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Introduction & Market Context
Canada Goose Holdings Inc. (NYSE:GOOS) presented its Q1 FY2025 earnings results on August 1, 2024, revealing modest revenue growth as the company continues to navigate a strategic shift toward direct-to-consumer sales while reducing wholesale exposure. The luxury outerwear brand reported progress on its three key operating imperatives: setting the foundation for brand evolution, implementing best-in-class retail execution, and operating with simplicity.
The company’s stock has shown resilience in 2024, with a year-to-date return of 27.12% according to available data, despite facing seasonal challenges in its first quarter, which is traditionally the company’s weakest period.
Quarterly Performance Highlights
Canada Goose reported Q1 FY2025 revenue of $88.1 million, representing a 4% increase year-over-year on a reported basis and 3% on a constant currency basis. This growth was primarily driven by the company’s direct-to-consumer (DTC) channel, advancement of inventory reduction strategy, and contribution from the European manufacturing facility acquisition.
As shown in the company’s revenue results:
The company reported a net loss attributable to shareholders of $77.4 million for the quarter, with an adjusted EBIT of -$96.0 million. Gross margin declined by 540 basis points, which the company attributed to the impact of the European manufacturing facility acquisition.
The comprehensive income statement reveals the full financial picture for the quarter:
Channel and Geographic Performance
Canada Goose’s channel performance showed significant divergence, with DTC revenue rising 13% to $63.1 million while wholesale revenue declined 41% to $16 million. The company’s "Other" revenue category increased to $9 million. Despite the overall DTC growth, comparable DTC sales decreased by 4.4% year-over-year.
The channel breakdown illustrates this strategic shift toward direct-to-consumer sales:
Geographically, Canada Goose experienced varied performance across its major markets. Asia-Pacific (APAC) was the standout performer with revenue reaching $30.8 million, up 26% year-over-year, driven by strong growth in Mainland China and Japan. North America revenue declined 3% to $40.4 million, with growth in the United States offset by declines in Canada. EMEA (Europe, Middle East, and Africa) revenue fell 10% to $16.9 million, though the company noted this was partially offset by higher DTC revenue and improvements in tourist traffic.
The geographic performance breakdown shows the company’s growing reliance on Asian markets:
Balance Sheet and Inventory Management
Canada Goose reported cash of $61.9 million as of June 30, 2024, with net debt of $765.9 million. The company has made progress on inventory management, reducing inventory by 7% year-over-year to $484.3 million. Inventory turns improved by 6% compared to Q1 FY2024.
The company’s inventory management strategy is a key focus area, as illustrated in this presentation slide:
Strategic Initiatives
Canada Goose outlined three key operating imperatives for FY2025 that form the foundation of its strategy:
1. Setting the foundation for the next phase of brand and product evolution, highlighted by the appointment of Haider Ackermann as the company’s first-ever Creative Director
2. Implementing best-in-class retail execution through enhanced sales training, strengthened store operations, and improved product availability
3. Operating with simplicity by streamlining product development processes, tightening company controls, and prioritizing technology investments while slowing new store openings
The company also emphasized its commitment to sustainability, noting efforts to reduce its carbon footprint, prioritize responsible material sourcing, and strengthen community relationships.
Financial Outlook
Looking ahead to the full FY2025, Canada Goose provided the following financial outlook:
The company expects low-single-digit revenue growth for the full year, with an average mid-single-digit percentage pricing increase over fiscal 2024. DTC comparable sales are projected to increase by low-single digits year-over-year, while wholesale revenue is expected to decrease by 20% compared to the previous year.
Canada Goose anticipates approximately 100 basis points of expansion for Adjusted EBIT and mid-teen percentage growth for adjusted net income per diluted share. The company projects weighted average diluted shares outstanding of approximately 99 million.
Discrepancies and Market Response
It’s worth noting that there appear to be significant discrepancies between the figures presented in these slides and those reported in some earnings coverage. While the presentation indicates Q1 revenue of $88.1 million (up 4%), some reports suggest revenue of $108 million (up 22%). Similar discrepancies exist for channel performance and gross margin trends.
These differences may reflect preliminary versus final reporting, different calculation methodologies, or reporting errors. Investors should refer to the company’s official SEC filings for definitive figures.
The market response to Canada Goose’s earnings was negative, with shares reportedly declining 8.55% in pre-market trading following the release, suggesting investors may have been disappointed by the company’s profitability metrics despite revenue growth.
As Canada Goose continues its strategic transformation, investors will be watching closely to see if the company can successfully execute its three-pronged strategy while navigating a challenging retail environment and managing its substantial debt position.
Full presentation:
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