loss) income		(8.2)			4.8				(5.6)			2.8
Comprehensive (loss) income		(5.3)			7.3				64.6			154.5
Earnings per share
Basic		$	0.03		$	0.02			$	0.64		$	1.38
Diluted		$	0.03		$	0.02			$	0.63		$

FAQ

What were Canada Goose's fourth quarter earnings for fiscal 2021?

Canada Goose reported total revenue of $208.8 million for Q4 fiscal 2021.

How did e-Commerce performance impact Canada Goose's revenue in Q4 2021?

E-Commerce revenue increased by 123.2% compared to Q4 2020.

What is Canada Goose's outlook for fiscal 2022?

Canada Goose expects total revenue to exceed $1 billion in fiscal 2022.

How much cash did Canada Goose have at year-end fiscal 2021?

Canada Goose had $477.9 million in cash at year-end fiscal 2021.

What was the net income for Canada Goose in Q4 fiscal 2021?

Net income was $2.9 million, or $0.03 per diluted share.