Mr. Dani Reiss reports

CANADA GOOSE REPORTS THIRD QUARTER FISCAL 2024 RESULTS

Canada Goose Holdings Inc. has released its financial results for the third quarter of fiscal 2024, which ended Dec. 31, 2023, and an updated outlook for fiscal 2024.

"Our third quarter results were in line with our guidance, highlighted by progress across our strategic priorities, including robust growth in the Asia Pacific region, increased revenue across categories, with particular strength in apparel, the delivery of elevated experiences across all touch points and increased efficiencies driven by our transformation initiatives," said Dani Reiss, chairman and chief executive officer of Canada Goose. "While we continue to operate in a challenging consumer spending environment, we are encouraged by our holiday performance, which saw record traffic levels and strong revenue generated during key consumer moments. We remain confident in our strategy and our ability to capitalize on the unique heritage of our iconic, luxury brand to deliver long-term profitable growth."

Third quarter fiscal 2024 financial highlights:

• Total revenue increased 6 per cent to $609.9-million compared with the prior-year period, up 5 per cent on a constant currency basis:
  • DTC (direct to customer) revenue grew 14 per cent to $514-million, up 14 per cent on a constant currency basis, driven by growth of in-store retail sales. Sales from DTC channels increased as part of the total revenue mix to 84 per cent from 78 per cent in the same reporting period last year. DTC comparable sales decreased 1.6 per cent year-over-year due to lower e-commerce sales, partially offset by higher comparable in-store sales compared with the same period in the prior year.
  • Wholesale revenue decreased 28 per cent, or 30 per cent on a constant currency basis, primarily due to a planned lower order book value resulting from lower orders from existing customers, compared with the same period in the prior year, and the continuing streamlining of wholesale relationships as the company optimizes for greater DTC sales. In addition, Canada Goose estimated higher returns from its wholesale partners as the company pro-actively manages its inventory.
  • Revenue grew by 62 per cent year-over-year in Asia Pacific with higher sales across all channels. Revenue was down 26 per cent in EMEA (Europe, the Middle East and Africa) and down 14 per cent in North America year-over-year, primarily due to the decline in e-commerce and wholesale revenue, partially offset by contribution from new stores.
• Gross profit grew 8 per cent to $449.7-million, compared with the prior-year period. Gross margin for the quarter expanded to 73.7 per cent compared with 72.2 per cent in the third quarter of fiscal 2023, primarily due to pricing, partially offset by higher product costs due to input cost inflation.
• Selling, general and administrative (SG&A) expenses were $250.9-million, compared with $225.7-million in the prior-year period. The increase in SG&A was primarily due to the company's expanded retail network and set up costs related to its transformation program.
• Operating income was $198.8-million, compared with $190.7-million in the prior-year period. The increase in operating income was attributable to higher gross profit, partially offset by higher SG&A costs.
• Adjusted EBIT(earnings before interest and taxes) was $207.2-million, compared with $197.1-million in the prior-year period.
• Net income attributable to shareholders was $130.6-million, or $1.29 per diluted share, compared with a net income attributable to shareholders of $134.9-million, or $1.28 per diluted share, in the prior-year period.
• Adjusted net income to shareholders was $138.6-million, or $1.37 per diluted share, compared with an adjusted net income of $134.5-million, or $1.27 per diluted share, in the prior-year period.

Balance sheet highlights

Inventory of $478.4-million for the third quarter ended Dec. 31, 2023, was relatively flat compared with the third quarter ended Jan. 1, 2023.

During the third quarter of fiscal 2024, the company repurchased 3,609,932 subordinate voting shares under its normal course issuer bid (NCIB) for a total cash consideration of $56.6-million, ending the quarter with a cash balance of $154.3-million, compared with $344.2-million at the third quarter ended Jan. 1, 2023.

The company renewed its NCIB in the third quarter of fiscal 2024, providing for the purchase for cancellation of up to 4,980,505 subordinate voting shares over the 12-month period commencing on Nov. 22, 2023, and ending on Nov. 21, 2024, representing approximately 10 per cent of subordinate voting shares comprising the public float, determined in accordance with the requirements of the Toronto Stock Exchange as at Nov. 10, 2023.

Third quarter fiscal 2024 business highlights

During the third quarter, Canada Goose continued to engage and drive brand desirability with consumers globally through the holiday shopping season through elevated shopping experiences, product collaborations, and a stylish and functional product assortment. Notable business highlights from the company's third quarter included the following:

• Driving consumer-focused growth:
  • Launched Canada Goose's second collaboration with BAPE, which has been the fastest-selling collaboration year-to-date in fiscal 2024. The company also executed collaborations with Pyer Moss, Concepts, OVO, Giants of Africa and the Shoe Surgeon to drive brand heat.
  • Delivered a strong Black Friday long holiday shopping weekend, with record store traffic and a more-than-40-per-cent increase in revenue over the comparable holiday shopping period in 2022.
  • Expanded Canada Goose's travel retail footprint, entering South Korea, following the opening of the travel retail store in Frankfurt in the second quarter of fiscal 2024.
• Building the DTC network:
  • Opened two permanent stores, in New Jersey's American Dream mall and in Kobe, Japan, and converted one temporary store to permanent in New York, bringing the total permanent store count to 65 at the end of the third quarter of fiscal 2024. In January, Canada Goose opened a permanent store in Nanjing, China.
• Product expansion:
  • Non-heavyweight down category grew year-over-year in the third quarter of fiscal 2024, expanding its share of revenue within the overall mix. Within non-heavyweight down, apparel was the company's fastest growing category, increasing across all key markets.
  • Acquired Paola Confectii, a manufacturing partner in luxury knitwear, marking the company's first European manufacturing facility. This acquisition supports the company's strategic objective of expanding existing categories by deepening in-house product expertise.

Fiscal 2024 full-year and Q4 outlook

The outlook that follows supersedes all prior financial outlook statements made by Canada Goose, constitutes forward-looking information within the meaning of applicable securities laws, and is based on a number of assumptions and subject to a number of risks. The purpose of this outlook is to provide a description of management's expectations regarding the company's annual financial performance and may not be appropriate for other purposes. Actual results could vary materially as a result of numerous factors, including certain risk factors, many of which are beyond Canada Goose's control.

Based on quarter-to-date trends, Canada Goose expects the following for fourth-quarter fiscal 2024:

• Total revenue between $310-million and $330-million;
• Non-IFRS (international financial reporting standards)-adjusted EBIT between $14-million and $27-million;
• Non-IFRS-adjusted net income per diluted share between two cents and 13 cents.

For fiscal 2024, Canada Goose expects:

• Total revenue between $1.285-billion and $1.305-billion, compared with previous guidance of $1.2-billion to $1.4-billion;
• Non-IFRS-adjusted EBIT between $146-million and $158-million, representing a margin of between 11 per cent and 12 per cent, compared with previous guidance of non-IFRS-adjusted EBIT of $135-million to $225-million, representing a margin of 11 per cent to 16 per cent;
• Non-IFRS-adjusted net income per diluted share between 82 cents and 92 cents, compared with previous guidance of 60 cents to $1.40.

Canada Goose's outlook now includes the following assumptions:

• DTC revenue as a percentage of total revenue of approximately 70 per cent, representing a low-single-digit decrease to a low-single-digit increase in year-over-year DTC comparable sales growth, and continued channel expansion.
• Wholesale revenue growth to decrease by a high-teens percentage rate year-over-year, reflective of the continued editing of the company's wholesale door count, returns from wholesale partners, revised reorder expectations and expansion of the company's retail store network.
• Gross margin as a percentage of total revenue to be in the high 60s, with DTC and wholesale gross margins in the mid 70s and low 50s, respectively.
• Three permanent stores planned in the fourth quarter, bringing the total permanent store count to 68 at the end of the fiscal year.
• SG&A expense to grow at a mid-teen percentage rate on a year-over-year basis due to a larger DTC network and operating cost base, moderated by cost-savings initiatives, including approximately $15-million in savings from the transformation program in fiscal 2024.
• Effective tax rate in the high teens as a percentage of income before taxes for fiscal 2024.
• Weighted average diluted shares outstanding of 101.7 million for fiscal 2024, reflecting share buy backs executed year-to-date and assumed dilution effective of outstanding share-based payments.

Conference call information

The company will host the conference call at 8:30 a.m. ET on Feb. 1, 2024. The conference call can be accessed on-line. After registering, an e-mail will be sent, including dial-in details and a unique conference call PIN (personal identification number) required to join the live call. A live webcast of the conference call will also be available on the investor relations page of the company's website.

About Canada Goose Holdings Inc.

Canada Goose is a performance luxury outerwear, apparel, footwear and accessories brand that inspires all people to thrive in the world outside. The company are globally recognized for our commitment to Canadian manufacturing and its high standards of quality, craftsmanship and functionality. Canada Goose believes in the power of performance, the importance of experience, and that the company's purpose is to keep the planet cold and the people on it warm.

We seek Safe Harbor.