Q1 2022 Canada Goose Holdings Inc Earnings Call
Good day, and thank you for standing by and welcome to the Canada Goose first quarter of fiscal 2020 two earnings conference call. At this time all participants are in a listen only mode. After the speaker presentations there will be a question and answer session to ask a question. During the session you will need to press star one of your telephone please be advised that todays call.
France is being recorded if you require any further assistance. Please press star zero and I would now like to hand, the conference over to Patrick Board. Thank you. Please go ahead.
Thank you and good morning, everyone.
With me are Dani Reiss, President and CEO and Jonathan Sinclair.
<unk> and CFO.
After prepared remarks from Dani and Jonathan we will take your questions.
These will be limited to one each to allow as many as possible to ask questions within the allotted time.
This call, including the Q&A portion includes forward looking statements.
Each forward looking statement, including discussion of our fiscal 'twenty two outlook 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 in making these forward looking statements.
Additional information regarding these forward looking statements factors and assumptions is available and our earnings press release issued this morning.
As well as in the risk factors section of our most recent annual report filed with the SEC and Canadian Securities regulators.
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 undertake no obligation to update or revise any of these statements.
Our commentary today will include certain non <unk> financial measures.
Which are reconciled in the table at the end of our earnings 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'm pleased to speak with you all today about our strong start to fiscal 2022, and the continued momentum we're seeing across the entire business.
The results we delivered in Q1 demonstrates the global demand for our brand and our ability to operate in and improving yet still evolving retail environment.
Heading into this quarter, we were well positioned after finishing fiscal 2021 with record revenue and our third and fourth quarters, our business has shifted from recovery to growth.
And that has continued into this quarter today I'm going to cover our results and share highlights of how we are driving growth in key categories.
And across geographies.
Looking at the quarter, our results were driven by strength across all channels and regions.
E Commerce revenue increased by more than 80% and low triple digit growth and both APAC and EMEA.
And North America, Canada, led the way with a growth rate and the high Seventy's and and the U S where the majority of our stores were opened for the quarter, we saw strong ecommerce growth and the high forties.
This highlights not only our successful and investments and our digital business, but also the strength of our global demand.
Next revenue increased significantly in all geographic regions. This is important to highlight as many of our stores across Europe, and Canada were impacted by closures during the period.
This performance underscores the functionality of our model and reinforces our ability to capture and serve demand in any environment.
Specifically in Canada, where we faced elevated closures and the quarter revenue still grew by 126% excluding PPE.
We consider this a very positive indication of domestic demand.
As traffic continues to improve we expect to see that drive increased productivity in our stores, which would be incremental channel growth to the performance. We have shown this quarter.
Turning to our retail expansion, we've spoken previously about the opportunity we continue to see and mainland China and our strategic focus on growing our business. There. We saw firsthand the opportunity ahead of us with our DTC revenue and mainland China, increasing by 188% this quarter.
Moving beyond Q1, we continued to build our business in mainland China and over the past month, we've celebrated three new store openings and key markets in the region with three more expected to follow this fall.
And a growing global lifestyle brand, we continue to expand across geographies and launching new categories and product design with intention purpose and functionality.
As a Canada Goose brand continues to gain momentum we are on.
And if any on many fronts and investing and newness and expanding our apparel offering globally.
Since our net were launched in 2017 and with the addition of our incredibly popular for this category last year, our apparel business is expected to exceed $45 million and sales this fiscal.
And only for years, we have successfully developed this fast growing category into a meaningful business and we expect that trajectory to continue.
Building on that are non parka business has shown strength overall and in this quarter, specifically contributed roughly half of our DTC revenue.
Yeah.
As I've spoken about and our last call we plan to launch Canada Goose footwear later this fall and our intention is to define and develop this category and a way that no. Other brand can or has I have great confidence and our team and and their ability to succeed in this category just like we have with each of our previous category expansions, including lightweight down.
And apparel.
We have a proven track record of successfully building new categories into meaningful businesses for our brand as I have said before I believe that we have an incredible opportunity in front of us in footwear and I cannot wait to introduce you to our offer and a very soon.
We continue to innovate across our assortment and we've made a commitment to embed sustainability throughout our organization.
And as we laid out and our inaugural sustainable impact strategy report, we are transforming the way we do business to ensure that we're doing everything we can to create the future and we want to see and the world.
With that focus this June we announced the mood and the use of all for and our product through a phased approach, we will and the purchase of for this year, but December 2021, and we will and manufacturing was for no later than next year by December 2022.
This decision was driven by our commitment to sustainability and our purpose based platform human nature.
Our mission has always been to make products that deliver exceptional quality protection from the elements and performed the way our consumers need them too and this transforms how we will continue to do just that.
This path forward and represents the culmination of both our long term strategic planning and importantly, the significant growth of our non for our business.
Currently our non for business accounts for roughly half of our revenue. This has shifted significantly over the past few years.
This has been intentional planned and driven by our expanding non for Parker offering lightweight down and spring categories and as previously mentioned, our grow and apparel business.
And a transformational change that has energized our business and I'm excited and I am confident and this new direction and its ability to further accelerate our growth.
In conclusion. This was another productive quarter, where we found success by investing on the opportunities with the greatest impact for our business.
This quarter also Martha and important evolution for our brand strengthening on our commitment to a more sustainable future.
And as we continue to move through the year I'm really excited to share updates with you all on our for launch later this fall.
And with that I'll turn it over to Jonathan to go over the details of our financial results.
Good morning, everyone and thank you for joining us today.
Canada Goose is off to a great start to fiscal 2020 two.
Looking at our Q1 results and outlook several three key themes that stand out.
Firstly alongside re openings and improving retail trends on digital business has continued our rapid pace of growth.
Secondly, the flexibility of our supply chain and DCC distribution.
Credible assets for navigating a dynamic environment.
Thirdly looking beyond the current year, we have the building blocks for significant upside and our profitability.
Starting with the top line total Q1 revenue came in at $56 million helped by a lower level of disruptions and both channels.
And the channel level DTC revenue was $29 million.
And we lapped the peak of first wave closures with a more operational but still impacted store base.
Across our network, we lost approximately 20% of total trading days compared to 60% last year.
This was complemented by outstanding digital growth against a meaningful comparative base.
Global ecommerce revenue increased by 81% with a continuation of the broad based growth we saw in Q4.
Canada led the way and North America with a high <unk> growth rate alongside a high forty's level and the United States, but all stores for open throughout the quarter.
EMEA and APAC, both had low triple digit growth rates in Europe. The U K was a particularly significant contributor.
As for its mainland China and APAC.
And wholesale revenue was $26 million our growth was due to a near total shutdown of shipments last year at the peak of the first wave.
Our expectation of annual revenue in line with fiscal 2021 has not changed.
We continued to concentrate more business with our best partners and tools as a strategic complement to DTC.
All regions made strong contributions to our growth.
The sequential improvement, we're seeing and Canada is particularly encouraging.
Excluding the impact of temporary PPE sales revenue increased by 126%.
This is despite losing 40% for the trading days and all knowing and Canadian stores.
Since reopening we are seeing some of our best store productivity levels globally, and our home market.
Moving on to gross margin DCC was 73% while wholesale was 35%.
Both came in slightly lower and the levels, we discussed on on last call.
We continue to expect each to be in line with fiscal 2021 for the full year.
And wholesale distributes and mix was higher than initially expected as well as non parka mix and D. C C.
These mix impacts are not significant on an annual basis, and we expect them to be transitory.
We achieved record non parka participation and our own channel at roughly half of DTC revenue.
This is a great milestone for the strategic evolution of our offering.
Finishing with SG&A.
Total expense line was $72 million.
47% from last year.
This reflects a much more operational business alongside growth investments.
Intra quarter, we decided to shift a portion of our planned spend for Q2.
I will circle back to the impact of that at the end of my remarks.
That shift complements underlying cost efficiencies from permanent savings initiatives last year.
Looking ahead to full winter, we are confident and our ability to make the most of peak demand.
The pandemic is not over.
Disruptions and risks remain including new variants.
That said our operational backdrop has greatly improved.
All of our stores and now open.
As all eight Canadian manufacturing facilities.
Our factories are running efficiently and much more normalized levels of production relative to last year.
While distancing regulations for Maine, we are utilizing extra shifts to lessen the impact.
And due to our unique model, we don't have significant exposure to the production shutdowns and shipping delays the sector is currently facing.
The vast majority of our revenue base is made in Canada.
And with a continuous offering we confidently stage raw materials and finished goods all shipping routes are also different.
We generally stop outbound from Canada to our global network of distribution centers.
We are highly confident and our ability to get product into the marketplace, while retaining and cease and flexibility.
Our gross margin tailwind also make this type of environment much more manageable from a profitability perspective.
Our experience in fiscal 2021 is a great proof point.
Despite losing three months of production to mandatory closures and retooling our infrastructure to make P. P and we would not constrained by supply and we preserved very strong gross margins.
The other uncertainty all sector is grappling with is the pace of retail recovery relative to last year's outsized E Commerce guidance.
It's a brand, which started and DTC online and.
As a selective retail footprint.
We are truly agnostic, we want to drive DTC mix higher wherever the consumer wants to shop and in today's environment, where the consumer is able to shop.
We have the global reach and critical mass to capture demand online and drive outsized growth.
We also know that our stores are productive and source off the bike consumers even in the highly disrupted environment.
Retail recovery is also foundational to our long term margin upside. This year, we've already lost a significant amount of trading to closures and luxury retail traffic is still far from pre pandemic levels globally.
Across geographies and there was a wide spectrum of case levels movement restrictions and reopening trends.
As we look beyond these dynamics, we have the potential for an extra gear.
The normalization of retail will really accelerate the uplift from driving DTC mix higher.
And in an environment, where all stores all continuously open with full traffic. There is no reason why our adjusted EBIT margin shouldn't stopped with it two and half and advancing multiyear trend.
Lastly, I will finish with some commentary around current trends in Q2.
Starting with the top line, we are assuming a low double digit growth rate and wholesale driven by earlier shipment timing.
And DCC, we currently expect revenue at roughly one other half times last years level.
And the other segment, which generated $30 million last year due to temporary PPE manufacturing, we do not expect any meaningful revenue.
We expect DTC gross margin in the mid Seventy's and wholesale gross margin in the mid Forty's in line with historical annual levels.
On the expense line. We're currently planning for total SG&A of over $100 million and DNA, a touch over $20 million.
This reflects the flow through of delayed spend I mentioned earlier.
In summary, we continue to navigate through a challenging environment, but we remain confident and our resilient and growing business we.
We are encouraged by the improving retail trends and rapid global E Commerce growth.
This was on agile supply chain and distribution and puts us and a great position to navigate today's on loans.
We remain and the dynamic world, but we are very optimistic that on momentum will continue into the peak season and drive sustained long term growth.
With that I will pass over to the operator to begin Q&A.
And as a reminder to ask a question you and need to press star one of your telephone keypad to withdraw your question press the pound key and please limit your questions to one and you may re queue for any follow ups again that is star one to ask a question and we'll pause for a moment to compile the Q&A roster.
And your first question comes from the line of Olivia Channel column.
Hi, Thank you very much and good morning, Danny and Jonathan.
And in light of your recent burn announcement, and how we're being non for impact your business and what gives you confidence that you'll be able to grow at the same trajectory. It sounds like you've been really proactive about this decision and strategy and as a follow up on what do you think about both for our first substitutes.
As you look and obey and investigate different opportunities. Thank you.
Yes.
Thanks, Oliver Thanks for your question good to hear for you.
We are very confident that we will meet this transition and we will continue to be a high growth company at the same time.
And this is not a sudden set and decision for US. This is something that we have been considering and planning around for years.
Our non for product offering has been growing and and outsize pace and it makes up roughly half the revenue base a day and that's the trajectory that has been and will continue will be continuing on.
This includes non for Parker styles, and alternative Hood trends, new product categories for free Assortments that we make for our wholesale partners all of which have been extremely successful and again, we expect them to continue to be.
Successful so we're at a stage and how are we and continued weak and we feel free.
We can continue to offer the best in protection without using for.
And this decision is truly energized the company and I believe offers Asa.
On a huge amount of increase opportunity and the future.
With regards to your question on off Ofer, we absolutely will not be using for for we do not believe that on a sustainable alternative for the environment and.
We will be using other other things and.
Thanks for you Okay Danny.
The cash still comes from them.
The the consumer side I was just curious about the consumer research and and what customers thinking how are you.
And customer centric and thinking about this decision. Thanks, a lot best regards.
Yes.
And we focus on innovation and we focus on providing consumer.
Consumers with the right price that they need for their right environments in which they live and.
As we've.
As we've been intentionally developing more and on for our products over time and they've been successful with.
We've we've leaned into that.
And the more everywhere.
Thanks, a lot perfect.
Your next question comes from the line of Jonathan Komp of Baird.
Yeah, Hi, Thank you just a follow up on on the first questioning but thinking about the gross margin impact could you maybe talk about any sort of on gross margin uplift that you would expect from not using for going forward and then separately for gross margin any other puts and takes when you're thinking about the balance of the year pricing and <unk>.
Cost or for other impacts outside of the debt.
Product mix factors that you've called out for other first quarter.
Hi, so.
I think when it comes to <unk>.
We all we continually.
We will continue investing in upgrades to the performance and the quality and the sustainability of our jackets and it's very much more.
Part of our broader evolution of our offering so as a result, and not really expecting this to change margin for the channel level.
And particularly given the broader suite of investments that we're making and our products I think as a more general point on on gross margins. Our algorithm is is very much intact, we're not expecting on gross margins fundamentally to move at the channel level.
Other time and therefore, we typically talk about mid seven days for DCC mid to high Forty's for for wholesale on an annual basis, we don't see that changing and we don't see any other puts and takes.
Moving that this year.
Okay. Thank you.
Your next question comes from the line of Omar Saad of Evercore ISI.
Good morning, Thanks for taking my question.
And Jonathan why don't you to dive in a little bit deeper on the guidance if you could.
It seems like it really implies a.
A shift to the two H versus pre Covid levels is there are some specific reasons why you guys are significant and signaling and such a significant shift into the back half versus pre COVID-19 is that something changed with the consumer behavior or the wholesale customer behavior or the category.
That would be helpful context, thanks, guys.
No problem the total.
I think at a corporate level.
It comes down to two.
Two main changes of course channel mix on one hand and buying behavior on the other it's clear that we are.
Much more DTC centric today.
And the channel to approach <unk>.
70 percentage.
And of all revenues this year.
And I think that naturally puts a lot more on revenue into Q3, and Q4, when consumer buying and since its peak and.
Last year at 89% of our annual DTC revenues were and the second half for the year.
And now is in parallel but that's as you know we've also have resized and refocused our wholesale business and that's much more weighted to Q2.
And your next question comes from the line of Michael Binetti of Credit Suisse.
And I'd like to thanks for taking my question here and I'd like to ask about that a little bit as well, but maybe Jonathan any any color on how you thought about conservatism baked in and <unk> on a direct to consumer basis.
Related to the shifts you just mentioned and then.
As we look at the some of the math as you laid out the second quarter. It looks like and assumes wholesale about 40% below September 19 levels and direct to consumer about 7% below 2019 levels.
And implies a pretty meaningful.
Decline I'm, just curious you know considering especially on the wholesale side, considering 40% lower and a category, where you guys have pretty consistent price increases.
It does imply some significant unit declines and that channel, maybe you could sort out for us what you think is idiosyncratic and.
And that spread.
And as you know versus the industry or anything going on and the wholesale channel other than your own strategic decisions and I'm, just trying to understand a little bit better.
Why the core would be we'd be down that much given that you still see DTC.
Down seven versus 2019, I'm trying to understand how maybe how you thought about unit recapture and D to see given the work you've done and wholesale.
I think that debt.
Let's take wholesale first and then we'll talk about DTC and wholesale we've been very clear that we went through something of a reset last year and we do not expect it to be materially different to last year's level. This year. So that as you compare back to fiscal 'twenty will happen and that you've got the thing festival the shipping patterns.
I have been somewhat different on.
On the one hand, and the absolute price of the wholesale business was materially higher at the site and time.
And secondly, as you switch alto.
Wholesale into DTC close we do expect that recapture but the key is you don't recaptured at the same time, because typically with wholesale obviously with Pipelining, Inc. In Q2, and getting it into the stores and installs and starting to sell it whereas with DTC, primarily we expect to recognize that revenue in Q3.
And Q4, turning to DTC and we believe that it's.
All comments are appropriately measured and directional given where we are today.
Most of the quarters ahead of us and in September and we remain in a dynamic environment and with new variants.
As we sit here today, we are really pleased with the performance. We're looking forward to a great for winter and if you look at the full year and what's implied for the size of the DTC business, you'll see it's well ahead of last.
Last year and the year before.
Yeah, I heard that Jonathan.
Well said and just to reemphasize this is the.
And the dynamics and the and the mixing and shifts and all sorts of things are changing for the in and.
And annual period year over year, our businesses on a.
On a on a straw.
A strong growth trajectory and we feel very confident about that and the future for a whole variety of reasons.
And your next question comes from the line of Mike Burton.
And Wells Fargo.
Hey, good morning, everyone I guess two.
Two quick ones, Jonathan and I think on the last call you had mentioned on wholesale potentially being flat year over year for the year, but you had some nice performance in Q1, just kind of curious if there's a little bit of and update there.
And then I guess, just bigger picture Danny or Jonathan.
Since Covid hit your E. Commerce revenue has been fantastic and robust can you talk about and expectation of.
And once we normalize where you see your store productivity kind of landing I assume you don't believe that youre going to have similar productivity and your retail stores on the other side of this just because of how much digital revenue you're now doing but is there a way to think about that or where you guys are thinking about that and certainly thanks.
So let's take the wholesale question first.
And as I think we've mentioned in the and these documents.
And very wholesale it's about when the when our wholesale customers want to take the inventory. So the performance and the first quarter is neutral to our expectations for the other in other words, we are simply shifting it when the when the wholesale clients want it which is a bit sooner than we thought.
Yeah.
And I think debt.
You know I mean determined you use once we normalize them and that's obviously the.
That's that's the punchline and once once we normalize and e-commerce as fully operational as it is today and our stores are also fully operational with normalized traffic I think that debt.
That's that's an environment, that's accretive to where we are right now.
Without any question, but it's it's.
Impossible for anyone to speculate when that will be.
And your next question comes from the line and making people.
And security.
Thank you good morning, Jonathan just wanted to clarify your comments around the adjusted EBIT margin, starting with it too and so what's the timeframe you were referencing there and how dependent is that on the retail environment and proofing. He could just give a little bit more detail. Please.
Yes.
Thanks.
I do think that you know.
It's hard to be at a point, where you can call it.
The timing on that with any integrity, just because it's obviously.
And important dependency and that on how we retail traffic regimes and how retail productivity growth.
We're clearly very much in and.
And the dynamics and disrupted environment.
You know we are confident that while it's going to get pass this to a point where retail is fully operational with normal traffic.
Timing of it is just hard.
As I look look today and what we're.
Cheating and delivering well, we're really pleased with the progress, we're making and we're really excited about the additional upside to the full full recovery of offers.
And I think that when we get back to that full traffic and.
The stores being open all the time, there's no doubt in my mind on that.
That starts with a two and with a strong growth path behind and it's just a question on timing as to when that resumes.
And your next question comes from the line of samples and just try.
Thank you for taking my questions I just was wondering.
Can you.
When we look at fiscal 19 is this all a timing issue or sorry fiscal 'twenty is this all on talent a timing issue of sell in versus sell through.
That makes it back and more and more backend loaded and in the past on this.
And just trying to get a complete handle on this and and if you could give us some more color on exactly I mean, I'm coming up around 66% gross margin for the year.
Is that more or less.
And what you're thinking about.
So I think that.
As we think back to fiscal 'twenty, we had a way way lower DTC participation and this business.
Net.
And if you if you look at what we've said we've closed on 70% and for the and all.
Our expectations for DTC participation.
This yet that fundamentally changes the revenue patent and the business because it My festival wholesale. This is the same size and it was and secondly, the DTC business.
But as I said earlier with a huge skewed for the second half for the year.
So that's really what's going on there I think if you take those proportions and you take what I said about.
Gross margin at the channel level.
Thank you do more shop for something and the ZIP codes and you're talking about.
And your next question comes from the line of Jay sole of UBS.
Great. Thank you so much so I have a three part question.
First you Danny can you talk a little bit about the launch strategy for footwear.
And that you have coming up here and the next few months, maybe you're on when we'll see that and also can you give us a little bit more detail around the timing of when some of the stores and China will open.
And then lastly is there a plan to.
Leverage the winter Olympic games that are coming up in February for the brand and a way that debt will increase visibility. Thank you.
Yes, Thanks for question and for launch strategy.
And was the same thing is happening.
This year we.
I'm very excited about it I'm very I know that one of our core competencies and now is developing new categories and we've put a lot of time and energy into this for a strategy.
And we've taken it very seriously and very excited with Washington isn't on launch on the fall and.
And I do look forward to share more information about that with you when we get closer to that time.
And perhaps this time next quarter.
With regards to China store openings, we've opened three so far and we plan to open an additional three stores.
Before fall.
And as far as the Olympic games and the question around that.
We just don't we don't we're not on official participant in the and the Olympic games, we certainly.
We certainly work with.
And you know various influencers as we do as part of our guerrilla marketing strategy as well.
She has worked for us for the last 20 years.
And your next question comes from the line of.
Barclays.
Good morning, Thank you for taking my questions.
And I was wondering if you can.
So your normalized annual price increases and a world it sounds like in 2020 two others, perhaps so no more normal pricing non luxury and also taking prices up and what we have seen in the past two years and at luxury.
Yeah, they've continued to take those prices up there just wondering if there is.
Need more.
Relative to kind of mainline price thing. So that's number one and then Jonathan just a housekeeping if you can quantify the SG&A shift.
And then more.
On the product efficiency coming from D eight manufacturing facilities.
Are you seeing is it capacity utilization labor efficiency.
And what did you see like for like look like thank you very much.
Okay, so taking pricing for us.
And you know, we've always said, we take price and the mid single digits.
That's something that we've done throughout the pandemic.
For fiscal 'twenty, one and fiscal 'twenty two is an embedded part of what we do and how we do it.
And the way that we manage on gross margin and.
And this year has been no different than that.
I think when it comes to SG&A.
Yes.
If you take what we spent in the first quarter and what we're talking about for the second quarter, you'll have a pretty good feel for the rate of growth and that's very much aligned with what we.
Gave us assumptions against the food yeah.
But last time.
In terms of product.
And the right sort of evolution of AUC.
Other words with.
Expecting on margin algorithm stay very much on track.
And therefore that we are not seeing that auc's, all rising either faster or slower.
And then Auo's with.
And we're seeing a very consistent pattern.
And that is a reflection of efficiencies and some product categories, and reinvestment and others and the way that we manage gross margin.
And your next question comes from the line will come on line.
On <unk>.
Thanks, Good morning.
Jonathan and I was hoping you could give us some color on the different levels of store productivity that's embedded in your guidance.
And as it pertains to China, and maybe some other markets and are starting to open up a little bit better what youre seeing from that traffic and productivity perspective.
And how that differs from what is embedded in the guidance.
Yes.
We're seeing.
Good levels of productivity.
I would say, particularly.
We've been very pleased with what we've seen happening in and.
Canada since reopening.
America has been.
Quite solid and throw out.
And very pleased with what we've been saying and China as well I think Hong Kong has decided on animal still.
And and Europe is gradually reopening it.
It came from a very different place and.
And frankly, we haven't sold the U K, we opened and.
In mid April and then the rest of Europe, and fits and starts thereafter.
What we're looking for.
Going forward is a gradual and progressive improvement in those.
And and.
And those levels of productivity and Thats what were saying.
And your next question comes from the line of Brooke Roach and Goldman Sachs.
Hi, Thank you and good morning, and thanks for taking the question I was wondering if you could provide an update on some other investments that you're making this year into both the brand and the digital consumer experience and per.
Perhaps what about those investments are fueling some of your optimism and confidence on continuing the ecommerce momentum and penetration amongst some on among both new and existing customers. Thank you.
Oh, yes. Thank you for your question, we are continuing to prioritize and fact.
Our investments in our.
And our omni channel.
And our digital consumer experience. These are areas, which are very important to us. It's all it's also clear that.
And this world is one which is approaching a state where there's really very little differentiation between physical retail and.
E Commerce retail its just a matter of awareness and consumer wants to shop, and when they want to shop and how they want to shop, and we wont be able to provide them with an experience that allows them to do that.
On their own schedule, and and you give them the experience that they want to have.
Tailored specifically to them and it ends with that and mine that we have.
A short term and longer term roadmap to continue to invest a significant amount and being best in class and.
And being an omni channel.
I'll provide an omni channel.
Experience for our consumers.
And your final question comes from the line on Ravi on from Bofa Securities.
Oh, Hey, guys. Thanks for taking my question My question's on APAC, which was actually up versus 2019, and the first quarter you guys mentioned that China was a significant contributor does that.
Imply that rest of APAC is still down versus 2019 and could you also tell us how to think about you know the Asia revenue pattern for <unk> versus the back half of this year or is it similar to how you're kind of talking about overall D to C. Any color on that would be great. Thanks.
And we're right at the beginning of a APAC.
APAC journey.
And we're only two years of three three by Christmas into China.
And trying to experience.
And we've seen great performances for all stores in mainland China, and we're continuing to see that growth both organically and through new stores and we're very pleased with how that's going.
And you are you rightly observed.
That's doing well.
Of course, Hong Kong is.
As I've, just now and she started animal it's it's dependent on borders reopening and a bunch of other factors.
I think when it comes to the rest of Asia, and remember that that's essentially a wholesale business and so that thus.
As far as different dynamics.
As both Japan and.
Korea, South Korea, and managed as distribution markets.
Yeah, all good points and I agree agreed on I'll answer that at this time I think.
And first and foremost on we view APAC is extra.
Extraordinary growth opportunity for this brand and a number of ways and Anna.
And.
And then and.
There's a lot of runway for us there on the pandemic has affected every market and different ways and for example, Japan, which is an established market and.
And was affected last year, we expect it to.
Two to rebound this year and better way.
But overall APAC is strong and healthy and and.
And growing out of it.
Very healthy rate and.
We are we are prepared.
Heartless and what's ahead, and we're set up to capture and share demand and any environment that may exist and any part of the world.
And now I'll turn the call back over to management for closing remarks.
Yes.
Yes.
Thank you all for joining us today I have never been as I said is a M. Today about our business our ability to strategically expand across categories has been proven and.
It's been met with excitement and strong demand across all markets.
And as much as COVID-19 has transformed the world. This has been a transformational year for our business as well and we look forward.
Tremendously towards the comp. Thank you very much and have a great day.
And this concludes today's conference call. Thank you for participating you may now disconnect.
Yeah.
And on.
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And.
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