Q3 2021 Canada Goose Holdings Inc Earnings Call
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Good morning, My name is Andrea and I will be your conference operator today.
At this time I would like to work for everyone to the Canada peak third quarter fiscal 'twenty and 'twenty one earnings call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during that time simply press Star then the number one on your telephone keypad. If you would like to withdraw your question press the pound key.
I would now like to turn the call over to Patrick Bourke Senior Director Investor Relations. Please begin your conference.
Thank you and good morning, everyone with me on any Reese, President and CEO, and Jonathan Sinclair EVP and CFO.
After prepared remarks from Dani and Jonathan.
We'll take your questions.
This call, including the Q&A portion includes forward looking statements.
These forward looking statements is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements.
Certain material factors and assumptions were considered and applied and making these forward looking statements additional information.
Information regarding these forward looking statements and factors and assumptions is available and our earnings press release issued this morning.
As well as and the risk factors section of our most recent annual report.
These documents are also available on the Investor Relations section of our website. The forward looking statements made on this call speak only as of today and we.
Undertakes no obligation to update or revise any of these statements are.
And our commentary today will include certain non <unk> financial measures, which are reconciled in the table at the end of our press release issued this morning and available on our Investor Relations website.
With that I will turn the call over to Danny.
Thank you Patrick and good morning, everyone.
I am pleased to speak with you today about our performance and our third quarter, which has exceeded our expectations.
We began this fiscal year with many unknowns. So we leaned into what we knew to be true we advanced our long term plans to best capture and serve demand while at the same time, placing our business and the best position for continued growth.
This approach has delivered strong results when it matters the most.
Today, I will provide an overview of our third quarter results and share an update on three areas, one and strategic areas of focus to our purpose based commitments and three our outlook for the rest of the fiscal year.
And the third quarter of the fiscal year, our business showed remarkable resilience and we have outperformed our own expectations.
Total revenue increased by four 8% to $474 million, despite extensive closures and operating restrictions.
This marks a return to growth for Canada, Goose, and our biggest quarter and we did it with strong profitability and cash flow and <unk>.
<unk> EBIT margin and the quarter was 33, 3% and free operating cash flow increased by $75 1 million.
Two $396 million.
Our third quarter results reflect the impact of our strategic long term initiatives, our flexibility and the key investments to.
To give you further context here are a few highlights.
First I'd like to give an update on our digital business, which we believe to be a foundational component of the future of retail.
We have invested heavily and E commerce business for years with a long term view.
This year, we successfully executed against that against that long term strategy and at the same time strategically deployed additional resources to better capture and serve demand around the world and our peak season.
As a result, our global E Commerce revenue increased by 39, 3% and we are encouraged by the strong momentum and acceleration that we continue to see across our E commerce business and the fourth quarter.
This this quarter I feel it's important to have a deeper geographical insight and.
And to our ecommerce business.
Across each of our major markets, we saw strong double digit growth.
Europe.
And Europe was particularly strong.
And this includes France, Germany, and Ireland, and and nearly double the number of digital business and the U K.
And mainland China Tmall continues to be a bright spot and a powerful channel for our brand.
And and our well established sites in Canada, and the United States. We saw a strong increase in revenue from a contribution perspective.
Now to our next strategic priority mainland China.
On our last earnings call I spoke about the growth plans that we've put in place for our business in the region.
We have continued to execute on these plans and the past here, we have more than doubled the number of stores and operate in the market.
And this quarter, we saw that our investment has delivered strong results and our mainland China DTC revenue has increased by 41, 7%.
We're still very early and our journey and mainland China, and we see significant opportunity to continue to grow our network and the region.
And a year to begin with so much uncertainty.
Relative all we've learned more about shifts and our customers' behavior, which has shaped our strategic approach moving forward.
And on our last call I discussed and store Omni channel shopping.
Which I just go on live.
We believe that it would be a needle mover for customer experience and conversion and I am pleased to say that it has been.
And the path to purchase continues to evolve this quarter we.
Bruce on the power of the endless aisle.
We consider this a validation of our approach and commitment to enable Canada goose fans for shopping with us wherever they are whenever they want and with access to a complete assortment.
Today I also want to highlight the continued importance on sustainability across our business.
We are steadfast and argument and our commitment to strengthening our communities protecting our planet and working towards a better future for generations to come.
And this quarter, we introduced human nature, our purpose based platform that unites our sustainability and values based initiatives and theirs.
A driving force of our enduring for amendment embedded across every aspect of our operations.
For all of business has evolved in today's world and driving meaningful change and become fundamental for todays consumer.
We are focused on keeping the planet cold and the people on it warm through our sustainable impact strategy continued product innovation and invigorating global communities and building culture through the Rs.
We have been trusted to protect people from the element and now <unk>.
And the human nature, we're taking warmth and even deeper level.
Building on that this past January we launched our most sustainable pressure to date the standard expedition parka.
And this brand new style inspired by the iconic expedition Parka encapsulates our heritage for now and functionality and a pit advises sustainable innovation.
This product and a significantly forward for our brand helping to set the standard for the future of outerwear at Canada Goose.
And we've kept sustainability at the forefront throughout the past six decade, driven by constant innovation for the betterment of both our consumers and the planet and on.
Im proud to say that this is only the beginning of a sustainable apparel journey and that the consumer response has matched our own excitement as the style is nearly sold out.
Further to the topic of brand momentum and consumer relevance lost on our first ever guests designer, we challenged here to take care of heritage pieces and co create.
And a capsule based on her innovative design direction. The collection is a relevant new perspective.
And another important moment for the brand.
And lastly, I would like to take this opportunity to welcome Michael Armstrong, who joined our board of directors and January for Us and licensing and operations for Fi Viacom and CBS globally.
And I'm confident that his.
Yes.
So popular culture entertainment and media exposure and experience will provide a balance growth strategy.
And with that I'll turn it over to Jonathan to go over the details on our funnel.
Good morning, everyone. Thanks, Stephanie and thank you all for joining us.
Looking at all.
Okay.
Three key themes that stand out.
Canada Goose has returned to growth and.
The resilience of our flow.
Earnings and cash flow has to debit.
And we're entering the final quarter of the fifth.
Fiscal year with strong momentum.
So also for the top volume total revenue increased by four 8%.
$474 million with significant sequential improvement across all business.
This reflects global demand strength.
Well as our ability to pivot to our distributions to where the consumer is shopping today.
Coming out on the first Covid wave and this summer we were in the midst of a message digital digital chip and consumer behavior.
We knew that E commerce, and what is causing that.
Debt to.
Always open channel again for this we were proactive and our investments to prepare for.
For the full was the selling season for that.
It just takes to inventory marketing and experience.
The result is a strong acceleration and performance and update this quarter.
E Commerce grew by 39, 3%.
Driven by meaningful Inc, both traffic and conversion.
Operationally, we're pleased with how smoothly on three key elements casual and shipped record online volumes during peak.
The transition, we completed and the sublet, so and haul it scalability and service levels with central to achieving this.
Geographically that was well balanced double digit growth and all of our major E com.
Most markets and North America, we saw strong contributions from our well established sites and Canada and the U S.
And mainland China offshore and Tmall luxury pavilion and continues to be a powerful engine for growth.
And last but not least all momentum in Europe was exceptional.
This includes very strong results and Germany, France, and the Republic of Ireland at a near doubling of our digital business and the U K.
Alongside and can combos other big strategic debt this year with store expansion and Asia.
And with total shut off of international and shopping.
We knew the serving the world's largest luxury consumer based on what.
Critical.
DTC revenue in mainland China increased by 41, 7%.
And with existing stores near pre pandemic.
On the completion of two remaining openings in Chengdu and charter and Shanghai on APM.
Net.
This strengthens our conviction and runway, we further expanded tier one and <unk>.
And this is complemented by the breach with chemo.
And our stores and North America, and Europe, we faced outside outsized headwinds from capacity restrictions mandatory closures.
<unk> by a lack of international traffic.
And Q3, we lost 75 trading day for.
Each of our three locations and Toronto with Alto and Montreal also shopping at the end for the quarter.
And London, we lost 36 trading days with Paris.
Each price for therapy.
<unk>.
As for the spud and for 12 days.
These closures include some of our most productive stores globally and that biggest and days of the year.
And again today.
And to achieve total PTC revenue of $299 4 million only two for last year. It is a great result.
Relative to Q2.
Okay great.
Greater proportion of retail declines through Thomas and wed open stores delivered strong productivity.
Wholesale increased by two 7%.
And $68 million.
This was driven by later shipment timing based on.
Requests for more of an in situ fulfillment local.
<unk> for the performance of our partners. This for winter and we will continue to take a controls Brian and the first approached by other genes channel.
Moving to earnings and cash flow adjusted EBIT margin was 33, three percentage and the quarter.
Is there a level of profitability and most brands debt become net loans and.
Todd and slightly.
Our resilience is grounded and full price economics and.
Highly productive distribution.
Consolidated gross margin was 66, 8% with PTC at 77, 9% and wholesale at 51, 5%.
Both channels were above typical levels due to temporary.
<unk> gross margin and the mid Seventy's for DTC and mid to high Forty's wholesale remains the right level.
So on.
Over the loans.
That said these increases also reflect the durability of our gross margin fundamentals.
Going down the P&L DTC operating margin was 55%.
Retail profitability.
Impacted by operating disruptions, but was still very strong and the uplift from E commerce growth.
And they bring a strong profit this quarter.
Sure.
Adjusted EPS per diluted share was $1 <unk> and assess compared to total and eight last year.
Moving to cash free operating cash flow was $300.
$6 million and increase of $75 1 million.
Driven by reduced working capital.
As a vertical manufacturer with an evergreen offerings, we are executing against and.
Tore down staged equivalents.
Inventory decreased by two 6% relative to Q2 last year and 17, 8% relative to the end of fiscal 2020.
We remain on track to deliver a significant year over year decline as we close out fiscal 2021.
In terms of liquidity.
And our strong position with low leverage and one <unk>.
High degree of flexibility.
Cash was up $460 million million outflow quarter, and alongside an additional $256 million of available borrowing capacity and now.
Revolver.
Finishing with current trends.
We are encouraged by the continued acceleration, but we have seen and E commerce growth since December.
On the retail side, however, store closures and mobility and illustrate restrictions have intensified 45% for owned retail stores globally and how it may close.
Yes.
Hello, and believe we've also seen a slowdown and the foot traffic and certain markets and response to new movement restrictions.
Recognizing this is a dynamic situation. We believe we are well positioned to continue operating these headwinds through our digital business.
And wholesale the vast majority of our shipments have been completions and get it.
Q4 is seasonally a very small quarter for the channel and we currently expect a low double digit year over year revenue decline.
We concluded our contractual obligations for PPA manufacturing and Q3 and as a result, we do not expect further revenue from these activities and the other segment and Q4.
And the recent price margin, we do not expect the day.
<unk> and wholesale gross margins in Q4 and repair.
Pete the larger or the inquiries and we had in Q3. This is due to seasonal spring product and a reduction in weight subsidies and manufacturing.
Lastly, we expect total SG&A in Q4 to grow at a similar rate year over year total revenue in Q3 total.
<unk> continued investments in brand building.
At the start of this year.
We moved aggressively to protect downside, while investing with conviction, what we saw opportunity.
Asset this quarter shows that that strategy is working.
We can grow and we can be highly profitable and a challenged operating environment.
We did this underscores our potential when the world comes out of this pandemic.
We know that the pulse of that won't be a straight line.
On the right track.
And look forward to updating you on our progress along the next call and with that I will pass it of its for operator to begin Q&A.
At this time, if you would like to ask a question. Please press Star then the number one on your telephone keypad. Please limit your questions to one question and one follow up on your first question comes from the line of Omar Saad of Evercore.
Yes.
And.
Okay.
Yeah.
Okay.
Okay.
Okay.
Omar Your line is open.
Thank you for taking my question.
So yes.
I'm wondering about and I appreciate the information around the tourist impact sounds like it was a pretty big drag, but maybe you could dive and a little bit deeper, especially in North America and Europe were there.
And historically been a strong tourist customer and <unk>.
You can also shed some light on the mix and your business between locals and tourists and your key market and then also.
And the Chinese tourists such an important tourists do you have the footprint.
And presence you need in China to recapture some of those lost tourists there yet thanks guys.
Hey, Omar Thanks for your question.
Good question and we're certainly on an environment with essentially no international traffic in North America and Europe.
Thank you Vittorio.
Has been closed and this isn't.
Yes.
Since last spring, so I'm really pleased with the strength of the demand and <unk> for local markets.
And for all of our consumers and the device actually.
It's been strong.
And in of itself and for example, our revenue in Europe, and the rest of the world increased by 30% and some regions.
Ben.
Particularly hard hit by tourism declines recently, and we're and we're up we're up there so on.
I am very encouraged by.
But what we've been seeing and a law.
Local markets from local consumers.
And if I can get that I had a couple of points to that.
And a pre Covid world Youll, Lopez's say, many times that our retail traffic has roughly.
And the split 50, 50 between local and international consumers and strategically.
And I'll focus this year has been on serving that is traveling and international consumers.
And driving demand for the local markets and the fact that we were able to grow our business in Q3 with all of these headwinds.
Is.
It's really really encouraging.
And when it comes to China.
<unk>.
And we've had a great.
A couple of quarters performance in EMEA and China This year.
Especially so for about 41, 7%, we are seeing great progress both in our existing stores and and the new stores. We've got a very clearly established strategy of tier one tier two comprehensive by rate and we are we are able to take advantage of that market.
By executing on that strategy and we're very pleased with that statement.
Your next question comes from the line of Jay sole with UBS.
Hi, Good morning. This is on Maui, just that and on behalf of Jay So.
And a couple of questions.
And on the fourth quarter, you mentioned is not that relevant on the wholesale channel.
But what are you seeing in terms of wholesale book orders I don't know if its too early to ask maybe on and the fall season.
And you could comment also a little bit about how the E Commerce channel grew throughout.
Throughout the quarter throughout this last quarter and lastly, as you were mentioning your focus on China and tier one and tier two cities to how does that translate into like the potential store openings as we moving to the next couple of years. Thank you.
So I think I'll hold.
Is that all of the vote.
Something we typically talk about.
And the next total, but we run a process, which weighted filing this year and.
We're very pleased with outstanding I think.
I'll give you some sluggish over and just about there.
Talk a little bit of color on the.
E Commerce performance geographically speaking about I think.
Retooled and I'll ask Paul about how we'd seen acceleration.
Towards the end of the.
The second quarter and E commerce performance year over year, that's an acceleration and that continued to build through the third quarter, just as the numbers got bigger and.
And just as it really mattered.
And that acceleration is something that Im pleased to say has continued on the third quarter and into the fourth quarter.
And when we think about.
Is the future.
We've got and with stores.
We're continuing to execute on our strategy.
No change to that and Thats, something we will comment on further.
And due course, but suffice to say there is no change to on strategy. We see DTC has been poor and key Avenue for growth for this business online and physically.
And.
And that guides I agree.
And with all of that debt since I think on.
I'm, particularly proud of this year of.
And this quarter.
And of the team and our ability to have our biggest quarter ever under these circumstances and global pandemic.
What we've seen.
The global consumer from all over the World.
<unk> growth and acceleration and really.
And really.
And the cement us as a lifestyle brand for that.
That they are gravitating towards and.
That makes me very optimistic and hopeful for the future.
Your next question comes from the line of Kate Fitzsimons of RBC capital markets.
Yes, hi, good morning, congratulations on the return to growth.
I guess I wanted to ask two quick ones for me.
You guys have noted a couple of times on the acceleration and the E Commerce business here in Q4, it is interesting because and it teams at least demand for your brand tens that maybe happened earlier in the winter season. So curious what you think is driving the acceleration there any comments on regional performance or response.
For early spring selling and that would be helpful. And then secondly, Jonathan you noticed you noted some brand building and Beth.
And on the SG&A and in Q3, what was the nature and some of these kind of investments and as we look out for Q4, what are some of the strategic expense priorities and.
And Q4 and beyond and we look at the channel wholesale DTC and also that.
Unallocated expense bucket that would be helpful. Thank you.
Thank you for your question.
I'll start and stop.
Off by Congress for commentary about that I think that.
Good morning.
As we saw on previous quarters and throughout this year.
Consumers mentality is much more of a buy now wear now mentality and I think that's important.
And given the shift to the variety and I think also with regards to our brand specifically, we're very relevant brand and the time like this where our survival brand and we made product loss for new products.
Debt.
Debt that are functional and I think that consumers new data.
Our children and times like this people are driven to products like ours and I think in general.
People these days on looking for real things.
On a real functional attributes and authenticity behind them and.
And I think for debt.
That is.
That's part of the reason for the acceleration and continued acceleration.
And.
Okay only on the <unk>.
<unk>.
Cost I think the key the key investments that we've been making.
And sort of referred to it a little bit and my prepared remarks, our rounds.
Brian and demand and building.
And we deliberately woods investing as Marc if you think about the business being and bought a much more by net and whatnot.
I think just holdco debt.
What's key is that you jump on the investment as the market becomes into into season, and Thats and Thats, what we were doing and.
And whether it was around the markets that we were opening up.
<unk>.
On line or whether it was about the existing markets all in support of the markets, where we're opening stores, we have been investing to build brand awareness to built on savings and to capitalize on the demand and convert it.
And to enter into the business, we're reporting today and Thats something that the causes of IL and al mobiles of the pulse. This is dale.
We've got to be continuing into into Q4.
That's why we're continuing to invest in it and Thats why youll see the cost continues to go well.
And we're very comfortable with that because we see the payback.
Your next question comes from the line of Ike Barreto with Wells Fargo.
Hey, good morning, everyone. Just two quick ones for me.
Jonathan you guys had some great cash flow and it's a lot of cash you guys up on the balance sheet relative to years past and.
And any thoughts on use of cash or capital allocation and then we appreciate the wholesale commentary for <unk> is there any commentary there's a lot of noise with the store closures and whatnot, but any any any help on the BTC revenues that are embedded in your plan for <unk> as well.
Okay.
And.
I think when it comes to capital allocation.
Our top priority is investing and the growth of this business we say.
And we've said 70 times, but it remains true.
Huge untapped potential.
And therefore.
For my point of view top priority topic on.
On the capital is always going to be.
Investing in the future of this business and.
We said before we're going to invest $45 million.
This year and capital expenditure as very much on track.
And we will battle.
Rise and fall is as the needs for the business demand remains our top priority.
Okay.
Users.
So.
And then thinking about Q4.
We've had and obviously the goods.
Momentum in and.
And the accelerating momentum and online debt offset by the fact, that's on new stores and close but.
And as we move through the quarter, you've got to think last year also was was pretty.
Heavily impact from about.
At this point in the quarter on.
So.
I think.
There's a strong case to say that this business has got very good DTC limit.
Your next question comes from the line of making a net with TD securities.
Thanks, Good morning, Dan and you touched on this on your remarks, but wondering if you could talk a bit more on about the success and the various collaborations that we're not sure on the quarter and also early into Q4 for kind of response are you seeing there from the consumer and is there any color you can.
And provide on the pipeline of collaboration.
Youre working on and the upcoming year and just lastly, any update on the plans for that footwear launch that you can touch on thank you.
Yes. Thank you for your question and yes collaborations are a very important part of our business.
And.
And they have been.
We had average successful successful for us this year, we and our first on our guest is honored this year Shanghai Best Angel Channel sheet designed to capsule collection for us and.
And it's been received very well by our consumers and net.
These are opportunities it provides.
They really provide high bonus for our brand and ways for our brand to be reinterpreted for.
By different by different.
Diners for.
And for different markets and.
This has been a collaboration which has been received well generally and and we do intend to do more more more guests designer collaborations and our future.
It's definitely been sub growth for us.
As we do with our collaborations which we've been doing for many years in terms of footwear, we're still on track for launch that and.
And next year next fall.
I'm very excited about it and I think for it's going to be a very important category for us and the long term I think we're doing it the right way I think on our strategy.
Very carefully.
<unk> talked through and we're executing against that strategy and I believe that execution and one of our strong points.
I think that.
And I'm very excited for the market to see what our footwear for us.
And what we can do with it.
Yeah.
Your next question comes from the line of Oliver Chen of Cowen.
Hi regarding innovation and product Danny how are you thinking about focuses on and lighter weight product and non evergreen and you have a really strong core and then as we look ahead inventory relative to sales growth.
Would love your thoughts on how you are planning that given the performance here and how your production availability and utilization look thank you.
Thanks Oliver.
So with regards to on innovation and product.
Yes.
First of all our core product and core.
Our business model is still very important, but we have a strong core and we've seen that this year as well and oxygen.
And we have Robert head towards that but at the same time, there has been a lot of product diversification and a lot of diversification into lightweight down.
Our our net where has been well received our fleece has been well received and we've certainly seen that we have.
And let's say <unk>.
Permission from our consumers to get into new categories that makes sense for us.
Of course, it's very important for us that we do that and and.
And best in class way, and and we put our best in class products.
And to the market regardless of what category. It is.
But.
And I'm very encouraged to see the diversification.
Globally and.
No.
But that just speaks to the relevance of Canada goose as a global lifestyle.
I think when it comes to inventories I mean clearly.
Reporting losses declined this quarter, it's exactly where we want it.
We've always said that we got and pull down on the inventory levels are installed and the other that's exactly how this is playing out.
And then.
Macy's generated a huge amount of our cash flow and Q3 as a vertical it manufacturer with an evergreen offering.
The beauty is that we can do this without constraining our commercial flexibility. So we've got a really strong position with with already staged inventory and we can jump on that speed.
And frankly, if we were announced sales of and weakened.
And so we remain on track to deliver significant year over year decline without compromising the total commercial potential for the business.
Your next question comes from the line of Mark Petrie with CIBC.
Hey, good morning.
You touched on this earlier, but I just wanted to follow up specifically with regards to China and sort of the evolution and shopping behavior, there and recognizing that park is obviously to drive the business, particularly for Q3 I'm interested to hear about the adoption beyond parkas and how the sales mix in China compares to other regions.
And where you had.
On a direct to consumer presence longer specifically sort of parker's versus accessories, our knitwear and then what that tells you about how the brand is building in that market.
Alright, and I think the way think about losses.
Obviously, we've seen great headway with all because embedded in China, but we've also seen good strong headway with the other categories and Thats.
And really pleasing is that we're able to see this building out and.
And getting a much more rounded presence with the consumer debt, which is which is important for the full.
<unk> breadth and depth of the brand presence and.
And that market.
I guess, what you'd probably see us.
Big country.
If you think about it from a north south point of view.
The southern part of China.
It's much more.
It's less.
And you did and the winter and there.
For more of a mix in favor for the lighter weight products that whereas you guys for the north and particularly and in the depths of winter.
It is a more heavy policy for penetration.
And I just think.
And <unk>.
Previous comments at all but I think this just speaks to the.
And the growth of Canada, goose, and the lifestyle branding and approximately and accepted.
Cross multiple categories that make sense for us and.
That's very encouraging and I see a lot more of it and the future and I believe and believe that there's a lot. There's a lot of opportunity ahead of us.
Your next question comes from the line of Eden and <unk> with Barclays.
Hello, and good morning, My question and actually on on Canada.
And of the Reinstallation of Reengagement.
The manufacturing process starting for this year for winter 2021 and.
And at what level of innovation.
Are you planning for winter 2021, and then secondarily on the wholesale guide.
Guidance for fourth quarter.
That on.
Is that largely due to current bookings on what's the opportunity for upside to that number and upon full recovery do you think you will reengage with the same number on.
And so on inventory depth and the channel partners. Thank you very much.
Yeah.
Yes.
Thank you for your question and if I understand your question correctly with regards to the factory innovation.
And our growth.
<unk>.
Constantly innovating and finding more efficient ways to manufacture our products and we're really proud that we are able to we do have eight facilities here in Canada and debt were always.
We're always.
We're always innovating and making them more efficient and and.
We have for largest manufacturing infrastructure for China in this country.
And pulling approximately 20% and so of course, Canada.
And.
And I will turn on of our wholesale business.
Happy with it and.
<unk>.
And.
As always hotels, a very important part of our business our wholesale partners on Likeminded partners, who.
Who.
Add value to our brand and and.
And Jonathan I'll add some color to the numbers on that yes, I mean the.
And the one thing I would say.
This is a tiny quarter for wholesale.
And side too.
And that's global.
This is this is a highly seasonal business pretty much all of the wholesale.
Before we get into this quarter. This year is no different.
And we're going to be.
And it's very small numbers and <unk>.
Vessel sales are important too.
<unk>.
No.
Notwithstanding.
Extending the closures and restrictions.
We are positive about the wholesale channel.
At the site and time and as I said earlier.
Very disciplined very control about what we do we see it as a strong complement paint brand accretive channel when it's managed well and that's what we intend to do.
Your next question comes from the line of Brian Mcnamara with Brennan and Baron capital.
Hi, good morning, Thanks for taking the question.
Just a follow up on wholesale.
So the results came in much better than your guidance of a low double digit decline could you provide more color on what drove that large delta and also is it reasonable to assume with Comed a significant amount of wholesale partner just given the after effects of COVID-19.
And if so have you and stronger partners and getting better allocation.
Thank you.
Yes.
Performance in the quarter.
Something we're very please please.
And obviously the primary.
Source of revenue and the quarter is that we are.
Fulfilling our older book, that's what we did.
And to the extent that customers wanted more it's something that we can say that location level off, though and the products and BCC notwithstanding that we were able to meet those requests and so and that produced <unk> and positive growth, we move very pleased with how that.
He has turned out.
We're also.
I think the other thing to think about as we.
And look at the sites of our wholesale business that we've been on a continue and it will continuous on wholesale distribution.
For the last several years, we don't see that changing anytime soon for us what matters is call quality of distribution that will constitute distributions and that's what's so important.
So we should expect sales continued to focus on that.
As we move forward, but equally with <unk>.
And important.
And pump business and this channel.
Your next question comes from the line of Robbie <unk> with Bank of America Securities.
Oh, Hey, guys. Thanks for taking my question and I wanted to just ask about the U S market in particular.
The U S revenues I think were down a little bit.
But digital and you pointed out with strong double digit or the west.
With wholesale.
Weaker and the U S and other regions or where the stores.
Much weaker.
Versus what Youre seeing in China, and maybe a little more color on on kind of how the U S market played out through the quarter.
Yes.
So what I'd say.
Hello, and Simon.
Festival.
And for the extremely well.
We're very happy with it and.
It's a big business and it grew nicely. Thank you.
It was a very strong business.
For a little bit.
Interrupted.
Some noise around the election and traffic and really it's been a it's been disruptive disrupted our wholesale business was very good.
As I said before we fulfill the the wholesale order book, we were able to deal with requests for other products. So from our point of view.
Are you happy with the U S market, we see a swing both central for US the site and time we.
Enjoying the good performance this quarter.
I'd like to echo that sentiment and debt.
Think that given that.
And as we all know there is no tourism this year and there are major disruptions many stores wholesale and retail were closed at <unk>.
Different points in time throughout the year I think debt.
And the strength.
Debt wholesale and retail showed during.
And at the time and they were opened for local and it relates to local consumer and was extremely robust and strong and.
Certainly demonstrated the.
The demand underlying demand for our product, which was very encouraging.
I would now like to hand, the call back to Mr. Danny Lee for any closing remarks.
Well thank you.
Very much thanks to everybody for joining the call before we leave I would like to close by acknowledging how challenging the year has been and continues to be for so many people COVID-19 has impacted the lives of millions and our Hearts go out to all of those that have been affected and also led to sincerely. Thank our team members around the world for their continued.
Efforts resilience and strength.
And for so for show and such strong and volume of our values throughout this very difficult year.
Thank you everybody again for joining us on this call and I certainly look forward to talking to you again soon.
Thank you for your participation. This concludes today's call you may now disconnect.