Canada Goose Reports Results for First Quarter Fiscal 2023
Canada Goose Holdings reported strong Q1 2023 results, with revenue of $69.9 million, reflecting a 24.2% increase year-over-year.
Key drivers included a remarkable 75% revenue growth in North America and 10.7% growth in DTC comparable sales. Gross margin improved to 61.1% from 54.5%.
However, the company registered an operating loss of $80.7 million and a net loss of $62.4 million, with increased expenses impacting profitability.
- Q1 2023 revenue grew 24.2% to $69.9 million
- DTC revenue increased by 19.6%
- Gross margin improved to 61.1% from 54.5%
- North America revenue rose by 75%.
- Operating loss increased to $80.7 million
- Net loss attributable to shareholders rose to $62.4 million
- Adjusted EBIT decreased by 23.3% to $(75.6) million.
Highlights1:
-
Better than expected revenue of
$69.9m 24.2% -
North America continued strong trend with75.0% revenue growth -
DTC comparable sales growth2 of
10.7% as stores regained momentum -
Gross margin grew to
61.1% from54.5%
“Our first quarter fiscal 2023 results reflect strong early leading indicators for the year, and we have seen encouraging trends in store productivity,” said
Key First Quarter Fiscal 2023 Results
CAD $ millions
|
First quarter ended |
|
$
|
|
%
|
||||||||
|
|
|
|
|
|||||||||
Revenue |
|
69.9 |
|
|
|
56.3 |
|
|
13.6 |
|
|
24.2 |
% |
Gross profit |
|
42.7 |
|
|
|
30.7 |
|
|
12.0 |
|
|
39.1 |
% |
Gross margin |
|
61.1 |
% |
|
|
54.5 |
% |
|
|
|
660 bps |
||
Operating loss |
|
(80.7 |
) |
|
|
(61.8 |
) |
|
(18.9 |
) |
|
(30.6 |
)% |
Operating margin |
|
(115.5 |
)% |
|
|
(109.8 |
)% |
|
|
|
(570) bps |
||
Net loss attributable to shareholders of the Company |
|
(62.4 |
) |
|
|
(57.5 |
) |
|
(4.9 |
) |
|
(8.5 |
)% |
Loss per share attributable to shareholders of the Company |
|
|
|
|
|
|
|
||||||
Basic and diluted |
$ |
(0.59 |
) |
|
$ |
(0.52 |
) |
|
(0.07 |
) |
|
(13.5 |
)% |
Non-IFRS Financial Measures3: |
|
|
|
|
|
|
|
||||||
Adjusted EBIT |
|
(75.6 |
) |
|
|
(61.3 |
) |
|
(14.3 |
) |
|
(23.3 |
)% |
Adjusted EBIT margin |
|
(108.2 |
)% |
|
|
(108.9 |
)% |
|
|
|
70 bps |
||
Adjusted net loss attributable to shareholders of the Company |
|
(58.5 |
) |
|
|
(50.8 |
) |
|
(7.7 |
) |
|
(15.2 |
)% |
Adjusted net loss per basic and diluted share attributable to shareholders of the Company |
$ |
(0.56 |
) |
|
$ |
(0.46 |
) |
|
(0.10 |
) |
|
(21.7 |
)% |
_______________________________
1 Comparisons to prior year quarter ended
2 See “Non-IFRS Financial Measures and Other Specified Financial Measures” for a description of this supplementary financial measure.
3 See “Non-IFRS Financial Measures and Other Specified Financial Measures”.
4 The Company adopted a change in accounting policy related to Software as a Service arrangements. See “Changes in Accounting Policies” in the Q1 2023 MD&A.
Revenue
Q1 2023 revenue grew
Revenue By Segment
|
First quarter ended |
|
$ Change |
|
% Change |
||||||||
CAD $ millions |
|
|
|
|
As
|
|
Foreign
|
|
In constant
|
|
As
|
|
In constant
|
DTC |
34.8 |
|
29.1 |
|
5.7 |
|
(1.1) |
|
4.6 |
|
19.6 % |
|
15.8 % |
Wholesale |
33.2 |
|
26.1 |
|
7.1 |
|
1.0 |
|
8.1 |
|
27.2 % |
|
31.0 % |
Other |
1.9 |
|
1.1 |
|
0.8 |
|
— |
|
0.8 |
|
72.7 % |
|
72.7 % |
Total revenue |
69.9 |
|
56.3 |
|
13.6 |
|
(0.1) |
|
13.5 |
|
24.2 % |
|
24.0 % |
DTC revenue grew
Revenue by Geography
|
First quarter ended |
|
$ Change |
|
% Change |
||||||||
CAD $ millions |
|
|
|
|
As
|
|
Foreign
|
|
In constant
|
|
As
|
|
In constant
|
|
17.9 |
|
9.9 |
|
8.0 |
|
— |
|
8.0 |
|
80.8 % |
|
80.8 % |
|
15.7 |
|
9.3 |
|
6.4 |
|
(0.8) |
|
5.6 |
|
68.8 % |
|
60.2 % |
|
16.1 |
|
22.4 |
|
(6.3) |
|
(1.6) |
|
(7.9) |
|
(28.1) % |
|
(35.3) % |
EMEA6 |
20.2 |
|
14.7 |
|
5.5 |
|
2.3 |
|
7.8 |
|
37.4 % |
|
53.1 % |
Total revenue |
69.9 |
|
56.3 |
|
13.6 |
|
(0.1) |
|
13.5 |
|
24.2 % |
|
24.0 % |
Revenue growth in
In addition, Q1 2023 revenue from
____________________________________
5 See “Non-IFRS Financial Measures and Other Specified Financial Measures”.
6 EMEA comprises
Gross profit and gross margin
The increase in gross profit was largely attributable to higher revenue as noted above and gross margin expansion. Q1 2023 gross margin was favourably impacted by pricing, and lower product costs due to increased production efficiencies. The gross margin in Wholesale also benefited from product mix driven by higher parka sales on customer requests for earlier shipments compared to Q1 2022. These benefits were partially offset by an unfavourable region mix with higher North American revenue and lower revenue in
Operating loss and adjusted EBIT
Operating loss increased and adjusted EBIT decreased compared to Q1 2022 primarily due to the timing of
Net loss and adjusted net loss
Net loss and adjusted net loss was higher compared to Q1 2022 as a result of factors described above. In addition, net loss in Q1 2022 included a
Balance Sheet Highlights
Cash was
Inventory was
Second Quarter and Full Year Fiscal 2023 Outlook
For fiscal 2023, the Company currently expects:
-
Total revenue
$1.30 0Bn$1.40 0Bn -
Non-IFRS adjusted EBIT
$250m $290m 19.2% to20.7% . -
Non-IFRS adjusted net income per diluted share
$1.60 $1.90
For the second quarter of fiscal 2023, the Company currently expects:
-
Total revenue
$255m $275m -
Non-IFRS adjusted EBIT
$8.0m $18.0m -
Non-IFRS adjusted net income per diluted share
$0.02 $0.14
This outlook is based on a number of assumptions for fiscal 2023, including the following:
- Improved traffic and lower levels of operating disruptions globally, including mandatory closures, in both Company and partner operated retail stores, relative to fiscal 2022.
- With respect to Mainland China’s contribution, the lower end of the Company’s full year guidance ranges for revenue and profitability assumes there will continue to be limited, periodic COVID-19 disruptions in the region during our peak season and the higher end of the ranges assumes a return to regular trading levels during our peak season in Mainland China.
-
The Company expects
$60m $65m -
Approximate % of fiscal 2023 total revenue by quarter: Q2
20% , Q350% , Q425% -
DTC % of total revenue
70% to73% , driven by low to high teens comparable sales growth and continued channel expansion. -
Wholesale revenue growth of
6% . - Gross margin in the high 60s as a % of total revenue, with expansion driven by DTC mix shift.
- Effective tax rate in the low 20s as a % of income before taxes for fiscal 2023.
- Weighted average diluted shares outstanding of 107.7m for fiscal 2023.
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
About Canada Goose
Founded in 1957 in a small warehouse in
Condensed Consolidated Interim Statements of Loss and Comprehensive Loss
(unaudited)
(in millions of Canadian dollars, except share and per share amounts)
|
|
First quarter ended |
|||||
|
|
|
|
||||
|
|
|
Restated |
||||
|
|
$ |
$ |
||||
Revenue |
|
|
69.9 |
|
|
56.3 |
|
Cost of sales |
|
|
27.2 |
|
|
25.6 |
|
Gross profit |
|
|
42.7 |
|
|
30.7 |
|
Gross margin |
|
|
61.1 |
% |
|
54.5 |
% |
SG&A expenses |
|
|
123.4 |
|
|
92.5 |
|
SG&A expenses as % of revenue |
|
|
176.5 |
% |
|
164.3 |
% |
Operating loss |
|
|
(80.7 |
) |
|
(61.8 |
) |
Operating margin |
|
|
(115.5 |
)% |
|
(109.8 |
)% |
Net interest, finance and other costs |
|
|
7.4 |
|
|
16.5 |
|
Loss before income taxes |
|
|
(88.1 |
) |
|
(78.3 |
) |
Income tax recovery |
|
|
(24.5 |
) |
|
(20.8 |
) |
Effective tax rate |
|
|
27.8 |
% |
|
26.6 |
% |
Net loss |
|
|
(63.6 |
) |
|
(57.5 |
) |
Non-controlling interest |
|
|
(1.2 |
) |
|
— |
|
Net loss attributable to shareholders of the Company |
|
|
(62.4 |
) |
|
(57.5 |
) |
Weighted average number of shares outstanding |
|
|
|
||||
Basic and diluted |
|
|
105,234,474 |
|
|
110,504,248 |
|
Loss per share attributable to shareholders of the Company |
|
|
|
||||
Basic and diluted |
|
$ |
(0.59 |
) |
$ |
(0.52 |
) |
|
|
|
|
||||
Non-IFRS Financial Measures:(1) |
|
|
|
||||
Adjusted EBIT |
|
|
(75.6 |
) |
|
(61.3 |
) |
Adjusted EBIT margin |
|
|
(108.2 |
)% |
|
(108.9 |
)% |
Adjusted net loss attributable to shareholders of the Company |
|
|
(58.5 |
) |
|
(50.8 |
) |
Adjusted net loss per basic and diluted share attributable to shareholders of the Company |
|
$ |
(0.56 |
) |
$ |
(0.46 |
) |
1 See “Non-IFRS Financial Measures and Other Specified Financial Measures”. |
|||||||
Condensed Consolidated Interim Statements of Comprehensive Loss
(unaudited)
(in millions of Canadian dollars, except per share amounts)
|
|
First quarter ended |
|||
|
Notes |
|
|
||
|
|
|
Restated |
||
|
|
$ |
$ |
||
|
|
|
|
||
Net loss |
|
(63.6 |
) |
(57.5 |
) |
|
|
|
|
||
Other comprehensive loss |
|
|
|
||
Items that may be reclassified to earnings, net of tax: |
|
|
|
||
Cumulative translation adjustment loss |
|
(8.1 |
) |
(1.8 |
) |
Net gain on derivatives designated as cash flow hedges |
16 |
1.3 |
|
0.1 |
|
Reclassification of net loss on cash flow hedges to income |
16 |
1.6 |
|
0.1 |
|
Other comprehensive loss |
|
(5.2 |
) |
(1.6 |
) |
Comprehensive loss |
|
(68.8 |
) |
(59.1 |
) |
|
|
|
|
||
Attributable to: |
|
|
|
||
Shareholders of the Company |
|
(67.5 |
) |
(59.1 |
) |
Non-controlling interest |
|
(1.3 |
) |
— |
|
Comprehensive loss |
|
(68.8 |
) |
(59.1 |
) |
Condensed Consolidated Statements of Financial Position
(unaudited)
(in millions of Canadian dollars)
|
|
|
|
|
|
Restated |
|
Assets |
$ |
$ |
$ |
Current assets |
|
|
|
Cash |
81.8 |
305.9 |
287.7 |
Trade receivables |
48.2 |
39.2 |
42.7 |
Inventories |
504.7 |
404.5 |
393.3 |
Income taxes receivable |
4.8 |
6.6 |
1.1 |
Other current assets |
52.4 |
34.4 |
37.5 |
Total current assets |
691.9 |
790.6 |
762.3 |
|
|
|
|
Deferred income taxes |
73.9 |
61.5 |
53.2 |
Property, plant and equipment |
110.5 |
119.9 |
114.2 |
Intangible assets |
134.7 |
124.4 |
122.2 |
Right-of-use assets |
253.2 |
240.8 |
215.2 |
|
64.7 |
53.1 |
53.1 |
Other long-term assets |
17.8 |
4.4 |
20.4 |
Total assets |
1,346.7 |
1,394.7 |
1,340.6 |
|
|
|
|
Liabilities |
|
|
|
Current liabilities |
|
|
|
Accounts payable and accrued liabilities |
165.6 |
149.6 |
176.2 |
Provisions |
16.2 |
13.4 |
18.5 |
Income taxes payable |
13.2 |
10.4 |
24.5 |
Short-term borrowings |
30.8 |
10.9 |
3.8 |
Current portion of lease liabilities |
59.9 |
49.6 |
58.5 |
Total current liabilities |
285.7 |
233.9 |
281.5 |
|
|
|
|
Provisions |
30.2 |
25.4 |
31.3 |
Deferred income taxes |
18.3 |
7.7 |
15.8 |
Term loan |
377.1 |
363.2 |
366.2 |
Lease liabilities |
230.6 |
214.7 |
192.2 |
Other long-term liabilities |
52.9 |
27.6 |
25.7 |
Total liabilities |
994.8 |
872.5 |
912.7 |
|
|
|
|
Shareholders' equity |
351.9 |
522.2 |
427.9 |
Total liabilities and shareholders' equity |
1,346.7 |
1,394.7 |
1,340.6 |
Non-IFRS Financial Measures and Other Specified Financial Measures
This press release includes references to certain non-IFRS financial measures such as adjusted EBIT, adjusted net loss and constant currency revenue and certain non-IFRS ratios such as, adjusted EBIT margin, adjusted net loss attributable to shareholders of the Company and adjusted net loss per basic and diluted share attributable to the shareholders of the Company. These financial measures are employed by the Company to measure its operating and economic performance and to assist in business decision-making, as well as providing key performance information to senior management. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors and analysts use this information to evaluate the Company’s operating and financial performance. These financial measures are not defined under IFRS nor do they replace or supersede any standardized measure under IFRS. Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures. Definitions and reconciliations of non-IFRS measures to the nearest IFRS measure can be found in our MD&A. Such reconciliations can also be found in this press release under “Reconciliation of Non-IFRS Measures” and, in the case of constant currency revenue, under “Revenue”.
This press release also includes DTC comparable sales growth which is a supplementary financial measure defined as sales on a constant currency basis from e-Commerce sites and stores which have been operating for one full year (12 successive fiscal months). The measure excludes store sales from both periods for the specific trading days when the stores were closed, whether those closures occurred in the current period or the comparative period.
Reconciliation of Non-IFRS Measures
The tables below reconcile net loss to adjusted EBIT and adjusted net loss attributable to shareholders of the Company for the periods indicated. Adjusted EBIT margin is equal to adjusted EBIT for the period presented as a percentage of revenue for the same period.
|
First quarter ended |
||||
CAD $ millions |
|
|
|
||
Net loss |
(63.6 |
) |
|
(57.5 |
) |
Add (deduct) the impact of: |
|
|
|
||
Income tax recovery |
(24.5 |
) |
|
(20.8 |
) |
Net interest, finance and other costs |
7.4 |
|
|
16.5 |
|
Operating loss |
(80.7 |
) |
|
(61.8 |
) |
Unrealized foreign exchange gain on Term Loan Facility (a) |
(1.5 |
) |
|
(0.9 |
) |
Share-based compensation (b) |
— |
|
|
0.1 |
|
Net temporary store closure costs (c) |
2.2 |
|
|
0.2 |
|
Pre-store opening costs (d) |
0.3 |
|
|
0.9 |
|
Japan Joint Venture costs (g) |
1.4 |
|
|
— |
|
Head office transition costs (h) |
1.7 |
|
|
— |
|
Other (j) |
1.0 |
|
|
0.2 |
|
Total adjustments |
5.1 |
|
|
0.5 |
|
Adjusted EBIT |
(75.6 |
) |
|
(61.3 |
) |
Adjusted EBIT margin |
(108.2 |
)% |
|
(108.9 |
)% |
|
|||||
|
First quarter ended |
||||
CAD $ millions |
|
|
|
||
Net loss |
(63.6 |
) |
|
(57.5 |
) |
Add (deduct) the impact of: |
|
|
|
||
Unrealized foreign exchange gain on Term Loan Facility (a) |
(1.5 |
) |
|
(0.9 |
) |
Share-based compensation (b) |
— |
|
|
0.1 |
|
Net temporary store closure costs (c) (e) |
2.2 |
|
|
0.2 |
|
Pre-store opening costs (d) (f) |
0.4 |
|
|
1.0 |
|
Japan Joint Venture costs (g) |
1.4 |
|
|
— |
|
Head office transition costs (h) (i) |
2.1 |
|
|
— |
|
Acceleration of unamortized costs on Term Loan Facility Repricing (k) |
— |
|
|
9.5 |
|
Other (j) |
1.0 |
|
|
0.2 |
|
Total adjustments |
5.6 |
|
|
10.1 |
|
Tax effect of adjustments |
(1.4 |
) |
|
(3.4 |
) |
Adjusted net loss |
(59.4 |
) |
|
(50.8 |
) |
Adjusted net loss attributable to non-controlling interest (l) |
0.9 |
|
|
— |
|
Adjusted net loss attributable to shareholders of the Company |
(58.5 |
) |
|
(50.8 |
) |
|
|||||
(a) |
Unrealized gains and losses on the translation of the Term Loan Facility from USD to CAD, net of the effect of derivative transactions entered into to hedge a portion of the exposure to foreign currency exchange risk. |
|
(b) |
Non-cash based compensation expense on stock options issued prior to the Company’s initial public offering (“IPO”) under the Legacy Plan and cash payroll taxes paid of $nil in the first quarter ended |
|
(c) |
Net temporary store closure costs of |
|
(d) |
Costs incurred during pre-opening periods for new retail stores, including depreciation on right-of-use assets. |
|
(e) |
Includes less than |
|
(f) |
Pre-store opening costs incurred in (d) above as well as less than |
|
(g) |
Costs in connection with the establishment of the Japan Joint Venture including amortization of intangible assets and the impact of gross margin that would otherwise have been recognized on the sale of inventory recorded at net realizable value less costs to sell. |
|
(h) |
Costs incurred for the corporate head office transition, including depreciation on right-of-use assets. |
|
(i) |
Corporate head office transition costs incurred in (h) as well as |
|
(j) |
Costs for legal proceeding fees including for the defense of class action lawsuits and rent abatements received. |
|
(k) |
Non-cash unamortized costs accelerated in connection with the repricing amendment for the Term Loan Facility entered into on |
|
(l) |
Calculated as net loss attributable to non-controlling interest less |
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements, including statements relating to the execution of our proposed strategy, early leading indicators and trends for fiscal 2023, our operating performance and prospects, and the general impact of the COVID-19 pandemic on the business. These forward-looking statements generally can be identified by the use of words such as “believe,” “could,” “continue,” “expect,” “estimate,” “may,” “potential,” “would,” “will,” and other words of similar meaning. Each forward-looking statement contained in this press release, including, without limitation, our fiscal 2023 full year and second quarter financial outlook and the related assumptions included herein is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statement. Our business is subject to substantial risks and uncertainties. Applicable risks and uncertainties include, among others, the impact of the ongoing COVID-19 pandemic and the extent and duration of related disruptions to our operations, as well as the evolution of the global economic conditions, and are discussed under the headings “Cautionary Note regarding Forward-Looking Statements” and “Factors Affecting our Performance” in our MD&A as well as in our “Risk Factors” in our Annual Report on Form 20-F for the year ended
View source version on businesswire.com: https://www.businesswire.com/news/home/20220811005221/en/
Investors:
ir@canadagoose.com
Media:
media@canadagoose.com
Source:
FAQ
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