Q3 2022 Canada Goose Holdings Inc Earnings Call
Thank you for standing by today's conference is scheduled to begin momentarily. Please continue to standby and thank you for your patience.
[music].
Good day, Thank you for standing by and welcome to the <unk>, Canada.
Canada Goose third quarter 2022 earnings conference call at this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Ask a question during the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to Patrick Burke.
Mr Relations. Please go ahead.
Thank you and good morning, everyone with me are Dani Reiss, President and CEO , and Jonathan Sinclair EVP and CFO .
Okay.
After prepared remarks from Dani and Jonathan we will take your questions. This 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.
<unk> forward looking statements.
These statements, including without limitation discussion of our financial 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 in our earnings press release issued this morning as well as in the risk factors section of our most recent annual report.
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 and thank you so much for joining us today.
I'm happy to be here today to discuss our results and share highlights.
Some has continued putting us on track to exceed $1 billion in annual revenue for the first time ever.
This is driven by the strong foundation that we've built.
And by our continued execution.
We had a strong financial performance in the third quarter.
Coal revenue increased by 26, 5%, excluding temporary PPE sales from last year.
DTC led the way in its largest quarter up 49%.
We had a sharp improvement in store performance relative to last year alongside continued digital growth.
This flowed through to significant bottom line growth.
Adjusted EBIT margin expanded 200 basis points to 35% and adjusted EPS increased 41% to $1 42 per <unk>.
Sure.
In the later stages of Q3 and into Q4.
New COVID-19 outbreak and related restrictions have impacted revenue growth.
And retail traffic in both APAC and EMEA.
As a result, we have revised our outlook for fiscal 2022, Jonathan will cover shortly.
We view these new disruptions as temporary and in the case of APAC, we have already seen sequential improvement in the past two weeks.
While today's environment presents challenges, we remain confident in our long term trajectory our unique platform and our brand momentum gives me confidence about the future and I'd like to touch on a few highlights that speak to this.
Our mainland tenant operations on asset in today's dynamic operating environment, we have not had any material revenue or margin headwinds relating to supply our shipping constraints. This winter.
Looking forward, we are confident in our inventory position going into fiscal 2023, and we're confident in our ability to navigate inflationary pressures.
As I mentioned earlier, our global digital business has continued to see strong growth building on the solid gains that we made last year.
North America was a standout and we launched our new E Commerce site in the region earlier this fall.
We've been very pleased with the enhanced customer journey and increase conversion that we've realized.
We will continue our phased rollout globally in FY 'twenty three.
We are building, an enduring global lifestyle brand and expanding year round relevance.
<unk> of the dedication of our team has shown delivering against this objective.
And we are encouraged by the results that we're seeing across the business.
This quarter non parka revenue grew by 75%.
We're seeing tremendous success across our expanded offering.
One highlight I'd like to touch on being our pastel collection, our first full expression of Canada goose lifestyle, including sweaters, outerwear accessories, and footwear collection resonated, particularly with women and we plan to expand this offering later this year.
Another milestone from this past quarter was the official launch of our first ever footwear collection.
The collection has driven excitement demand and a strong response from consumers.
Looking forward to our spring collection, we will launch several new styles grew on a year round relevance there is so much potential in footwear.
And long term and I look forward to continuing to update you.
Yes.
Innovative collaborations are a hallmark of our brand in a massive driver of brand heat in December we have all of our annual collaboration with concepts with the addition of renowned Japanese Ashram brand Beth.
The response was incredible and the collection sold out within days.
And Tomorrow, we launched our second annual capsule collection with NBA, All star as part of our multiyear partnership.
This year, we've teamed up with <unk> and our guest designer for the collection.
<unk> is one of the world's most innovative designers today and the collection has received outstanding interest presale.
I look forward to seeing our brand in Cleveland next weekend.
Finally, we continue to make the best future our responsibilities are.
Our human nature purpose platform got everything that we do.
And it is underscored by our purpose to keep the planet cold to the people on it warm.
Last month, we launched our first human nature collection. The collection demonstrates how quickly we are scaling innovative and environmentally responsible polymer materials into our product assortments.
The collection is made with 100% recycled nylon responsibly sourced down and uses undie fabric significantly reducing the chemical impact of the collection.
This is only the beginning and I look forward to updating you on our continued progress on this front.
And with that I will turn it over to Jonathan to go over the details of our financial results and outlook.
Thank you Danny.
Morning, everyone.
Thank you for joining us.
We delivered a strong performance in the third quarter with revenue and earnings well above pre pandemic levels.
Brian momentum was exceptional adult DTC led distribution was highly productive.
With a one of a kind of supply chain, we fulfill peak demand without material constraints or profitability impacts.
Following new COVID-19 bearing outbreaks, we have seen lower than expected revenue and traffic in Asia Pacific and EMEA at the end of Q3 and into the current quarter.
This has been partially offset by outperformance in the United States.
We believe these disruptions are temporary and contained.
Pricing environment remains more favorable than it was last year, and we're making great progress on our strategic agenda.
Looking at the quarter in detail.
Total revenue increased by 26, 5% to 580 <unk>.
Excluding the impact of temporary PPE sales yet.
As fiscal 'twenty two is a 53 week.
The additional week in Q3 provided $14 nine.
In the quarter.
Do you see that the way.
Increasing by 49% $445 million.
Higher revenues from existing stores.
Thus growth and retail expansion.
Significant contributors.
Retail productivity improved sharply alongside 28% digital growth on top of last year's outsized okay.
This is a great proof point for the channel and for our brand and our most important quarter.
As planned wholesale revenue decreased 15% to $137 million.
Throughout the year, we've spoken about a normalization of timing the shift back into Q2.
This was driven by partners requesting.
Earlier.
Stripping away these shifts.
<unk> mid single digit growth annually has not changed.
We are finishing full winter with significantly higher sell out with last year.
We are excited to build upon this in fiscal 2023.
From a product perspective, our year round lifestyle relevance continues to grow.
Total non parka revenue increased by 75%.
And lightweight jackets with standout performance alongside encouraging contributions from the apparel headwind and footwear.
<unk> also grew strongly.
Geographically certain markets have slowed down.
So the accelerated.
These shifts have been in line with the new variance restrictions and they reflect broader industry trends.
In mainland China, DTC revenue increased by 35%.
Following a very strong November we observed a slowdown in store traffic in December which carried through into the current quarter.
Underlying demand remained strong highlighted by the low sixties growth rate, we achieved online.
We've also seen sequential improvement in our retail performance over the last few weeks heading into <unk> yet.
Revenue in EMEA increased by 16%.
Asia Pacific grew at a meaningful interrupted pace.
The absence of international traffic has been a headwind for major global shopping destinations like Paris.
Given this friction and disruptions of also.
In markets like Germany.
None of this changes our long term conviction in the region.
It's upside in the recovery.
On the other North America is accelerating.
Canada revenue growth was 32% excluding temporary PPE sales last year.
E Commerce increased in the low double digits together with much improved.
Yes.
Being fully operational provided an incremental.
As we face closures in Ontario, and Quebec during this period last year.
Revenue in the United States increased by 26%.
Our established retail stores.
Nick.
Pre pandemic levels and digital growth was in the high <unk>.
This highlights the upside of other regions when retail traffic normalizes remember this performance was almost entirely driven by domestic demand.
Moving on to gross margin.
BTC came in at 77, 1%, while wholesale was 52%.
Excluding temporary wage subsidies, both slightly up versus last year.
Yes, Scott.
We have a long track record of funding new products and cost increases without margin compression.
With our successful lifestyle evolution.
<unk>.
Albert.
More.
Total SG&A was $184 million up 27% from last year.
As we've discussed throughout this year.
We plan to slow down SG&A and.
And expand profitability in our peak selling season.
Adjusted EBIT margin expanded 200 basis points to 75, 3% and adjusted EPS increased 42% to $1.42.
Finishing with a revised.
Fiscal 2022.
This reflects lower revenue in Asia Pacific and EMEA in the current quarter.
We now expect the following ranges for our key metrics.
Total revenue of $1 1 billion to $1 one.
Opinion.
This assumes approximately 68% DTC mix with 6% to 7% wholesale revenue.
Adjusted EBIT of $165 million to $175 million.
Representing an EBIT margin of 15, 1% to 15, 8%.
And adjusted.
EPS.
So a $1.
Yes.
At a macro level.
This outlook assumes no material increase in pandemic, all economic disruptions relative to what we're experiencing today.
Backing out our year to date results with one quarter left.
Our annual outlook implies the following revenue levels for the fourth quarter.
Total revenue of 215 $230 million.
This represents slightly positive.
Great.
Relative to the comparative quarter.
13 week period starts a week later.
What that means is it shifting one week from a high volume trading period, which represented $49 million in total revenue.
In contrast, the extra week from the ship at the end of this fiscal period, it's not meaningful revenue perspective.
This assumes approximately 84% DTC.
With slightly negative to flat wholesale revenue growth.
In Q4 of last year E Commerce growth is a high watermark of 123% due to closures and late demand timing.
We expect e-commerce to normalize and be largely in line with last year with a fully operational retail fleets, playing a much larger role in our DTC growth.
The temporary reductions we have sites do not change our optimism for fiscal 2023.
We will share our views at Eurex in detail.
As we see it today there is no reason why we call it and have strong growth and margin expansion, even without a full retail recovery globally.
Our DTC journey continues.
Brand momentum is robust our lifestyle Butlins has expanded.
All of the kind of supply chain and our pricing power gives us stability and flexibility.
Retail comps.
I look forward to updating you on our plans.
And with that I will pass over to the operator to begin Q&A.
Yes.
Yeah.
[laughter].
Thank you if you have a question at this time. Please press star followed by the number one key.
Key on your Touchtone telephone once again that star and then one to ask a question.
One moment, while we compile the Q&A roster.
Yeah.
Okay.
Our first question comes from Oliver Chen from Cowen Your line is open.
Hi, Thank you.
Q4, what are your thoughts on store traffic region delay in some of the assumptions you have there.
Would also love your view on marketing spend and marketing spend as a percentage of sales in the longer term and how you're evaluating that opportunity.
And then finally, it's encouraging you've seen higher sell out in the wholesale channel.
Just would love some of the drivers there and what it means for your Ford inventory planning. Thank you.
Okay.
Okay.
Okay.
Okay.
Yeah.
Yeah.
Hi.
Okay.
Some of that cost.
A reduction in what we're expecting is around 60% in Asia from 40% in <unk>.
And.
What we're seeing in North America is very much grain Titan wafer.
We've got continued momentum momentum that.
I think when it comes to marketing.
We are always very deliberate about our investment in marketing.
We have continued ways.
That's sort of a level that's at the higher end of what people typically invest.
We keep a constant is essentially revenue and we see no change in that over time.
So when it came to wholesale.
We obviously, we've had a very poor.
Positive set of demand set of demands circumstance as we enjoyed very strong.
Demand that the consumer is the consumer and the channel's healthy we've seen very strong unit growth and value growth.
In.
The retail performance of the wholesale cost base.
Does that picture allows addressing our wholesale business.
<unk> continues to be very important to us.
This year.
It was a more typical year end.
More of our obligations.
In Q2.
And.
Our sell through is very strong. So we're very encouraged by this very strong sell through.
We're encouraged to see this category.
Need to grow into drive program for enrollment and revenue for us in the future.
Thank you. Our next question comes from Jonathan Komp from Baird. Your line is open.
Yeah, Hi, Thank you I wanted to ask on margin if I could maybe first just clarify that.
Decrease to the margin outlook for this year is that all of sales deleverage or anything else going on and then maybe more broadly as you think to the pathway back above 20% operating margin beyond fiscal 'twenty, two anything changed with your outlook there and maybe just if you could clarify some of.
The main drivers of margin expansion going forward.
Sure.
Thanks.
I think as we often do we make.
SG&A growth investments typically very front weighted in the.
And then as we get into the peak season, that's when we see the profit delivery on the margin expansion.
First first fourth quarter here as I've said before was supposed to be a major driver of margin expansion time.
Timing this year was unfortunate and it's magnified the impact therefore developments.
Some disruptions.
With the current disruptions, we have loss of sales leverage.
<unk> is a very much more limited thing that we can do on the cost side to be absolutely clear. This is a sale or sales traffic store retail traffic story, that's impaired revenues and therefore depressed margin.
And as a result were in the mid teens for the relative to the mid to high teens range that we've been talking about throughout the year.
As we look forward.
In terms of fiscal 'twenty three we see no reason why we can't expand margin significantly more than the current year.
Even in this environment, we got pricing power to manage cost inflation of DTC productivity critically is improving in the U S has already shown us the upside of a more fulsome retail recovery.
And just to add to that.
Towards often said you all longer term as retail restriction and profit normalized globally, we completely we intend to recover and we see ourselves eventually going beyond pre pandemic levels.
To John's point, it's completely a traffic story.
Traffic will come back.
Thank you.
Our next question comes from Ike <unk> from Wells Fargo. Your line is open.
Hey, good morning, everyone, Jonathan I apologize.
Cutting it a little bit maybe just talk over on Oliver's question around regional performance I, just wanted to understand a little better.
Guidance reduction on DTC is around $75 million, which is a lot for a smaller quarter for Q, so clear position regional dispersion, which I think youre talking about APAC and EMEA could you, maybe just give us a little bit more detail.
What levels of productivity you are expecting in <unk> by region, North America sounds pretty healthy, but it sounds like there's pressure there just kind of parsing that out Mike.
Understand what's now let me give you a kind of globally.
Alright, yes.
Absolutely.
Very happy to do so.
Start with the bright spot.
This is actually now within very close striking distance of pre pandemic levels.
Underscore that's without meaningful international traffic.
Highly productive stores in Canada are a bit behind but they are much improved from last year and they are definitely moving in the right direction.
Asia Pacific was a standout for retail recovery last year, but it's taken a few steps back with the new outbreaks and restrictions that we've been dealing with this year.
In General EMEA is the is furthest behind and retail normalization currently.
But overall globally, it's important to note that we've seen much stronger traffic. This fall winter than we did last year.
Convinced that these disruptions are temporary.
Thank you. Our next question comes from Michael Binetti from Credit Suisse. Your line is open.
Hey, guys. Thanks for the questions here I wanted to ask just about the early framework to think about for 2023.
Maybe just some help on what you see as far as the revenue pressures you see in total for this year in <unk> and <unk> that should be transitory as we try to think about how much you should be able to reclaim or the.
The how to think about how much. The compares are easier as we think about next year because of what you think is transitory happening right now and then on.
On profitability on the gross margin I think the non parka categories were a bit of an impact.
The gross margin this quarter I would assume that that the mix of non parka keeps evolving next year as your question to some of those other categories in boots, certainly maybe how we should think about that is what is the run rate of the headwind on.
The gross margin just as we go forward and then just a follow Jonathan's question earlier is it.
You've spoken to EBIT margins much higher even than the 20%.
Over the long term for the business is it is it is it is it not appropriate to think of 'twenty pluses EBIT margin 423 at this point.
So I think.
Thanks, Mike I mean, there's quite a lot in that so let's let's take it in sequence in which you asked.
Yes.
The first is the framework for 'twenty three there is no doubt that we've still had imped traffic this year in our stores.
And that therefore gives us a softer base for next year and assuming that we can see the continued normalization of traffic that clearly gives us an opportunity for growth quite apart from the organic growth the business should be should generate in any event both through.
Its existing network of stores and wholesale accounts and so on as well as the continued development of the retail network and our technology.
So in terms of online and only so we.
We would we feel very good about the platform for next year, and we think that that should act as a springboard for growth.
Now turning secondly.
To gross margin.
Yes.
Youre right that more.
Margins are inevitably higher in our pocket category and therefore this week.
The.
Yes.
And therefore as we develop.
Our non parka business those margins initially on somewhat.
The fundamental part of our.
Margin algorithm, though is that we create tailwind and headwind so that we keep the gross margins imbalance, particularly at the channel level.
So.
Therefore, we believe that what we've said historically, which is.
Mid seven its gross margin further DTC channel mid to high voltage for wholesale is what we should expect to see.
Overtime and our view on that has been has not changed management's job is to keep it in balance and we believe that we're demonstrating that we're able to do that.
I think when it comes to <unk>.
EBIT.
Going forward I've said before there's no reason why we shouldnt be expanding.
Margins significantly more than we did this year, even in this environment and whilst it's too early to give specific numbers for next year.
You've heard me talk about the fact that we expect EBIT margins to move up above 20 and towards 30 overtime and that view has not changed we have got a very strong underlying earnings model here. Its just the DCF is affected by temporary disruptions to the retail traffic.
Yes, and to add to what Jonathan said, a very high level.
Very optimistic for next year and beyond.
We will continue to be we have we have consistently.
<unk> grown and demonstrated meaningful growth over the past few years and we see nice personally I see no reason why that will not continue into the future.
We've demonstrated and we cannot operate a profitable and growing business and impaired environment now.
At such time when traffic returns.
We said it would be.
Even greater accelerator to that to that growth.
Thank you.
Next question comes from Omar Saad from Evercore. Your line is open.
Good morning, Thanks for taking my question.
I wanted to ask a little further.
For further detail on Asia, and China, and maybe put a finer point on the deceleration in some of the soft traffic you are seeing there.
What is COVID-19 related or are there other effects going on in that market.
Lingering effects from the PR kind of.
A consumer watchdog issue that had you guys. There and then in the last two weeks I think you mentioned last two weeks. It's picked up are you seeing that pick up in correlation with easing of Covid restrictions do you have a view on China.
Post deal Winter Olympics do you think things will open up even further there would love just a little bit more detail on what's happening in that market, what's affecting your business and your outlook. Thanks.
Sure Yeah. Thank you for your question.
Very confident about our business in China are.
The primary story in China at the moment is.
As COVID-19 related and and restrictions related which impair traffic to stores.
And in that in that number and thats in that and Thats. The biggest story in China alone.
Our plant that are.
Our online business in China was up over 60% in the last quarter. When it was really important to note and as a very good sign of consumer demand for our products in China.
We're very optimistic and bullish about R.
Our future prospects in China, we have a lot of runway left there and.
We intend to continue to grow meaningfully.
Meaningfully for for years to come.
And hopefully the.
Global climate change as Susan traffic returned to pre pandemic levels.
And.
As I said in my prepared remarks, we're seeing that traffic bill weekends a week.
At the moment and that's been very encouraging.
I think.
You bet.
There are a number of factors going going on in China at the moment, whether it's around Covid, but also.
Obviously the Olympics.
Thanks Shane.
We have assumed.
On a more normalized trend in Asia for the remainder of the year based on what we've been saying and that's embedded in what we're saying here.
And.
We feel fairly confident about it I think the other thing is to think about the way in which our business evolves. Typically January is bigger than February February as big of the March and therefore.
The the swing factors embedded in how traffic becomes more volatile than the remainder of the year it becomes less significant.
Thank you.
Next question comes from <unk> Yang from Barclays. Your line is open.
Great. Thank you very much a couple of questions here, I guess I'm going to say on the China topic.
How should we think about the China.
China segment margins and specifically what percent is coming through.
Commerce versus stores.
And what does the EBIT margin look like relative to the other regions.
The other agents.
Then Jonathan.
I dig into the air.
The product margin specifically the merchandise margins you talked about puts and takes.
Obviously, the AI or is going to be a net positive what do you look at what is cost inflation. So what is the current rate of contemplation because you don't have container shipping.
Turning from the far East I'm, just curious how much are you raising prices to offset cost inflation. Thank you very much.
That's all right that's great. Thank you.
China, China margins typically are.
Our robust.
Certainly at the gross level and that reflects the fact that we follow.
The global pricing metrics around the world and that's a well established patent for us.
I think <unk>.
Generally speaking therefore, we enjoy good levels of productivity and therefore that the stores are profitable, but I'm very good.
Alongside a strong contribution from our e-commerce .
From an EBIT margin standpoint first of all the stores in the.
And.
The online in normal times were about the same to trying to EBIT margin in and of itself a little bit more depressed than the other regions because it has embedded in it.
The operating costs of our partnership with <unk>, which fall in SG&A and so.
Although there were very strong underlying.
Margins, there's a supplementary culture, that's been there in the region since day one.
When it comes to our product margins.
We.
We are not facing huge input cost inflation, we do get input cost inflation will be unique in the world if we weren't getting that.
But it's not the high low single digits typically is what we're saying.
And we do have some freight.
Freight costs.
Because we're moving product.
Buying raw materials and bringing them in.
Well, because we're shipping product out.
And those the inflation in those types of cost is pretty much a normal life.
Yes.
We do have pricing power it's Brian .
And that's been there for years and asphalt DTC network grows it means that we have a very.
Robust and resilient and sophisticated understanding of price elasticity, which means that when you do move prices.
You're you're able to.
Understand the likely impact from volumes networks very surgical.
So in that context, we've been able to raise all prices generally speaking are mid single digits.
Each ended occupancy you guys at all this year has been no different and.
And we've been able to make sure the pricing.
An obstacle in Nebraska.
Thank you.
Our next question comes from Megan Annette from TD Securities. Your line is open.
Thank you good morning.
The brand equity by region can you talk about the brand positioning in each of your key geographic regions.
Has that shifted throughout the pandemic at all.
Increased competitive intensity in any region in particular that that might be worth, noting and you could make any comments on what you're seeing from new maybe relative to your existing customers that would be helpful. Thank you.
Yes. Thank you for your question I think our brand equity.
We're seeing that event brand equity across all of our markets is very strong.
Part of the share of mind Bill recapture in all markets is wrong, especially amongst young consumers a lot of this.
A lot of this sub brand awareness brand heat is being driven by our.
Some of our collaborations that we're doing.
Coming up soon as our collaboration with the MBA for example, where we are in.
Colorado collaborators to late November in that.
Some some of that is already sold out.
Two our base camp community early.
Yes so.
We're very encouraged by what we see right now.
Tomorrow.
Our brand awareness and desirability perspective in <unk>.
All.
Three of our geographic markets.
Both objectively and relative to our competitive set.
Thank you. Our next question comes from Mark Petrie from CIBC. Your line is open.
Hey, good morning, I, just wanted to ask about store sales productivity I know, there's a lot of noise, but just curious any comments with regards to how sort of the fiscal 'twenty, one and fiscal 'twenty two store cohorts are performing versus some of your older stores and I guess, specifically in China. If you can if you can share any comments, there and then what's a reasonable expectation.
And just with regards to store growth in fiscal 'twenty, three and then.
Longer term network potential.
Yes.
Thanks.
Im.
Our store productivity when it comes to looking at the new cohorts of stores, we've been very pleased.
With the stores that we've been able to bring online.
<unk>.
In the last couple of years to be honest, it's quite good to be a buyer and the sellers market and therefore, we've been able to pick up some really interesting proxy.
Whether we're talking southwest Plaza.
In.
In the U S or whether we're talking about stores that we bought it in Germany, where the source of it.
China.
We've been very pleased with how they've taken off.
We are still very early in the development of our network because.
When the 40 odd stores zone.
That's that's not huge.
In a sector, where there are plenty of people with stores went into three digits.
So will we.
We see plenty of opportunity for growth in the network.
We've always said that we're never going to be a brown with hundreds of stores, we stand by that.
But I think you've also you can also see that we are opening stores in the high single digits to around the 10.
And have been doing that for a couple of years no reason why that shouldn't continue.
And that will take us up towards a number approaching triple digits.
Yes.
Okay.
Thank you.
Our next question comes from Brooke Roach from Goldman Sachs. Your line is open.
Thank you so much for Copel or a question I wanted to follow up on Logan Prior question about brand equity and competitive position.
Local care, a little bit more about how you see the competitive environment in China.
And we'll show you the Lexington, we'll have in the Chinese region.
And Craig.
Sure Ken.
As you'll note around our brand.
In that marketplace.
Thank you.
Yes, and thank you for your question our brand equity in China, specifically.
Specifically, what you are asking about is.
We see as being quite high other macro products. There is high it is.
China is a really large market and there's room for lots of brands there and there are lots of brands, both both international and domestic and amongst those brands.
The demand for our brand is very strong.
And we see that in all of our market research that we do.
And China. In addition to that I think is very important.
As an international brand.
We also.
Hello, Mark specifically.
To China for China. So we have a team on the ground in China marketing, our entire team, including our marketing team is underground in China.
And.
Marketing into a consumer's there along with collaborations that we do in market with local designers.
And.
And in that way, we continue to.
To keep the demand for our brand from our Chinese fans are very high.
Thank you.
Our next question comes from Brian Macnamara from Bahrenburg Capital. Your line is open.
Good morning. Thank you for taking my question I wanted to get your thoughts on the significant volatility in your share price on earnings results specifically in recent quarters. What do you think is driving these big surprises and with your shares very weak today and with I think $2 million left 2 million shares left on your authorization do you believe this is a good.
<unk> to be aggressively buying back stock given your view that the current challenges are temporary thank you.
Thank you for your question I think I believe firmly that is our job to build a long term and strong enduring business that will last for decades and generations to comment I firmly believe that we're doing that and that's not measured in quarters as measured in years and in generations and so when I look at what we.
We've accomplished year after year over the past many years I'm very.
Very proud of what we've been able to accomplish and I think that.
I.
I think that over time.
All of the right number it'll be all of our classes and.
And.
Yeah, Jonathan to talk with some technical details yes.
When it comes to.
The NCI, but you rightly note that.
There is capacity left in the MLP ought to be.
As you also know we privilege investment in the business with.
Free cash flow because that ultimately we believe.
Best use of funds.
To generate returns to shareholders.
That said at times, when we believe that the.
There is an.
Yeah.
Share price in the market.
It is also an option for us to consider.
Working with al.
In CIB.
Thank you.
Next question comes from Camilo Lyon from <unk>. Your line is open.
Thanks, Good morning.
Just to follow up on China, and the store's performance.
I remember hearing correctly, China was up 35%.
But you're you're stores doubled.
Year over year, so it looks at comp stores was down pretty meaningfully.
Jonathan can you parse out the performance of those new stores versus the your existing stores.
And if the commentary that you are starting to see a pick up in performance and productivity in the current quarter is reflective of the entire store base or existing stores, our new stores. Thank you.
So.
Inevitably it at this.
Level of <unk>.
Space expansion.
To conclude that.
Theyre all declines in the comp store base in China.
<unk>.
Certainly what we say.
That said.
We are also seeing.
Good growth.
With the Chinese consumer so.
I don't think you can just look at it in terms of the stores because your wholesale Hudson.
Hello.
Online is up 60% on installs.
Stores are obviously below that.
But I do think that we are seeing very encouraging footfall wincing very encouraging trends.
The new stores that we've been opening around mainland China have all been hitting their numbers, we've been very pleased with that.
That's developing.
Frankly, the disruptions that we're seeing at the moment.
Pretty much driven by the.
Environmental and extraneous factors describing.
Thank you. Our next question comes from Jay sole from UBS. Your line is open.
Great. Thank you for taking my question. My question is on social media activity in China. It seems like the companies social media activity decreased in December Mike <unk> wave.
Weibo and Wechat can you just talk about why that is.
Maybe just operator next question.
Hey, Thanks for your question Jay.
We run our marketing operations in China out of China.
Boots on the ground in our office.
In Shanghai and that is how that is how we speak directly to our Chinese consumer base I think that our.
Our social media presence is strong and.
And has it really helped draw.
Drive our brand awareness in our revenue over the year over the past few years that we've been in China, where as you know we're on Tmall Ron.
JD com or wechat, weibo as well and.
Across all of those platforms, we've been able to cultivate a very strong.
We just can't really in China marketplace.
Thank you.
Our next question comes from Robby <unk> from Bank of America. Your line is open.
Hey, good morning, Thanks for taking my question.
I wanted to ask one more on the U S.
I don't know Danny or Jonathan can you remind us what percent. If you go back to fiscal 'twenty year calendar 2019 can you remind us what percent was tourist driven.
Because I think it was very high right I think and so it would imply that your <unk>.
Core U S customer has grown a lot.
Since 2019 or fiscal 'twenty.
Any kind of numbers you can give us on sort of the growth in sort of the U S.
Customer versus two years ago, and it has the profile changed or is it more stores driving that but it does it does look like.
Tell me, if I'm getting the math wrong, but it doesn't look like it's been pretty impressive growth in U S customers versus two years ago.
Hi.
Yes, there is no question that our visitors arena today, United States has been very strong.
Very robust and certainly due to an absence of.
International tourist traffic has grown.
Driven by local.
Private client and local population.
So we're very pleased with our obviously the growth the growth of our equity our brand.
And awareness and.
The popularity of Canada, Goose and assets and I think that.
Now towards the future and the return on international Tourism, both both too.
Parts of the World to North America.
And to EMEA as well.
Sure.
Got you.
I think that that only bodes extremely well for our for our growth and for our store productivity across all regions.
I think what I would add to that is we've always said that.
Normal times, and Youre talking about baseline that.
We're 50 50 business between tourism.
Domestic demand and that was certainly the case in the U S alongside other.
Other markets I think that.
If you look at the U S. Even now it's pretty much doing the same number as it was pre prototyping.
That's that's really.
Important to say.
Thank you.
We're also as you're thinking about.
Products offered.
We are obviously developing lifestyle alpha.
The non heavy breakdown compliment to you anyway.
And that's enabling us to develop the business across the U S. Not just in the cold weather.
Hence the opening in South Coast Plaza.
If we get grateful that I didn't answer that.
Patients too so we're seeing not just great performance, great momentum and great products.
Thank you and that does conclude our question and answer session for today's conference I'd now like to turn the call back over to Danny Rea for any closing remarks.
Thank you before.
Before we say goodbye for today I'd like to leave you with one final comment and that is that our foundation is strong and our ability to navigate temporary disruptions is absolutely proven and as John noted earlier, our optimism for fiscal 2023 has not changed were confident in our business and our growth potential.
Even without a ford retail traffic recovery globally.
So we can draw again next quarter and thank you everyone. Once again for joining us here today.
Yes.
Thank you. This concludes today's conference call. Thank you for your participation and you may now disconnect everyone have a wonderful day.
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