Q4 2022 Canada Goose Holdings Inc Earnings Call
[music].
Good day and thank you for standing by welcome to the Canada Goose Q4, 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 to 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.
You require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Amy Schwalm. Please go ahead.
Thank you operator, and good morning, everyone with me are Danny Reese, Chairman and CEO , Jonathan Sinclair, EVP, and CFO and Cary Baker President.
Our call today, including the Q&A portion contains forward looking statements each forward looking statement, including our financial outlook is subject to risks and uncertainties that could cause actual results to differ materially from those projected.
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 the risk factors section of our most recent annual report.
Filled with securities regulators.
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 undertake no obligation to update or revise them. Lastly, our commentary includes certain non <unk> financial measures, which are reconciled at the end of our earnings press release.
With that I will turn the call over to Danny.
Thank you Amy and good morning, everyone.
Earlier, we released our Q4 and fiscal 2022 results as well as our outlook for 2023.
Spice to challenges in today's environment I'm proud that we were closing the year with record sales breaking the $1 billion Mark for the first time.
We're also ending fiscal 2022 with confidence and conviction in our brands our business and our team.
It is against this backdrop I will share our plans to achieve an even stronger outlook for the year ahead.
We are excited about the key investments and progress we have made to significantly accelerate earnings growth in fiscal 2023.
We expect to generate between 19 and 21% EBIT margin on revenue between one three and $1 4 billion.
This translates to EPS growth in the range of 47%.
74%.
Turning to our results from the fourth quarter.
From a geographic perspective, our retail performance in North America was the biggest driver of growth.
Consumer confidence remains strong and shoppers have returned to pre pandemic trends.
We saw similar environment in the U K, which drove EMEA.
And the rest of Europe , we saw softer local and international traffic trends.
<unk> was the only region that the client due to ongoing COVID-19 restrictions, including store closures in mainland China.
The Chinese government has a strong track record of being very proactive and continued COVID-19 outbreaks.
We do not expect the prevailing circumstances have a meaningful impact on results in our busiest season, which is reflected in our outlook.
Recently, many peers are pointing to continued production and supply chain challenges as well as logistical delays. This was not a factor for us in the quarter, nor do we expect it to affect the year ahead.
We continue to be uniquely insulated against supply chain issues due to our Canadian manufacturing, which accounted for 84% of our total units in calendar 2021.
As I mentioned earlier, we marked a revenue milestone in fiscal 2022, we also laid the foundation to achieve our fiscal 2023 targets well.
Well on our way so the next $1 billion in cells.
I would like to recap some of our announcements from this past quarter.
Last month Cary Baker, a Canada Goose veteran and previously President of North America was appointed President Canada Goose.
This new rule consolidates, our commercial leadership team and marketing under Carrie I am so excited to see all the carriers are going to accomplish given her incredible track record.
In March we announced the appointment of Belinda Wong Chairman, Starbucks, China, and executive Vice President Starbucks to our board of directors.
Linda has more than 20 years of extensive experience in China, and the Asia Pacific region, and I'm thrilled to have her on our board.
And finally, we're very excited about recent developments to accelerate our business in two key markets in Asia Pacific.
Building on the successful foundation that we've built in mainland China over the past four years.
Recently, we signed a distribution agreement with Lockheed group to significantly grow our South Korea business.
This is a major untapped market in terms of both size and influence. This agreement allows us to further develop our brand and the country's best locations, while providing a clear longer term path to retail expansion and direct participation.
As well in March, we announced Canada Goose, Japan joint venture with our long standing partner signs of relief.
Japan is the second biggest market in Asia, and one of the most influential luxury markets in the world.
This joint venture will have an immediate impact on revenue and gross profit.
We expect Canada Goose, Japan to double this revenue contribution this year versus last year and at a higher gross profit per unit.
This new venture will accelerate our direct to consumer expansion in Japan.
To update you on our progress.
This leads me to the first tenet of our long term growth strategy driving our direct to consumer mix higher.
In 2022, DTC revenue represented more than two thirds of our business at $740 million.
I am incredibly proud of our trajectory, having only opened our first e-commerce site and no less than seven years ago.
Not only is our DTC strategy driving revenue growth, but it is driving the most profitable growth for us.
In 2022 did you see gross margins were 76% with a contribution margin in the high forties.
In fiscal 'twenty, three we plan to continue to expand our retail network, adding up to 13 stores globally.
We also plan to strengthen our e-commerce business by expanding our Omnichannel operations to the U K as well as launching a new ecommerce site in Europe.
Not only they are a direct to consumer business allow us to reach consumers when and where they want to shop. It allows us to build deeper relationships and again even stronger inside.
Penni Brock our Chief marketing Officer, now also leading consumer experience there couldnt be a more passionate person to take this on.
Putting the customer at the heart of every decision we make has long been a top priority for us.
Earlier this month Forbes magazine named Shana to use one of the most consumer centric brands in the world and we cannot be prouder I look forward to the new hyattsville reach underpinned his leadership.
Category expansion is another key driver of our growth strategy we.
We're seeing tremendous success from our year round non part of our offering.
In 2022, we saw our non parka revenue grow by more than 70% driven in large part by our lightweight down vest and apparel.
This represents a huge opportunity for us and I'm thrilled at the success, we're seeing across such a large assortment of product categories.
We also believe our products should reflect our commitment to protecting the planet.
That commitment starts with materials, we choose using more recycled organic and other responsibly sourced inputs.
Our kind of fleece is an ultra soft breathable fabric made with recycled and bio based materials.
This new fleet as.
As one of our latest products to refresh our human nature platform to keep the planet cold and the people on it.
Being a leader in sustainability is another key focus for Canada Goose.
As part of that commitment.
We recently issued our third annual ESG report.
We continue to make important progress on our material and operational goals.
Most recently, we became responsible down certified as a brand and as a manufacturer.
On the operations front, we continue to track well against our goal of net zero carbon emissions by 2025.
In January 2022, I was also very proud to sign Canada goose to the United Nations Global compact.
We remain absolutely committed to respecting and protecting the fundamental human rights of those directly and indirectly a part of our company and supported inclusive safe and healthy working conditions.
Before I turn it over to Jonathan to discuss our results and outlook in more detail I want to thank the global Canada Goose team for all their efforts in building, an even stronger foundation for future success, our brand relevance and pricing power enable us to move with confidence and pursuit of the tremendous growth opportunities in front of us.
Our confidence is reflected not only in our guidance also and a repurchase of over $250 million in shares this past year.
We look forward to an unprecedented year ahead and updating you along the way.
And now I'll hand, it over to Jonathan who will discuss our results in greater detail.
Thank you Danny and good morning, everyone.
With fiscal 'twenty two rep top we're pleased with our momentum I'm optimistic about the year ahead.
Despite new waves of disruption in certain markets, we believe current trends in our business Austral.
Consumer behavior and retail traffic are normalizing in many markets and our unique supply chain has become an even greater advantage.
Carrying this momentum into the year ahead, we have many powerful levers to grow and to increase profitability.
First I will start by looking back at the fourth quarter.
Yeah.
The current quarter ended on April three 2022, and that's one week later than the comparative period.
The seasonality of our business makes the impact of this significant.
For that reason, we have also provided figures that use the same set of trading weeks in both periods.
We believe this better reflects our trajectory going into fiscal 2023.
On a reported basis total revenue in Q4 increased by 7%.
China level DTC growth was 8% and wholesale growth was 4%.
Using the same trading weeks in both periods total revenue would have increased by 24% with DTC growth of 28% and wholesale growth of 8%.
Looking at gross margin, it's great to see the power of our algorithm working so well in these times.
Both DTC and wholesale gross margins expanded compared to the prior year coming in at 76, 1% and 33, 6% respectively.
Going further down the P&L adjusted EBIT margin expanded to five 6% and <unk>.
Adjusted EPS was full sentence.
For the full year, both metrics landed at the top end of outlook ranges with adjusted EBIT margin of 15, 9%.
Adjusted earnings per share of $1.09.
Moving to our outlook for fiscal 2023, the two things that stand out the breadth of our opportunities and the resilience of our operating model.
We have many powerful levers for growth and for margin expansion with a high degree of supply certainty and limited supply pressures.
Starting with the top line, we expect total revenue of between one three and $1 $4 billion.
The DTC.
This assumes low to high teens comparable sales growth alongside continued expansion of our retail network and our omni channel capabilities.
At this stage of our journey in DTC like for like growth becomes the biggest driver and we will be providing this to you as we progress through the year.
The total channel is projected to reach 70% to 73% of our total revenue this year.
In wholesale.
We expect revenue to increase by approximately 6% continuing our strategy of controlled complementary growth.
From a geographic perspective, our major new catalyst is our recently formed joint venture, Canada Goose, Japan with a former distributor Sotheby League.
We expect the JV to contribute $60 million to $65 million in total revenue in fiscal 2023.
The timing of this revenue is somewhat later in the year.
As wholesale shipments to the JV will no longer be recognized as revenue upon shipment.
As Tani mentioned this unlocks a more significant unprofitable Japanese business with a longer runway.
We expect to realize an immediate uplift in revenue per unit from our existing volume in this market.
We also have a stronger economic model to fund DTC expansion and bring the full breadth of Canada goose to the consumer alongside the local expertise of a trusted would cost part of it.
Another key contributor to our outlook is product expansion.
Non parka revenue grew by 17% in fiscal 2022.
Alongside continued growth in our cool consumers are embracing our earliest stage categories.
We expect these products to continue outpacing the overall growth of the business.
Certainty of supply and a dynamic external environment is another important piece of confidence behind that outlook.
While others are now starting to bring back production, we've always been there.
In our most recent calendar year.
84% of the units made all purchased well from Canada, followed by Europe with 14%.
This geographic mix is very unique.
We are not experiencing any significant supply disruptions and we're going into the coming year with a high degree of flexibility in our inventory position.
Moving pulsed revenue first.
Fiscal 2023 represents a major step up in profitability with an adjusted EBIT margin of between $19 to 27%.
This is underpinned by three key drivers of gross margin expansion lower SG&A growth and improved retail productivity.
We expect consolidated gross margins to be in the high <unk> as a percentage of total revenue with expansion driven by the DTC mix shift.
At an individual channel level, we feel good about preserving cash.
Typical levels, while funding investments in earlier stage categories.
We have a long history of taking price in excess of cost inflation, which is grounded in the quality and functional value that our products provide.
As a vertically integrated manufacturer with high AUR products, we have fewer inflationary pressures.
As restrictions in our manufacturing facilities have subsided.
Output is ramping up and overhead absorption is improving providing an additional tailwind.
To finish on gross margin in wholesale specifically, we have a one time step up from the conversion of all Japanese business shifting from our largest distributor market to a joint venture as we know.
Noted in the past international distributor sales come in at a significantly lower gross margin compared to a direct sale to a wholesale partner.
This change eliminates that.
The second driver is lower SG&A growth fiscal 2022 was a year of significant upfront investment, including all footwear launch.
We also resumed our much more offensive stance with demand creation and operational spend coming out of the first wave.
Weighted to the earlier parts of the year.
For fiscal 2023, we expect a lower level of growth in SG&A.
The last piece is retail productivity.
We expect improved traffic alongside lower levels of closures and restrictions to drive greater profitability in all stores.
In markets, which are currently unrestricted we have seen a strong rebound from local consumers as well as the green shoots and international traffic from North American and European consumers.
I'll now turn the outlook is not dependent on a full recovery of international traffic no on the return of traveling Chinese consumers.
Bringing all of this together, we expect adjusted EPS in the range of $1 60 to $1 90.
Representing growth of 47% to 74%.
This is purely organic.
The underlying share count does not assume any incremental share buyback activity.
Before we wrap up.
Like to touch briefly on our embedded view for quarter one.
We expect total revenue of $60 million to $65 million.
In our seasonally smallest quarter. This represents a lower rate of growth than the annual expectation for two reasons.
The first is ongoing closures and restrictions in mainland China full.
All stores are currently closed with traffic significantly impacted those are open.
E Commerce logistics have also been disrupted.
Well generally consumers in this market are understandably not immediately focused on discretionary consumption.
We believe that this is a transitory headwind and a very low impact trading period.
Underlying brand demand remains robust.
Our experienced in the first wave also shows how quickly and significantly mainland China has rebounded from disruption.
Our outlook assumes a return to regular trading levels in this market during the peak selling season.
Yeah.
The second dimension is the conversion of our Japanese business to a joint venture, which shifts revenue recognition later from shipments to the distributor the shipment to the wholesale partner.
Q1 was previously a significant shipment window to this partner each year.
For this reason I only this reason, we expect wholesale revenue growth to be slightly negative.
For adjusted EBIT, we expect a loss between 18 and $75 million.
That flows down to an adjusted loss per share of <unk> 64 cents to 60.
In closing, we navigated through a disrupted and came out stronger.
Eagerly looking at the year ahead with accelerating growth markets I'm rising consumer demand for emerging product categories.
In addition, <unk>.
Improved retail productivity gross margin expansion and reduced SG&A growth will drive our bottom line.
Underpinning all of this is our unique supply chain, which enables us to always have products available and to effectively navigate a more.
<unk> environment.
We are very optimistic for the year ahead, and confident our strong momentum will make fiscal 'twenty three are stand out yet.
With that I will pass this over to the operator to begin Q&A.
As a reminder to ask a question you will need to press star one on your telephone.
With your all your question press the pound key.
So you please limit yourselves to one question. Please re queue to ask another question to allow time to answer one question. Please.
Please standby, while we compile the Q&A roster.
Our first question comes from the line of <unk> from Wells Fargo. Your line is now.
Hey, good morning, everyone purchase congrats to carrying kind of curious stepping into the new role what are your biggest priorities are to take the brand to the next level and then maybe Jonathan just more specifically on the outlook. Thank you. So much for all the quarterly cadence that's helpful. But the comment on mainland China can you just expand on how we should think about the bridge.
From <unk> to <unk>.
Youre talking about returning to regular trading by peak season, So does that mean youre assuming.
<unk>.
Business under pressure in the second quarter and when you say returning to normal I think.
So along those lines for peak season is that relative to pre COVID-19 levels, just trying to understand exactly what is embedded for China. During your peak season sales. Thank you.
Good morning, guys. Thanks for that.
I'm very excited to take on the new role and to work alongside Danny is at the day to day lead on global commercial operations, which will give him more bandwidth for a long term strategic initiatives.
When I think about all of the commercial opportunities in front of US My biggest priority is to make sure that we execute with excellence and that means being purposeful disciplined about creating impact in everything we do is that both from a consumer perspective, but also from a financial perspective.
The Great News is we have an incredible brand a strong business model and the incredible team to bring that all Patricia.
Okay.
If I may.
Let me just talk a little bit about China.
Obviously.
Yes.
We've seen mainland China being negative.
In Q4 and right now they were closures no disruptions.
And what we are what we're looking for is a gradual.
Bill.
As China opens up again now what we do know.
Is that.
We've seen these types of disruptions before.
And we've seen that they've been typically quite temporary.
Mainland China has proved to be a market, which has bounced back quite quickly Paul.
Thanks Chi.
Obviously expecting Q.
Q1 to be heavily impacted.
And then as we move forward Q2, showing that gradual improvement and a normal level of business.
Thank you. Our next question comes from the line of Oliver Chen from Cowen. Your line is now open.
Hi, Good morning. This is Katie on for Oliver. Thanks, So much for taking my question.
Would love to know a little bit more about.
The wholesale channel and how that's sort of progressing versus your expectations and sort of what are you seeing within the wholesale channel and is there any sort of deterioration on the consumer front, there or is it just about it.
Thank you so much.
And thank you for your question, our wholesale channel and is progressing.
As expected and very well last year, our sell throughs at wholesale were very very strong.
And we're happy with that this year, our wholesale order book has increased as expected.
And then just.
We continue to.
T J.
Sellers too.
Brent.
Consumers.
Been responding very well.
David.
Consumer behavior is preserved.
Awesome.
No I'd say, it's an absolute net charge and we're really excited to see that.
On channel and through wholesale channels.
Hi, guys.
The wholesale.
Assumptions behind our guidance.
Obviously founded on older book.
So.
We feel pretty good trends.
Thank you. Our next question comes from the line of Jonathan Komp from Baird. Your line is now open.
Yeah, Hi, good morning. Thank you I wanted to ask about the initial revenue growth guidance for 18% to 27% growth could you maybe just help bridge that difference.
Impaired to your typical thinking I think pre COVID-19 several years ago.
<unk> had three year targets closer to the mid to high teens. So maybe if you can reconcile the difference this year and then on the earnings growth going forward given that the EBIT margin still has quite a bit below peak do you think there could be.
Several years ahead, where you see faster than the typical I think it was 20% earnings growth that you used to outline.
So taking those.
In sequence.
The revenue growth.
Now, we're looking at a healthy level of comp.
Underpinning.
Depending how we see the business developing.
Barry.
Very clever about all pricing power, we're very clear that that's going to enable us.
To to see some of that some components that together with some more some unit as well.
So.
Alongside of course the.
The developments of <unk>.
The retail network.
We've already talked about wholesale wholesale.
We obviously, we've shown a range box.
Uncertainties at the moment, we feel pretty good about this level of growth.
Its environment and we see this as very consistent.
Yes.
Sure.
On earnings.
Clearly getting ourselves back to the 20% Mark and beyond.
It's very important something that.
Big focus for us.
This year.
An important step in the journey, but it's an important it's not meaningful.
So as the business continues to grow.
I see this as something we should.
We expect to see continue for some time to come.
Yeah.
Okay. Thank you.
Yeah.
Thank you. Our next question comes from the line of Michael Binetti from Credit Suisse. Your line is now open.
Hey, guys. Thanks for all the additional detail in the press release on the guidance here very helpful.
Maybe I know you said I think you said 66 5 million in the distributor change.
I just want to clarify maybe you can help us think about how much is.
Incremental and the Japan Korea change.
Two the revenues you're generating last year under the old distributor model and how that change influence is the how much that change influences. The overall company margins.
Accretive or dilutive I guess and then.
I think when we talked a few quarters ago, and then last quarter you thought.
Maybe margins could get above 20%. This year, you talked about a lot of room for expansion I thought 'twenty was a low watermark I see you have at least low end of the range a little bit below that right now I'm more wondering if you embedded incremental conservatism since we talked about that or you know relative to China or anything going on or if there are some new costs that you've contemplated.
<unk> you want to go after for the business this year.
Okay. Thanks, Mike.
I'm going to talk let's talk about JV Festival obviously.
Optical change.
In the reported level of revenues.
No.
And so.
Black Diamond essentially is.
The open.
<unk> impact on the on the road.
Revenue.
Market.
Over time, we think this is a very high.
EBIT margin market.
Alright optimistic about as we see that is founded on the.
Elements of DTC is an important component of our system.
Thanks, Ed.
Welcome.
And.
We expect to see a lot of activity there.
JV.
Amongst them.
We're very sorry.
So I wouldn't see that changing.
When it comes to margins overall.
Just how do we describe 20 percentage point on the journey.
Dealing with.
Certainties.
Frankly in this quarter, we're not expecting to do any material business in mainland China.
What's embedded in the comments we've made.
And therefore.
Year to date.
In the ranges that we've given so as things improve.
They will then.
We resume our journey.
We'll see.
And Jordan.
The fundamental earnings model hasn't changed.
Yes.
That'd be great.
For the second half Jonathan.
The fundamentals have not changed.
And then if we were in the 25% range and we expect.
Get back there.
Beyond that.
Can you on our journey towards 30 as international tourism.
Profit trends back to normal.
Yeah.
Thank you. Our next question comes from the line of Megan Annette from TD Securities. Your line is now open.
Thank you good morning, looking at the balance sheet is still in a position of strength.
Can you give us an update on your capital allocation priorities, specifically, how youre thinking about share repurchases in fiscal 'twenty three and is there anything we should be thinking about in terms of major capital investments forthcoming near term. Thank you.
So.
Our capital allocation priorities haven't changed.
In the sense that the best use of cash for US is to invest in this business. We can continue to enjoy very high ROI.
And our store sites and obviously, that's an area we continue to invest in.
The.
We also invested all manufacturing facilities as well as Paul scaling the business as we continue to grow.
But fundamentally we don't see a very different level of underlying capital capital expenditure.
To the extent that we.
Have we built surplus.
Capital.
Up in the business then we look at how we how else we might allocate that we've seen in the past when we believe there are opportunities.
We have.
Been in the market.
As to the buyback and CIB is fully exhausted.
We will keep that under review.
Okay.
Thank you. Our next question comes from the line of Brooke Roach from Goldman Sachs. Your line is now open.
Good morning. Thank you so much for taking our question can you provide some color on the assumptions that underpin your confidence in achieving a low to high teens comp improvement in your DTC business. This year, how does that break down by geography, and then specific to the North American domestic consumer where momentum has just been particularly strong how are you planning the year.
In that region. Thank you.
So when we.
In terms of.
The comparable growth.
We are.
Assuming tools <unk> festival with golf, the normal impact of pricing.
Bolstering our product categories, we expect unit growth, but I think we have as I mentioned is of course, we do expect a gradual resumption of traffic to continue.
Therefore, that's something that we are factoring in as well.
We feel this level of.
Comparable growth as egregious as business continues to move back.
And therefore, we feel pretty confident about it Paul.
<unk>, two <unk> talk a little bit about the North Americans.
Please.
So for North America, we see continued growth, obviously very strong at home in a mature market, but the U S. In particular I would say is this.
Early days, we have store opportunities, we have opportunities to get outside of the northeast and that's what we've already seen through this year and expect that to continue next year as well.
[laughter].
Thank you. Our next question comes from the line of Aegean is from Barclays. Your line is now open.
Good morning, it's great to see the progress.
Danny I wanted to.
He has taken on the comments that you made.
About the pricing so where are you relative to 2019 pricing levels. What are your initial price increases for 2022, and I know you don't have to give them and maybe get some color because I imagine you don't want to get the actual number.
And then maybe Jonathan can you relative to average unit cost you'd said that the price increases would be above kind of the inflationary aspect of it can you give any color on maybe how that impacts.
The flow through of the basis points on gross margin. Thank you very much.
Thank you for your question, so our ability to.
Our ability to continue to take price.
Year after year is one.
<unk>.
It is one that.
It is underpinned by the value that we are running a program every year.
Right.
Yeah.
Thanks.
And that is we tightened.
Our best in class, maybe in Canada. They perform function first and I don't believe that there is a better value to product in the market of our time today.
And Thats what.
Enables us to have the levers to increase our prices.
And I think when it comes to thinking about the cost pressures than not that significant marine but when manufacturing of all of this ourselves.
That helps.
One <unk>.
We havent seen we do see some cost price pressure in raw materials, it's not particularly significant but when you're dealing with margins that are fundamentally blinded.
And relatively high AUR.
And then actually you don't really see too much pressure on it. The other point is I'll remind you the algorithm that we use is one a tailwind.
The title wins include pricing includes Skype.
Includes sourcing.
And we invest of course in input pricing.
But also in new product development, and new category doable and therefore at a.
Gross margin.
We see management's job keeping the margins, where they are and then continuing.
Continuing to invest in the development of the product categories.
Thank you. Our next question comes from the line of Neil.
Your line is now open.
Thanks, and good morning, everyone.
I think you mentioned that Youre planning on planning on opening 13, new stores can you tell us where the source of our plan to open and and then I think Jonathan you talked about Q3 returning to.
Normalized levels of productivity in China can you just remind us what those look like.
We're actually if that's true for your assumptions on our store productivity level for China and.
And how that might compare to a more mature market level of productivity like in North America.
Thank you Sheila for your question.
So we're currently planning to open 13, new permanent stores.
Around the world.
These are relatively balanced geographically.
Almost.
Yes.
Including significant contribution from the states.
EMEA and mainland China and Japan.
It's balanced across all those markets.
Okay.
And then when it comes to China.
China I think the other thing that's really important to remember is that we have enjoyed and continue to enjoy similar levels of sales density in mainland China that we do in the rest of the world. So when that business is not.
<unk> in terms of traffic and Thats, what we enjoy and that's what we expect to enjoy this yet.
Thank you. Our next question comes from the line of Robbie Robbie <unk> from Bank of America. Your line is now open.
Hi, Thanks for taking our question. This is Alex Perry on for Robbie I'm, just first I wanted to ask and what does the guidance assume for North America store traffic, maybe I think you talked about some green shoots you're seeing in terms of the international tourists, maybe give us a little more color there and are you back to pre pandemic traffic levels.
And your domestic stores, despite the absence of the international travel traveler. Thank you.
So as far as North America, generally I'm going to segment that into the U S and in Canada.
I think when it comes to the U S. We already talked about the fact that we were seeing a very strong rebound.
In traffic and pre pandemic levels of sales.
And we talked about that extensively at the end of Q3.
I think that.
That's something we expect to continue.
Remember, we did all of that with pretty much domestic traffic.
I think when it comes to Canada.
When it comes to the domestic component of all traffic that is coming back to where it was.
International will come back when it comes back.
Perfect. Thank you.
Thank you. Our next question comes from the line of Mark Petrie from CIBC. Your line is now open.
Hey, good morning, I just wanted to follow up on that last question and again sorry.
Okay.
But if you can share any.
I'm not sure with regard to that.
This favorable mix and the sales growth sort of by category versus other markets. So not looking for specific numbers of course, but just on a relative basis is there any difference in the take up on <unk>.
Light weight down accessories or footwear in Canada versus other markets and then also appreciate that you take a measured approach to new product launches, but just wondering if you could share any comments with regards to the response to.
The footwear launch and anything you can share with regard to your expectations for growth in fiscal 'twenty three.
I think the important thing to understand.
Is that.
Less about.
The geography and more about the China side.
In other words, what's important to US is how we tell stories around our new product categories, how we build our consumer franchise.
And how we make those adjacencies.
In our stores around the world.
Therefore.
That we deploy in Canada.
<unk> in the U S that we deploy in Europe , and we deployed in Asia.
That's the global footprint.
Therefore, we don't see a differential.
How consumers react to it because it's all about how we tell the story, we may see a difference in how consumers react and wholesale businesses.
Obviously, we're curating the motherboard.
<unk>.
Indeed, we will typically privilege orange.
As we introduce new products.
Yes, Anthony I would just add to that.
Two.
To speak a little bit to footwear, it's a really exciting new category for us which is high.
And done well.
The new perspective to the marketplace.
Existing space in the market.
We believe the significant white space.
Comparable product, but is that at this stage the collections.
It's small.
Distribution.
That's typically how we manage new categories and grow into them and that means it is not a significant revenue contributor today, but we do expect that it will be material contributor in the long term.
Yes.
This is a standard part of our playbook, which is to take a disciplined gradual approach to building new categories.
I'm really excited about what lies ahead.
Because I know that this category.
Right.
Thank you. Our last question comes from the line of Jay sole from UBS. Your line is now open.
Great. Thank you so much for taking my question I guess I was just hoping you can elaborate a little bit on your comment that your outlook does not depend on a 100% return of international traffic or return of tourism from China.
Can you just maybe tell us what the incremental sales impact would be if there was a 100% return of international traffic or a return from tourism from China, and then sort of compare that to the dollar figure that you expect in the guidance from those factors.
Thank you Dave for your question.
We didn't feel it was responsible to include a full return.
International Tourism from China, It's really anybody's guess as to when Thats going to happen lots of people are getting lots of years and we're off.
We did not include any of that and I haven't so I would say that if it works all return whenever that might be I would ever point in time, I would imagine it would be pretty significant amount of money.
Yes at this point.
Return on assets.
None of it in our guidance.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
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Yes.
Yes.
Yes.
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Okay.
Okay.