Q2 2024 Canada Goose Holdings Inc Earnings Call

Good morning, and welcome to the Canada Goose Q2, 'twenty 'twenty four earnings call.

All participants are in a listen only mode. After the speaker's presentation, we will conduct a question and answer session.

To ask a question you will need to press star followed by the number one on your telephone keypad.

As a reminder, this conference call is being recorded.

I would now like to turn the call over to Ana Raman head of Investor Relations. Please.

Please go ahead Ms Robyn.

Thank you operator, and good morning, everyone with me are Dani Reiss, Chairman and CEO, Jonathan Sinclair, EVP, and CFO and Cary Baker President.

After Danny's and Jonathan his prepared remarks, we will open it up for your questions our call today, including the Q&A portion.

Forward looking statements.

Each forward looking statement, 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.

Certain material factors and assumptions were considered and applied in making these forward looking statements.

Additional information regarding these statements factors and assumptions and regarding material factors that could cause actual results to differ from those projected is available in our earnings press release issued this morning.

As well as in our filings with U S and Canadian 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 any of these statements.

We report in Canadian dollars. So all amounts discussed today are in Canadian dollars unless otherwise indicated.

Please note that financial results described on today's call. We will compare second quarter results ended October one 2023 with the same period ended October the second 2022 unless noted otherwise.

Lastly, our commentary today will also include certain non ifr S financial measures, which are reconciled at the end of our earnings press release.

With that I'll turn the call over to Danny.

Operator: Good morning and welcome to the Canada Goose Q2 2024 earnings call. All participants are in a listen only mode. After the speakers presentation, we will conduct a question and answer session. To ask a question, you'll make a press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded.

Thanks, Anna and good morning, everyone.

<unk> solid second quarter results reflect the strength of our iconic Bryant G global markets and progress across our strategic initiatives.

Our Q2 fiscal 2020 for revenue was in line with our expectation of 281 $1 million.

Ana Raman: I would now like to kind of call over to Ana Raman, Head of Investor Relations. Please go ahead, Ms. Raman. Thank you, operator, and good morning, everyone.

As soon as the top end of our earnings guidance range as we balance investments in our growth initiatives with a focus on operational discipline, delivering $15 6 million in adjusted EBIT.

Ana Raman: With me, our Dani Reiss, Carement and CEO, Jonathan Sinclair, EVP and CFO, and Carrie Baker, President. After Dani's and Jonathan's prepared remarks, we will open it up for your questions. Our call today, including the Q&A portion, includes forward-looking statements.

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And adjusted earnings per share for.

For Q3.

More conservative approach with regards to our expectation given the macro environment, we see across many of our markets today as a result, we are revising our full year outlook.

The moderation in sales growth and continued investments in our priority.

Ana Raman: Each forward-looking statement, 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. Certain material factors and assumptions work considered and applied in making these forward-looking statements. Additional information regarding these statements, factors, and assumptions, and regarding material factors that could cause actual results to differ from those projected, is available in our earnings press release issued this morning, as well as in our filings with U.S, and Canadian securities regulators. These documents are also available on the Investor Relations section of our website.

Balanced with prudent expense actions John.

Jonathan will expand on both our second quarter results and updated guidance.

In Q2, more consumers came to shop with Canada Goose.

Same period last year as our brand continues to capture the attention of shoppers around the world.

Our innovative high performance products and elevated luxury experience are resonating with our loyal consumers, who even with this high inflationary backdrop are returning to enjoy more of our offerings.

As we continue to navigate an uncertain global macro landscape our business is prepared for anticipated demand and Mr reduced visibility.

While this macro environment presents a headwind we remained focus on building for the long term guided by our three strategic pillars.

Rivaling consumer focused growth building and PTC network and expanding our product categories.

I will take you through the progress we've made on each of these pillars.

Ana Raman: 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. We report in Canadian dollars, so all amounts discussed today are in Canadian dollars unless otherwise indicated. Please note that financial results described on today's call will compare second-quarter results ended October 1, 2023, with the same period ended October 2, 2022, unless noted otherwise. Lastly, our commentary today will also include certain non-IFRS financial measures, which are reconciled at the end of our earnings press release.

First driving consumer focus groups.

Q2, DTC channel revenue of $194 million was up by 15% compared to the same period last year.

Top priority here is investing in our brands to inspire and engage with consumers and drive desirability through customer experiences.

Is it any more he campaigns and partnerships.

Starting with our distinctive elevated luxury retail experience that we call Canadian warrants, which defines the kennedys this customer journey.

In Q2, we began to rollout the Canadian Whomp experienced across our store network.

During our pilot phase showed a positive uplift in conversion.

This is important as we look to capitalize on our strong profit trends.

While the first one conversion across our network are not expected to completely take hold immediately we are taking a test and learn approach to guide us moving this metric up into the right.

Dani Reiss: With that, I'll turn the call over to Danny. Thanks, Danny, and good morning, everyone. We delivered solid second-quarter results. We've left in the strength of our iconic brand in the key global markets to progress across our strategic initiatives. Our Q2 fiscal 2004 revenue was in line with our expectations at $281.1 million, and we exceeded the top end of our earnings guidance range as we balance investment in our growth initiatives with a focus on operational discipline, delivering 15.6 million in adjusted even in 16 cents in adjusted earnings per share.

Second our brand marketing campaigns.

In September we launched our fall Winter campaign, featuring three Trailblazing women, who represent the Canada Goose. These dose all the living their authentic lives out in the open.

The early weeks of this campaign has been very successful achieving well over 1 billion media impressions.

In late October we held our largest event to date in China as we celebrated our fifth anniversary of our first brick and mortar store in the region.

Dani Reiss: For Q3, we are taking a more conservative approach in regards to our expectations given the macro-environment we see across many of our markets today. As a result, we are revising our full-year outlook to reflect the moderation in sales growth and continued investments in our priorities. Balance with critical expense.

We welcomed nearly 500 guests or event held in Shanghai during which.

They took in our first ever fashion show in the country, which was held outdoors event with one of our most successful activations in the market so far resulting in over 3 billion media impressions.

Dani Reiss: Jonathan will expand on both our second world results and update guidance for us. In Q2, more consumers came to shop with Canada Goose, but in the same period last year as our brand continues to capture the attention of shoppers around the world. Our innovative high-performance products and elevated luxury experience are resonating with our loyal consumers who, even with this high inflationary backdrop, are returning to enjoy more of our offerings.

Chinese shoppers continued to be a driver of our growth both inside and increasingly outside of the country.

As of Q2, we had 21 stores in China position that we have opportunistically backed by strong.

Demand for our brand in this market and knowing that this would position us well.

All of them independently.

I was in China last month for our five year anniversary celebration and visiting our stores and met with her customers and I was pleased to see the level of process in the stores and truly impressed with the guest experience our customers are receiving.

Dani Reiss: As we continue to navigate on certain global macro-at-landscape, our business is prepared for anticipated demand, admitted reduced visibility. While this macro-environment presents a headwind, we remain focused on building for the long term guided by our three distributive pillars, driving consumer focus growth, building our DTC network, and expanding our product categories, and we'll take you through the progress we've made on each of these pillars. First, driving consumer focus growth. Due to DTC channel revenue of $109.4 million was up by 15% compared to the same period last year.

Similar approach to brand building partnerships to risk, we continue to drive cultural relevancy and tap into new audiences, one important aspect being product collaborations.

In September we launched a collaboration with London based fashion House rock and artist Matt Mccormack.

Lucid pieces for women.

Products from this collab, where feature across the West Canada Goose stores in place with strategic and influential fashion retailers like Dover Street market.

In October we launched another collab with luxury streetwear brand pure mass featuring a colorful limited edition capsule inspired by the Street culture, and Brooklyn children's both men and women.

Dani Reiss: Our top priority here is investing in our brand to inspire and engage consumers in drive desirability through customer experiences, targeting marketing campaigns, and partnerships. Starting with our distinctive, elevated luxury retail experience that we call Canadian warmth, which defines the Canada's customer journey. In Q2, we began to roll out the Canadian warmth experience across our store network, which during our pilot phase showed a positive uplift in conversion. This is important as we look to capitalize on our strong traffic trends. While the effects on conversion across our networks are not expected to completely take hold immediately, we are taking a test and learn approach to God as in moving this metric up into the right.

Both clouds are seeing solid reception from our customers and more importantly, growing exciting media coverage globally and building brand awareness around the world.

Turning to our second pillar building our DTC now.

In Q2, we opened six new permanent stores. In addition to the conversion of two temporary storage to permanent during the quarter. We had 62 permanent stores at the end of the period.

We opened new stores in L, a Atlanta and Philadelphia in the United States.

In mainland China, we opened a store in Tianjin and our second store in Shanghai and in <unk>.

Japan, we opened our second store.

With 90, new permanent stores opened so far in fiscal 'twenty four we are well positioned with consumers in our key geographies as we enter the holiday shopping season.

Dani Reiss: Second, our brand marketing campaigns. In September, we launched our fall winter campaign, featuring three trail living women who represent the Canada youth ethos, holding living their authentic lives out in the open. The early weeks of this campaign have been very successful, receiving well over a billion media impressions. In late October, we held our largest event to date in China, and we celebrated our fifth anniversary of our first brick and mortar store in the region.

We also opened our first travel retail store in the Frankfurt International Airport in September.

We're just a month into his opening and the store is off to a good start receiving positive feedback from customers as they connect through this important international hub.

Probable retail as a new part of our wholesale programs and were eager to test and learn in the selling environment as we refine our growth plan and attract a brand new type of clientele traveler.

Dani Reiss: We welcomed the 500 guest store event held in Shanghai, during which they took in our first ever fashion show in the country, which was held outdoors. The event was one of the most successful activation in the market so far, resulting in over 3 billion media impressions. Chinese shoppers continued to be a driver of our growth, both inside and increasingly outside the country. As of 2-2, we had 21 stores in China, positioned that we have built opportunistically, backed by strong demand for our brand in this market, and knowing that this would position as well, follow in the pandemic.

Let's now talk about DTC home sales, which include both in store and online sales.

DTC comp sales were down 7% year over year as total store comp sales increased slightly offset by a decrease in the E Commerce revenue.

While profit grew significantly both online and offline across all regions DTC comp growth was down in the U S EMEA and mainland China.

Growth in Hong Kong, Taiwan, and Macau was robust fueled by the return of mainland Chinese tourists.

Dani Reiss: I was in China last month for our five year anniversary celebration and visited our stores and met with hot customers, and I was pleased to see the level of profit in the stores and truly impressed with the guest experience our customers are receiving.

Canada DTC growth also increased particularly in cities with high levels of tourism, including Vancouver and Toronto.

Dani Reiss: Our third approach of brand building is partnerships through which we continue to drive cultural relevancy and tap into new audiences, one important aspect of being product collaborations. In September, we launched a collaboration with London-based fashion house Brock, an artist Matt McCormay, that included eight exclusive pieces for women. Products from this collab were featured across select Canada Goose stores in place of strategic and influential fashion retailers like the over street market. In October, we launched another collab with luxury streetwear brand Pierre Moss, featuring a colorful limited edition capsule inspired by the street culture in Brooklyn catering both men and women. Both collabs are seeing solid reception from our customers and more importantly, growing exciting media coverage globally and building brand awareness of round the world.

Overall, we saw softer conversion in Q2 year over year, which we believe may be due to the macroeconomic environment with consumers spending closer to need exacerbated by the later onset of cold weather that many regions had been experiencing in.

Turning to online commerce, although our stores contributed the majority of our DTC revenue in Q2 E. Commerce is an important part of our broader strategy to create a seamless omnichannel experience.

We are investing in the end to end online shopping journey to drive better conversion and minimize returns.

On the front end, we continued to implement new features such as a size and fit module, while enhancing the Bakken through improvements in merchandising navigation and site architecture and performance just to name a few initiatives.

In Q2, we made good traction in both hot and middle of the funnel activities.

Increasing visits to our product pages and additions to occur.

Dani Reiss: Turn into our second pair building our DTC network. In Q2, we opened six new permanent stores. In addition to the conversion of two temporary stores to permanent during the quarter, we had 62 permanent stores at the end of the period. We opened new stores in L.A. Atlanta and Philadelphia in the United States. In mainland China, we opened a store in Tianjin and a second store in Shanghai. In Japan, we opened a second store in Tokyo.

Or overall hugely DTC comp results were non ideal our teams are actively working to change this dynamic and trajectory to drive topline growth such as converting on the strong profit trends, we have had in the quarter our cost per owned channels.

Turning to our third pillar expanding our product categories.

In Q2.

The demand for non heavyweight them Cross group expanding its share of revenue within the overall mix.

Dani Reiss: With nine new permanent stores opened so far in fiscal 24, we were well positioned with consumers and our key geography as we entered a holiday shopping season. We also opened our first travel retail store in the Frankfurt International Airport in September. We're just a month into its opening and the stores off to a good start receiving receiving positive feedback from customer and they connect through this important international hub. Provo retail is a new part of our wholesale province and we're eager to test and learn in the selling environment as we refine our growth plan and attract a brand new type of clientele traveler.

While total sales for February down were flat year over year revenue in this category grew with energy GG channel, reflecting continued strength for our core products.

Within non heavier weight down rainwear was our fastest growing category in the second quarter followed by apparel.

So our fleece bomber Huron has an hoodie and hybrid jacket with the most popular apparel pieces with our customers.

When we look at who is purchasing of non heavy with them products. In Q2, we see that more of a repeat customers are coming back to the branded loved to purchase additional items.

Dani Reiss: Let's now talk about DTC con sales, which include both in store and online sales. DTC con sales were down 7% year over year as total store comp sales increased slightly offset by a decrease in e-commerce revenue. While traffic grew significantly both online and offline across all regions, DTC con growth was down in the US, India and mainland China. Growth in Hong Kong, Taiwan and Macau was robust fueled by the return of mainland Chinese tourists. Canada, DTC growth also increased particularly in cities with high levels of tourism including Vancouver, Banff and Toronto.

This is another reason that we're focused on offering customers amazing authentic experiences that keep them returning for more.

And then our footwear category sales of our recently launched sneaker Atlanta in July ramped up and remained at consistent levels through the second quarter and I'm happy to see the category performing to our expectations.

Taking a step back we are executing on our product roadmap and we're excited with the newness were injected into our upcoming product Assortments part is always top of mind for us and I and our design teams are actively working with top tier design talent to ensure the execution against our product roadmap continues during this time of transition.

In closing can I use is first and foremost about our products. We don't compromise on our vision of being a leading luxury brand, which is defined by our high performance style and craftsmanship.

Dani Reiss: Overall, we saw software conversion in Q2 year over year, which we believe maybe due to the macro economic environment which consumers are spending closer to need exacerbated by the later onset of cold weather that many regions have been experiencing. Turning to online commerce, although our stores contributed the majority of our DTC revenue Q2 e-commerce is an important part of a broader strategy to create a seamless on the channel experience. We are investing in the end to end online shopping journey to drive better conversion and minimize returns.

Although we are facing an uncertain and challenging global macroeconomic backdrop at this time, our fundamentals are strong and we look forward to see many more people enjoy Canada goose products in the months and years ahead.

Before I hand, the call over to Jonathan I want to congratulate him on his appointment to the role of president of APAC any about it on taking on the role of Chief Financial Officer, both of which will be effective on April one 2020 for both.

Dani Reiss: On the front end, we continued to implement new features such as a side and spit module while enhancing the back end improvements and merchandising navigation inside architecture and performance, just to name a few initiatives. In Q2, we made good traction in both top and middle of funnel activities, increasing visits to a product pages and additions to cards. Overall, Q2 DTC comp results were non-ideal. Our teams are actively working to change its dynamic and trajectory to drive top-line growth.

Both Jonathan and Neil have deep experience with Canada use, allowing for a smooth transition between role and continuity.

Across the business, while supporting our growth and expansion in APAC.

Thank you and with that I'll hand, it over to Jonathan.

Danny and good morning, everyone.

We're pleased with our solid top and bottom line performance in the quarter, reflecting demand and strong operational discipline.

Revenue for the second quarter was $291 $1 million up 1% year over year.

Dani Reiss: Turn to our third pillar, expanding on product categories. Thank you to the men for non-heavyweight downclaws grew, expanding its share revenue within the overall mix. Well, total sales were heavily down, were flat and over your revenue in this category grew, with energy to each channel, or something continuous strength for our core product. With a non-heavyweight down, Rainware was a fastest growing category in the second quarter, followed by a peril. So, at Feliz Bomber here on Pants and Hoodie in the hybrid market, with the most popular apparel pieces with our customers.

Driven by growth in our DTC channel.

On a constant currency basis revenue was down 3% year over year as the euros strength against the Canadian dollar.

DTC sales of $109 $4 million grew 50% or just under 12% on a constant currency basis over the same period last year as a result of retail store expansion.

DTC revenue was 39% of total sales in Q2 compared to 34% in the second quarter last year.

Dani Reiss: When we look at who was purchasing a non-heavyweight down products in YouTube, we see that more of our repeat customers are coming back to the branded love to purchase additional items. This is another reason that we are focused on offering customers amazing authentic experiences to keep them returning for more. In our footwork category, sales of a recent and lost sneaker at line in July, ramp up and remain at consistent levels through the second quarter, and I'm happy to see the category performing to our expectations.

As all store footprint expanded and consumer demand increased and a more profitable DTC segment.

We continue to intentionally shift our proportion of channel revenue to sell directly to end consumers.

Q2 wholesale revenue of $162 million was down 10% year over year or 15% down on a constant currency basis due to the planned streamlining of our wholesale partners.

Dani Reiss: Taking a step back, we are executing on our product roadmap, and we're excited with the members we're injecting into our upcoming product assortments. Product is always top of mind for us, and I and our design team are actively working with top tier design talent to ensure the execution and gain their product roadmap continues during this time of transition.

Similar to Q1, we delivered earlier shipments to our wholesalers who are excited to have the products available ahead of the peak season.

We continue to see caution amongst the wholesale community, which is reflected in our order book across all geographies as a challenging macroeconomic backdrop continues to present headwinds.

Dani Reiss: In closing, Canada is first and foremost about our product. We don't compromise on revision of being a leading luxury brand, which is defined by our product's type of performance style in cross venture. Although we are facing an uncertain and challenging global macroeconomic backdrop at this time, our fundamentals are strong. And we look forward to seeing many more people enjoy Canada's products in the months and the years ahead.

Moving to performance by geography.

Q2 revenue increased in Asia Pacific and in EMEA, while decreased in North America Europe It yet.

North America revenue of $124 $1 million was down 7% or eight.

Dani Reiss: Before I hand in the color to Jonathan, I want to congratulate him and his appointment to the role of President of APAC, and he'll bow that on taking on the role of Chief Financial Officer, both of which will be affected on April 1, 24. Both Jonathan and Neil have deep experience with Canada to use, allowing for a smooth transition between role and continuity across the business, while supporting our growth and expansion in APAC.

8% down on a constant currency basis.

Lower wholesale revenue was partially offset by growth in all DTC channel.

In Q2.

DTC segment in North America grew high single digits year over year due to solid store performance.

In the U S. DTC sales grew low double digits due to new store sales.

Jonathan Sinclair: Thank you, and with that, I think over to Jonathan. Thank you, Daddy, and good morning, everyone. We're pleased with our solid top and bottom line forms in the course of reflecting demand and strong operational discipline. Revenue for the second quarter is $281.1 million, up 1% year of the driven bike growth in our DCC channel. The constant currency basis revenue was down 3% year of the year, as the year was strengthened against Canadian dollar.

Traffic was substantially higher.

As we more than doubled our store count to 13 permanent stores.

We're taking meaningful steps to grow the female consumer while continuing to build on the success of the men's business.

In the second quarter.

Sure Charles.

Actions from women remained stable year over year with pieces from a full winter of 'twenty three collection resonating in the court.

Jonathan Sinclair: DTC sales of $109.4 million grew 15% or just under 12% on a constant currency basis over the same period last year, as a result of retail store expansion. DTC revenue was 39% of total sales in Q2 compared to 34% in the same quarter last year. As our store footprint expanded and consumer demands increased in our more profitable DTC second, we continue to intentionally shift our proportion of channel revenue to sell directly to our end.

From a product standpoint, Paul I'm rain categories led the growth in the northern heavyweight down portion of the business.

This demonstrates our ability to provide an all season relevant product offering to our customers.

Moving to Canada, our home market, we registered modest DTC growth compared to the same period last year due to growth at a brick and mortar stores as revenue contributions from tourists continued to grow within the mix.

Alongside a reduced wholesale penetration.

Jonathan Sinclair: Consumers. Q2 wholesale revenue of $162 million was down 10% euro per year or 15% down on a constant currency basis due to the planned streamlining of a wholesale partners. Similar to Q1, we delivered earlier shipments to our wholesans who were excited to have the product available ahead of the peak season. We continue to see caution amongst the wholesale community which is reflected in our order book across all geographies as a challenging macroeconomic backdrop continues to present headlines.

Turning to Asia Pacific.

This region had a solid quarter with revenue, increasing 13% year over year to $63 $8 million.

On a constant currency basis.

We had especially strong performance in our stores in Hong Kong, and Taiwan and in Macau with a continued return of Chinese tourism.

Stole sales rose in mainland China, we're lifting of Covid restrictions has led to a solid rebound in domestic spending.

We continue to expand those product mix and grow off known heavyweight downloads.

Jonathan Sinclair: Moving to performance by geography, Q2 revenue increased in Asia-Pacific and in $124.1 million was down 7% or 8% down on a constant currency basis as lower wholesale revenue was partially offset by growth in our DTC channel. In Q2, our DTC segment in North America grew high single digits year over year due to solid store performance. In the US, DTC sales grew low double digits due to new store sales. Traffic was substantially higher year over year as we more than doubled our store count to 13 permanent stores.

With <unk> apparel and footwear, representing a larger portion of total revenues on a year over year basis in the region.

Lastly.

EMEA revenue was up 6% year over year to $93 2 million.

Or down 4% on a constant currency basis.

As wholesale revenue was partially offset by softer DTC channel performance.

Wholesale out performance was led by earlier shipments of orders to our partners.

DTC revenue was offset by lower e-commerce revenue as consumers felt the pinch a weakening macroeconomic conditions.

We continue to see the share of revenue from international tourism grow as a proportion of total revenues in the region.

Jonathan Sinclair: We're taking meaningful steps to grow the female consumer while continuing to build on the success of the men's business. In the second quarter, the share of transactions from women remained stable year over year with pieces from our full winter 23 collection resonating in the quarter. From a product standpoint, a power and rain categories led the growth in the non-heavyweight down portion of the business. This demonstrates our ability to provide an all-season relevant product offering to our customers.

Right.

Standout categories during the quarter growing significantly compared to last year with Europe experiencing more painful than average during the summer.

Moving to gross profit.

Second quarter gross profit grew 8% year over year to $117 $5 million driven by gross margin expansion.

Q2, gross margin expanded 410 basis points.

63, 9%.

This was due to pricing a favorable product mix, even with non heavy weight down outpacing heavyweight Donovan, let's say.

Jonathan Sinclair: Moving to Canada, our home market, we registered modest DTC growth compared to the same period last year due to growth at our brick and mortar stores as revenue contributions from tourists continue to grow within the mix, alongside a reduced wholesale penetration. Turning to age of six, this region had a solid quarter with revenue increasing 13% year over year to $63.8 million, up 11% on a constant currency basis. We had especially strong performance in our stores in Hong Kong, in Taiwan and in Macau with a continued return of Chinese tourism.

A higher mix of DTC sets.

The increase in the gross margin of our products was seen across nearly all categories with known heavyweight down outpacing the margin expansion of established heavyweight title segment.

DTC gross margin was 76% in Q2.

Around 60 basis points year over year, while wholesale margins increased to 57% up 620 basis points.

Again compared to the second quarter of last year.

Gross margin in the DTC segment was marginally lower due to inflationary product cost and higher freight charges due to increased volume in the U S and in mainland China, partially offset by favorable pricing.

Jonathan Sinclair: Store sales rose in mainland China, where lifting of COVID restrictions that has led to a solid rebound in domestic spending. We continue to expand our product mix and grow our non-heavyweight down office with rain wear, a power and footwear representing a larger portion of total revenues on a year over year basis in the region. Emea Revenue was up 6% Euro the year to 93.2 million dollars, or down 4% on a constant currency basis, as wholesale revenue was partially offset by softer DTC channel performance, wholesale app performance was led by earlier shipments of orders to our partners.

Wholesale margin was higher primarily due to pricing, which included importantly, foreign exchange headwinds due to the strengthening of the euro relative to the Canadian dollar.

As well as preference for higher margin styles within the heavyweight in lightweight segments by our wholesale partners.

Adjusted EBIT was $15 $6 million.

That was down compared to $26 $3 million, we made in the second quarter of last year.

But at the same time was above the top end of our guidance range due to strong operational execution.

Jonathan Sinclair: DTC stole revenue was offset by lower e-commerce revenue, as consumers felt the pinch of weakening macroeconomic conditions. We continue to see the share of revenue from international tourism, growers of proportion of total revenues in the region. Rainware is a standout category during the quarter, growing significantly compared to last year, with Europe experiencing more rainfall than average during the summer. Moving to gross profit, our second quarter gross profit grew 8% Euro via $179.5 million, driven by gross margin expansion.

This was primarily due to lower than planned SG&A spend as we drove efficiencies across the business.

A combination of slowing hiring process improvements and automation of manual processes.

SG&A spend of $177 $2 million was largely associated with the higher cost coming from the expansion of our retail network in particular rent and employee costs as well as the timing of marketing spend one time corporate restructuring expenses and our transformation.

<unk>, which I'll discuss in a little bit more detail shortly.

Jonathan Sinclair: Due to gross margin expanded 410 basis points to 63.9%. This was due to pricing available product mix, even with non-heavyweight down outpacing heavyweight down I might say, and a higher mix of DTC sets. The increase in the gross margin of our products was seen across nearly all categories, with non-heavyweight down outpacing the margin expansion of our established heavyweight down segment. DTC gross margin was 76% in Q2, down 60 basis points Euro via, while wholesale margins increased to 57% up 620 basis points.

Adjusted net income attributable to shareholders was $16 $2 million or <unk> 16 cents per basic share.

Moving to our balance sheet, we ended the second quarter of fiscal 'twenty, four with inventory of $519 $7 million.

That was up 2% from 511 $5 million at the end of the same period last year.

As inventory growth decelerated for the third consecutive quarter.

In Q2.

We bought back approximately $1 three 6 million chats. So a total cash consideration of $29 9 million.

Ending the quarter with $851 9 billion of net debt on our balance sheet compared to $774 $1 million at the end of the second quarter of fiscal 2023.

Jonathan Sinclair: Again, compared to the second quarter of last year, gross margin in the DTC segment was marginally low due to inflationary product costs and higher freight charges due to increased volume in the US and in mainland China, partially offset by favorable pricing, wholesale margin was higher primarily due to pricing, which included importantly foreign exchange tailwinds due to the strengthening of the Euro relative to the Canadian dollar, as well as preference for our higher margin styles within the heavyweight and lightweight segments by our wholesale products. Adjusted EBIT was 15.6 million dollars, that was down compared to 26.3 million dollars remaining the second quarter of last year, but at the same time was above the top end of our guidance range due to strong operational exclusion.

The year over year increase was due to our investment and then NCI b our share buyback program.

And higher borrowing as we prepare for our peak season.

Since the commencement of all in CIB, we have repurchased three 7 million shares or 68% of the amount authorized under the program.

As you know this is a strategic pillar in our capital allocation policy and something we keep under constant review.

We're comfortable with net debt leverage of three three times adjusted EBITDA at the end of the quarter.

Which you should remember reflects a seasonal cash low point for the business.

Based on the seasonality of the business, we expect to reduce our net debt leverage ratio by the end of the fiscal year.

Jonathan Sinclair: This was primarily due to lower than planned SG&A spend, as we drove efficiencies across the business through a combination of slowing hiring, process improvements and automation of manual processes. SG&A spend of 177.2 million dollars, was largely associated with the higher costs coming from the expansion of our retail network in particular rent and employee costs, as well as the timing of marketing spend one time corporate restructuring expenses and our transformation program, which I'll discuss in a little bit more detail shortly.

During the second quarter as part of the transformation program, we took meaningful steps to identify and eliminate inefficiencies from our cost base, while enhancing customer experiences.

We streamlined our corporate workforce.

Reducing non store no manufacturing head count by approximately 10%, resulting in a more lean and centralized structure to support the next phase of growth.

We also transitioned all production in house with nearly 85% of our domestically produced jacket manufactured in house in the second quarter of fiscal 2024 compared to 58% as recently as the fourth quarter of fiscal 2023.

Jonathan Sinclair: Moving to our balance sheet, we ended the second quarter of fiscal 24 with inventory of 519.7 million dollars, and that was up 2% from 511.5 million dollars at the end of the same period last year, as inventory grows decelerated for the third consecutive quarter. In Q2, we brought back approximately 1.36 million shares for a total cash consideration of 29.9 million dollars, ending the quarter with 851.9 million dollars of net debt on our balance sheet, compared to 734.1 million dollars at the end of the second quarter of fiscal 2023.

In house production gives us greater flexibility and quality control over our manufacturing process and consequently control over inventory message.

We also rolled out a number of initiatives to enhance store productivity touching staffing merchandising and layouts as we seek to improve conversion and customer satisfaction.

Together.

This has resulted in estimated savings run rate of approximately 15% of the $150 million. We expect the results of our transformation program by fiscal 2008 and that progress is ahead of our expectations.

Jonathan Sinclair: The year over year increase was due to our investment in the NCIB, our share buyback program, and higher borrowing as we prepare for our peak season. Since the commencement of our NCIB, we have repurchased 3.7 million shares or 68% of the amount authorized under the program. As you know, this is a strategic pillar in our capital allocation policy and something we keep under constant review. We're comfortable with net debt leverage of 3.3 times adjusted in the end of the quarter, which you should remember reflects a seasonal cash low point for the business.

Jonathan Sinclair: Based on the seasonality of the business, we expect to reduce our net debt leverage ratio by the end of the fiscal year. During the second quarter, as part of the transformation program, we took meaningful steps to identify and eliminate inefficiencies from our cost base, while enhancing customer experiences. We streamlined our corporate workforce, reducing non-store and non-manufacturing hate count by approximately 10%, resulting in a more lean and centralized structure to support the next phase of growth.

<unk> Avenue.

The non <unk> adjusted EBITDA <unk> adjusted net income per diluted chess a physical 2024.

As a result.

We are updating <unk>, yeah, 2024 guidance as follows.

Jonathan Sinclair: We also transitioned more production in-house with nearly 85% of our domestically produced jacket manufactured in-house in the second quarter of fiscal 2024 compared to 58% as recently as the fourth quarter of fiscal 2023. In-house production gives us greater flexibility and quality control over our manufacturing process and constantly control over industry management. We also rolled out the number of initiatives to enhance store productivity, touching staffing, merchandising and layouts as we seek to improve conversion and customer satisfaction.

We expect total revenue to be between 1.2 and $1.4 billion for the full year.

Ah revenue guidance assumes D T C revenue to be around 70% of total revenue.

Representing a high single digit increase to a low double digit decrease in here the D. T C comparable sales growth.

And continued stole expansion.

We now plans to open 15, new permanent stores this year.

Nine of which are open as of today.

Jonathan Sinclair: Together, this has resulted in estimated savings run rate of approximately 15% of the $150 million we expect as a result of our transformation programme by fiscal 28, and that progress is ahead of our expectations. Turning to our output, we had a solid first half of fiscal 2024, delivering on the top line, delivering on the bottom line expectations, and we're making good progress across our strategic colours and our transformation programme and seeing some early benefits of our work in the positive adjusted ebit achieved in the second quarter. We remain confident that our strategy is the right one to achieve long-term, sustainable growth and improve profitability.

We also expect wholesale revenue to decrease your area by a low to mid teens percentage, reflecting the continued editing of a wholesale dog count, which I would remind you is 6% that.

Revised reorder expectations and expansion Vasile retail network.

We now expect <unk> adjusted EBITDA between $135 million and $225 million in fiscal 2024, representing an operating margin of between 11 and 16%.

This is seems to gross margin percentage to be in the high sixties honestly a basis with D. T C and wholesale gross margin in the mid seventies and low fifties respectively.

Jonathan Sinclair: All of that said, however, our outlook for the back half of fiscal 24 has come under pressure due to an increasingly challenging global macroeconomic environment that has impacted consumer decision-making and prioritisation of spend. As a result, we saw early momentum gathered in our second quarter begin to slow noticeably in September. While we began to see some improvement in late October, visibility remains reduced. To reflect the increased uncertainty in the macro environment, we are revising and expanding the potential range of outcomes for revenue, the non-Io4S adjusted ebit, and the non-Io4S adjusted net income per diluted chair for fiscal 2024.

We expect SG&A expense to grow at a mid teens sandwich right on a year over year basis.

The larger T T C network and the associated operating cost space Motorize, it like cost savings initiatives, including around $15 million in savings from the transformation program and physical 2024.

We expect no I FRS adjusted net income per diluted chat to be between 60 cents and $1.40.

This assumes an effective tax rate in the high teens is a <unk> of income before taxes.

And a weighted average of diluted Chez outstanding of 103.5 million units for fiscal 2024.

Jonathan Sinclair: As a result, we are updating our full year 2024 guidance as follows. We expect total revenue to be between $1.2 and $1.4 billion for the full year. Our revenue guidance assumes DTC revenue to be around 70% of total revenue, representing a high single-digit increase to a low double-digit decrease in year-over-year DTC comparable sales growth and continued store expansion. We now plan to open 15 new permanent stores this year, nine of which are open as of today.

Consistent with this annual guidance all guidance for the third quarter is as follows.

We expect revenue.

Between $575 million and $700 million <unk>.

<unk> adjusted EBIT between $190 million and 265 minutes.

<unk> adjusted net income per diluted share between $1.20 $2.76.

Yeah look I've provided represents almost likely range of outcomes based on the trends we seem so phones quota.

And consequently, where we believe despite Texas for the <unk> quarter and the full fiscal yeah.

Jonathan Sinclair: We also expect wholesale revenue to decrease year-over-year by a low-to-mid-teens percentage, reflecting the continued editing of our wholesale door count, which I would remind you of 6% down. Revised reorder expectations and expansion of our store retail network. We now expect non-Io4S adjusted ebit between $135 million and $225 million in fiscal 2024, representing an operating margin of between 11 and 16, and Percentive. This assumes the gross margin percentage to be in the high 60s on a full year basis, with DTC and wholesale gross margin in the mid 70s and low 50s, respectively.

In summary.

While the macro economic environment presents challenges, we remain very focused on the things we can control.

<unk> Ah brand and all operations.

In addition to advancing all three pillars.

We are taking clear steps to improve our operational efficiency as I was.

<unk> positive results.

I'm excited about our prospects as we continue to build on a luxury positioning and execute a strategy to drive profitable growth over the long term and the best possible results in the coming cold.

With that operator, please open up.

The lines for questions.

Thank you.

I'd like to ask a question. Please press star followed by the number one on your telephone keypad.

Last time, we ask that you placed on it yourself to one question I'm like follow up question.

Jonathan Sinclair: We expect estimates to grow at a mid teens percentage rate on a year over year basis due to the larger DTC network and the associated operating cost base, moderated by cost saving initiatives, including around $15 million in savings from the transformation program in fiscal 2024. We expect non-IFRS adjusted net income for diluted share to be between 60s and a dollar 40. This assumes an effective tax rate in the high teens as a percentage of income before taxes and a weighted average of diluted shares outstanding of 103.5 million units for fiscal 2024.

For additional questions. Please me trying to kill thank you.

Our first question comes from Brooke Roach from Goldman Sachs. Please go ahead. Your line is open.

Good morning, and thank you so much for taking my question.

I was wondering if we could discuss a little bit more contact on a trend that you're seeing throughout the corner as you administer the fall season Pelican stores and online by can see my cohort what changes are you seeing in consumer behavior.

Consumers resonating with different aspects of your breath.

Including the new women's collection.

Yeah.

April Thanks for other question.

We are.

So what.

Jonathan Sinclair: Consistent with this annual guidance, our guidance for the third quarter is as follows. We expect revenue between $575 million and $700 million. Non-IFRS adjusted e-bit between $199 million and $255 million, and non-IFRS adjusted net income per diluted share between a dollar 22 and a dollar 76 cents. The outlook I've provided represents almost likely range of outcomes based on the trends we've seen so far this quarter. And consequently, where we believe this may take us for the entire third quarter and the fourth fiscal year.

<unk> are mixed we received traffic afterwards.

To see that with.

You need to continue to drive conversion of that traffic it's.

Consumers are Robert and ordered a new product and it makes them consumers in our stores.

Remains wrong, there's lots of lots of high percentage of new consumers.

While his returning consumers and now we're encouraged by that we we would you continue to see we have started to see some soft and earlier.

Jonathan alluded to earlier.

Earlier and.

Over and recently, we've started to see that's getting a little bit better and it's it's hard at this point.

What how.

How much of that is.

Trying to measure that continue which is why we have taken a.

Jonathan Sinclair: And summary, while the macroeconomic environment presents challenges, we remain very focused on the things we can consult our products, our brand and our operations. In addition to advancing our three pillars, we are taking clear steps to improve our operational efficiencies and we're seeing positive results. I'm excited about our prospects as we continue to build on our luxury positioning and execute our strategy to drive profitable growth over the long term and the best possible results in the coming quarter.

Cautious approach.

Certainly encouraged from Brian perspective to see the profit territory.

I can just check in to blood test done that the spread <unk> you've heard Jonathan talk about we talked about before about how we're really trying to dial in an increase that sheriff women customers and so we saw that happen significantly in the last in Canada in India that remained pretty stable, where we thought that more changes you know genetics customers that.

Decreased it within the next this corner.

Which again per line it lines up with what we're thinking a little over here and seeing in the industry in terms of the aspirational customer being a little bit more challenge right now.

Operator: With that operator, please open up the lines for questions. Thank you. If you would like to ask a question, please press star followed by the number one on your telephone team pad.

Okay. Thank you and if I could just follow up with one additional question on China can you elaborate on what is now embedded in your updated for your guidance for Chinese consumer crest, both in mainland China.

Operator: In the interest of time, we ask that you please limit yourself to one question and let follow up questions. For additional questions, please rejoin the queue. Thank you.

<unk>.

Yes so.

When it comes to China, with <unk>, with saying an environment, which is still somewhat challenged.

Brooke Roach: Our first question comes from Brooke Roach from Goldman Sachs. Please go ahead to line his open. Good morning and thank you so much for taking our questions.

All of the economic impact on the Chinese consumer.

Dani Reiss: I was wondering if we could discuss a little bit more context on the trend that you're seeing throughout the quarter as you've missed through the fall season, both in stores and online by consumer cohort. What kind of are you seeing in consumer behavior, and how are consumers resonating with different aspects of your brand, including the new women's collection? Thank you. Okay, Brooke, thanks for the question. So far, the trends that we're seeing so far are mixed.

That said, we are coming up against very much softer combs as we go through November and December issue of cool last year that was very different business being done at that critical time. So we.

<unk> some growth coming out of my then tried it for that reason.

And we looked more broadly.

What we're saying is that the Chinese consumer is starting to travel, but really it that trouble is an asian phenomenon rather than the global phenomenon. So we are definitely seeing more Chinese consumers across southeast Asia, and wishing that manifest itself, particularly in those stores and hold on.

Dani Reiss: We're seeing traffic in our stores is up. We're looking to see that. We've opportunity to continue to drive from burden of that traffic. It's, you know, our consumers are ravaging towards their new products, and the mix of consumers in our stores. The remains strong, there's lots of high percentage of new consumers, as well as returning consumers. And, you know, we're encouraged by that. We do continue to see when we have started to see some softener earlier.

I'm in the account.

Thank you very much I will pass it on.

Our next question comes from <unk> from Wells Fargo. Please go ahead. Your line is open.

Hey, Thanks, guys two questions for me number one just at a high level of curious how is the business preparing for the the banning of P. F. As in key markets like New York for example, I'm just kind of curious how are you adjusting manufacturing what what's the conversation internally.

Dani Reiss: And as Jonathan alluded to in the earlier and October, and recently we've started to see that getting a little bit better. And it's hard at this point to know what, how much that is. And we're trying to continue, which is why we're taking a cautious approach. We'll certainly encourage the brand perspective to see the traffic that our store is up.

And then looking at the piano this quarter specifically the other <unk>. The other revenue line was up to eight or 9 million for my lesson. Two last year again, just can you comment on what exactly is driving that what what's embedded in that and then what is that other line kind of forecasted to be the rest of the year as well how should we think about that thank you.

Dani Reiss: So I can just jump into Brooke just on the split of men to women. So you've heard Jonathan talk what we talked about before about how we're really trying to dial in and increase that share of women customers. And so we saw that happen significantly in the U.S. In Canada, in India, that remains pretty stable, where we saw a bit more changes, you know, gen X customers that decreased it, which in the mix this quarter. Which again, it lines up with what we're thinking and what we're here and seeing in the industry in terms of the aspirational customer being a little bit more challenge right now. Great. Thank you.

Mmm.

Pardon me.

On the first question so.

Uhm. So this is the topic, we've been talking about for many many many years, we obviously have a robust program in our sustainability and you've seen them our goals and objectives on that trajectory <unk> well under way, where I would say, we're feeling strong how to schedule. So that's something that we look at region by region I would not say that's the only.

Brooke Roach: And if I could just follow up with one additional question on China. Can you elaborate on what is now embedded in your updated for your guidance for Chinese consumer growth both in mainland China, but also globally. Yes. So I think when it comes to China, with, you know, we're seeing an environment which is still somewhat challenged terms of the economic impact on the Chinese consumer. That said, we are coming up against very much softer compounds, as we go through November and into December, she were called last year.

Let me look at our sustainability under our human nature platform is quite robust and so that's one of our key factors and focuses as we come up with some of these deadlines, let me say that.

Yeah, I'll, just add that I think that I recently integrated supply chain, many patterns infrastructure to one of our strengths and one of our competencies and that is an area that the <unk>. We we feel that we're very much ahead of the curve when it comes to these sorts of matters.

I think when it comes to the redfin the performance and in the second quarter of see what it was.

Brooke Roach: There was very little business being done at that critical time. So we do expect some growth coming out of mainland China for that reason. When we look more broadly what we're seeing is that the Chinese consumer is starting to travel. But really, it that travel is an Asian phenomenon rather than the global phenomenon. So we are definitely seeing more Chinese consumers across Southeast Asia. And we're seeing that manifest result, particularly in our stores in Hong Kong or Macau. Thank you very much.

Yeah I think.

Have to remember is that for two is all about a wholesale business daily D. G. C. Only stuff's got going in in towards the end of the quota.

<unk> as you go through September and so as a result.

Any growth you see that doesn't really show up in the waiting and is therefore, something that's very much more about.

The wholesale business, which is we've said all along is going to be down here, but yeah and.

Even though we were able to make to the request to ship somewhat sooner. The reality is that we we still end up down your ear and wholesale and that produces several flat picture.

Ike Borotow: Our next question comes from Ike Borotow from Wells Fargo. Please go ahead. Your line is open. Hey, thanks guys. Two questions from me.

The key numbers in that though it's all T. T C business is growing in double digits.

Spike the dropping and combs, we're still making headway under grad from that.

Ike Borotow: Number one, just at a high level curious, how is the business pairing for the banning of PFAs and key markets like New York, for example? I'm just kind of curious how are you adjusting manufacturing, what's the conversation internally? And then looking at the PNL this quarter specifically, the other revenue line was up to 8 or 9 million from like less than 2 last year again. Can you comment on what exactly is driving that, what's embedded in that? And then what is that other line kind of forecasted to be the rest of the year as well?

Yes.

Right, but what I'm asking about the other line I'm I'm, just think because of the friends and family event that happened a couple of quarters ago. I was curious as like what is going on it's driving the higher revenue in other and then what should we expect the rest of the year.

I mean again as I've said before that friends and family for houses relatively insignificant part of the type of business. It was up.

Mm mm.

Dani Reiss: How should we think about that? on the first question, so PSAs. So this is a topic we've been talking about for many, many years. We obviously have a robust program in our sustainability, and you've seen our goals and objectives on that trajectory. So we're well underway, where I would say we're feeling strong ahead of schedule. So it's something that we look at region by region. I would not say that's the only factor that we look at.

The.

Sales for employees and friends family generally speaking.

It's a level of business that is likely to you know I'll be mirror lost yeah as as we go through the rest of the <unk> and we see it as a normal business activity.

Okay. Thank you.

Our next question comes from Oliver Chang from T. D. Cowan. Please go ahead your line is open.

Hi, Thank you on that <unk> uncertain macros in buying closer to need in cold weather.

Dani Reiss: Our sustainability under our human nature platform is quite robust. And so that's one of our key factors and focuses as we come up to some of these deadlines that we see ahead. On the side of that, I think it's been a really integrated supply chain, many factory infrastructure delivery strengths. And one of our components is in an area that the weeks out and we feel that we're very much ahead of the curve when it comes to these words of matters.

And your guidance range it'd be helpful to understand what system on on the higher end of guidance as well as the lower and then.

As you thought about this consumer that's prioritizing certain things, which parts of your assortment, where most impacted and second you may have made a lot of progress and innovation and a lot of great call out to about what's happening forward with within ovation and cultural relevance as well as product what percentage mix.

Jonathan Sinclair: Then when it comes to the growth in the performance in the second quarter, obviously it was five year over year. I think you have to remember is that quarter two is all about our whole self business, really, and that DGCO only starts to get going in earnest toward the end of the quarter. As you go through September and so as a result, any growth you see there doesn't really show up in the waiting.

As none heavyweight down and how should we forecast that going for given all your initiatives. Thank you.

So if I can come in on the map, obviously, we we expect a continuation of of the macro we don't we're not expecting that suddenly the pillows I think what we would say is that.

Jonathan Sinclair: And it's therefore something that's very much more about the whole business, which, as we've said all along, is going to be down year over year. And even though we were able to meet consumer request to ship somewhat sooner, the reality is that we still end up down year over year and wholesale and that produces an overall flat picture. The key numbers in that though is our DTC businesses growing in double digits, despite the drop in in comps with still making have went the growth in that in that business.

The U S remember that.

Hold up bite.

Quite suddenly and quite sharply.

Holiday season began last year.

So.

We sort of become a bit more comfortable with that.

At the bank pulse of Q3.

I think when it comes to whether you know obviously, we were coming out of a very.

Mm mm unseasonably warm.

M C somebody born September, which five popular record is Ah by popular couches record breaking across nice geographies.

Jonathan Sinclair: Fred, but I'm asking about the other line. I'm just thinking of the friends and family event that happened a couple quarters ago. I was curious is like what is going on that's driving the higher revenue and other. And then what should we expect the rest of the year. I mean, again, you know, as I said before, friends and family, it brought us a relatively insignificant part of the total business. It was up.

We've had notes assumed and especially my winter ordered especially cold winter in the range of gardens seem normal normal weather conditions.

Whether impacts this business in the sense that it's a.

<unk> prompts a cold snap.

<unk>.

This.

It sort of reminds consume that this is the time that they they should go and bye bye <unk>.

Jonathan Sinclair: 8 million year over year as in terms of sales employees and then friends family, generally speaking. It's a level of business that is likely to, in our view, mirror last year as we go through the rest of the year, and we see it as a normal business activity. Thank you.

So the longer you wait for that the late with sauce.

And I think that is what we've experienced this yet.

I think when it comes to the consumer says as as Kerry was describing before I think <unk>.

That's really where the aspirational consumer is most most concentrated is probably the area, which they most affected vial.

Oliver Chen: Our next question comes from Oliver Chen from TD Cowan. Please go ahead.

Oliver Chen: Your line is open. Hi, thank you on the call up on uncertain macros and buying closer to needs and cold weather. And your guidance range would be helpful to understand what's assumed on the higher end of guidance as well as the lower end. And then as you thought about this consumer, that's prioritizing certain things, which parts of your assortment were most impacted. And second, you made made a lot of progress in innovation and a lot of great call outs about what's happening forward with with innovation and cultural relevance as well as product, is non-heavyweight down and how should we forecast that going forward given all year initiatives?

When it comes to Gnome heavy weight down.

All of our business is obviously, it's fairly sees all of that football heavy weight down his bowl concentrated.

<unk>, particularly Q1 Q2 or three so this yet but as we think about it for the full yeah, it's still going to be over half of the business by value.

Last year. It was I think 63 per cent, we should think about it to be in at around 850.

This I've sixties as a source of.

Normal place for the time being as we grow and establish that normally heavy weight categories. What I would also add isn't in Q2, we saw about.

Five six times the growth right.

Oliver Chen: Thank you. So if I can comment on the Mac, you know, obviously we expect a continuation of the macro. We're not expecting that suddenly to pivot. I think what we would say is that in the US, remember that really we saw that point quite suddenly and quite sharply as the holiday season began last year. So we sort of become a bit more comfortable with that at the end of the back part of Q3.

Don't heavyweight down compared to the grocery store heavyweight them understanding both of them Laura.

And I'm not really helping.

Alright, I'll get the thing that excites me about that is you know, we're we're seeing that sounds high sounds perfect. What comes of rainwear. So we're seeing that in APAC, followed by <unk> I think any referred to this before but police category. So we're seeing massive uptake in that you know whether it's everywhere with a glaring piece, there's customers are gravitating towards the end of July.

Oliver Chen: I think when it comes to weather, you know, obviously we're coming out of a very unceasingly warm, unceasingly warm September, which by popular record is by popular account is record breaking across most geographies. We have not assumed and especially mile winter or especially cold winter in the range of times, we assume normal weather conditions. Weather impacts this business in the sense that it's, it prompts the first cold snap prompts business. It sort of reminds consumer that this is the time that they should go and buy, buy, co-weather back in.

<unk>.

Uhm.

Really love it that all of this is that none of the category extension isn't coming at the expense of Great project. So you know as we get into new categories at different price plan personnel April.

Yeah.

Yeah.

Oh.

All of them again, <unk> Uhm I just want to go back to the appointment earlier about traffic uhm.

Brown.

And the traffic <unk>.

And you know.

This company has changed a lot over the years from one that was really.

Wholesale focused wanted to work now or more for D. T C than ever before which is really really good thing for us in so many ways, but also.

Oliver Chen: And so the longer you wait for that the later it starts. And I think that is what we've experienced this year. I think when it comes to the consumer set as, as Carrie was describing before, I think the JNX, the app and that's really where the aspirational consumer is most most concentrated is probably the area we're seeing most effective mile. When it comes to non-heavyweight down, our business is obviously it's a fairly seasonal and therefore non-heavyweight down is more concentrated in particularly Q1 and Q2 as we saw this year.

Does it pushes our revenue for them so right and.

Mmm we've.

Just talk about your guidance question on the response with a wide.

The range of outcomes. It's it's.

It's really early to tell.

Does that is that.

How old are the macro environment.

Certain times, and we felt responsible thing to do but in.

Regards how how we're feeling about Brandon.

We're all really really good about it.

Thank you very much a quick follow up you made progress on your E Commerce, and and you have that.

Really great leadership, there, but what's happening in that business in terms of what we should know.

The consumer interface looks.

Oliver Chen: But as we think about it for the fully it's still going to be over half of the business by value. Last year it was I think 63% and we should think about it to be in and around the high 50s, those 60s as a sort of normal place for the time being as we grow and establish non-heavyweight down categories. What I would also add is in Q2 we saw about five, six times a growth rate in non-heavyweight down, compared to the growth that we saw in heavyweight down, understanding both of them more.

That's much better than the content it looks really integrated but.

Overall across the industry, we've been seeing traffic and conversion issues. Thanks, that's regard.

Yeah, Thanks, Oliver I appreciate it.

How much.

Website, you can have a slot for me at work we're we're.

Sure I'm really focused on it also see traffic being very strong.

Great and we want multiple projects going on many it'd be test.

That we're working on that just concurrently to optimize conversion and that's what I'm focusing on and and you know many of those has been working.

Dani Reiss: [inaudible] Yeah, Oliver, if I can, just, sorry, just jump in and, you know, I want to go back to the point a minute earlier, but traffic and, I hope so, feeling about a brand, I've given the traffic friends and restores. And, you know, this company has changed a lot over the years for one that was really, you know, very old self-focused one, where now we're more DTC than ever before, which is a really, really good thing for us in so many ways, but also what it does is it pushes our revenue further to the right, and, you know, we've just brought back to your guidance question, although it's possible, why doesn't the range of outcomes?

I expected to.

Continue to see those those show progress and.

<unk> <unk> <unk>.

Thank you.

Our next question comes from <unk> from Raymond James. Please go ahead. Your line is open.

Thank you good morning, everyone. I. Appreciate you taking my question Uhm, you talked about seeing more gross margin expansion and the non heavyweight down category. I was hoping you can expand on the drivers of that and how we should think about the sustainability of these margins as we think about the person takes going forward.

Yeah, it's alright.

Alright, it's Jonathan I, all gross margin story has been very much consistent over the years, we've been very.

Clear that you know over the longer.

We were talking about mid seventies, and eighties seem at high voltage and wholesale but we got a tailwind the effects.

<unk> does she already somewhat stronger than that and wholesale but but the reality is that the the the way. We manage this is that we make sure the margins as the category grows.

Back in the.

Dani Reiss: It's really, really good to tell. I've got to ask how, you know, how are the macro environments going to play out in these uncertain times? And we felt that's responsible thing to do, but in regards to how we're feeling about our brand and overall, we're really good about it. Thank you very much.

Best today that we did in February this yet we deliberately printed the consolidated gross margin or lightweight down to illustrate the fact that it's very close to the culprit margin and that's important because as the category is built out to a meaningful second pillar in this business.

Dani Reiss: A quick follow-up, you made progress on your e-commerce, and you have really great leadership there, but what's happening in that business in terms of what we should know, that the consumer interface looks much better and the content looks really integrated, but overall across the industry, we've been seeing traffic and conversion issues. Thanks. That's regards. Yeah, thanks all over. I appreciate the comments on our website. You've got a platform for me at work.

We've been able to do is to grow the gross margins back to the level that we would expect them to be as immature category. So you correctly assume the for example, footwear Belgian so not that strong right now.

But that's okay, because we're all the trajectory and if you and if I stand back from all of it.

And I go back to call it a T mobile, but let's say, 85% heavy weight down.

That that makes us come down to sort of like low sixties.

<unk>, so what we've been able to do through that journey is actually manage the O for awhile ago rhythm to accommodate those the maturing and improving gross margins outside of heavyweight down.

Dani Reiss: We're really focused on it. Also seeing traffic being very strong there, as we are in storage, right? And we want multiple projects going on, many of you test that we're working on that to, you know, concurrently, to optimize conversion, and that's what we're focusing on. And, you know, many of those tests are working, and I expect that to continue to those show progress in the quarter of the years. Thank you.

Violence, a tailwind simply create with the investment in product development and investment and scales and <unk>.

Patterns.

I hope that gives you a sense of it was Sunday no change at all perspective on sustainability, if those guys Belgians, nor we expecting to to raise them of all because one of the key components is that we continue to invest.

Rick Patel: Our next question comes from Rick Patel from Raymond James. Please go ahead. Your line is open. Thank you. Good morning, everyone. I appreciate you taking a question. You talked about seeing more gross margin expansion in the non-heavyweight down category.

Development categories, we need the space to do it within their grasp poetry.

And you also touched on an improvement in late October or can you just expand on that does that reflect marketing or product activation or is it a function of just <unk> volatility.

Jonathan Sinclair: I was hoping you can expand on the drivers of that and how we should think about the sustainability of these margins as we think about the puts and takes going forward. Yeah, it's Johnathan. Our gross margin story has been very much consistent over the years. We've been very clear that, you know, over the longer run. You know, we're talking about mid-70s and DTC mid-high-forties in wholesale, the moment we've got a tailwind of FX.

I think <unk>.

You're right. We didn't you know we do touch on the fact that.

Was saying sequential improvement and I think that's that's obviously key inevitably there are activities that we do is we get into peak season, that's true I forget I think around US you also getting the advent of full which you'll you'll probably seeing and feeling first hand and as.

As that happens as well, it's you've got the coalescence. If you like of the activity that we're undertaking and the climate, becoming a little bit more seasonal instead of the two come together in the business Dawson to build.

Jonathan Sinclair: So hence this year is somewhat stronger than that in wholesale. But the reality is that the way we manage this is that we mature the margins as the category grows. And so, you know, back in the in the investor day that we did in February this year, we deliberately printed the consolidated gross margin or lightweight down to illustrate the fact that it's very close to the core for a margin. And that's important because as their category has built out to a meaningful second pillar in this business, what we've been able to do is to grow the gross margins back to the level that we would expect and to be as a mature category.

Absolutely.

Time, when we expect to see this happen. This is this is where our business is the flow of our business every year and.

Starting in September every week is bigger than the previous weekend.

Uhm. So this <unk> you know the.

<unk> sorry to see it towards the end of October it's promising and you know it's it's it's it's.

Not enough yet.

Completely shifted trends, but it certainly certainly bright spot in Morrow and welcome as well.

Jonathan Sinclair: So you'd correctly assume that, for example, where margins are not that strong right now, but that's okay because we're on a trajectory. And if I stand back from all of it and I go back to call it early 18 when we were, let's say, 85% heavyweight down and we could say that that that mix has come down to sort of low 60s. Our margins have stayed the same. So what we've been able to do through that journey is actually manage the overall algorithm to accommodate the matureing and improving gross margins outside of heavyweight down and balance the tailwinds that we create with the investment in product development and investment in scales until that point happens.

Thank you very much.

Our next question comes from Robbie Arms from Bank of America. Please call Heck. Your line is open.

Oh good morning, Thanks for taking my question I.

<unk> you know I was curious if given the sort of you know change in the global operating environment. You know if you were thinking about changes in the promotional strategy for Canada Goose too you know drive better you know response from customers you know or in and also just with the you know weakness in the wholesale.

Channel are there any thoughts of any adjustments to strategy in wholesale you know like maybe a more of a relationship with Amazon or other distribution channels to sort of you know support revenue growth in this tougher environment.

Jonathan Sinclair: So I hope that gives you a sense bit. We're certainly not changing our perspective on the sustainability of those gross margins, nor are we expecting to raise them overall because one of the key components is that we continue to invest in product development and new categories. We need space to do it within the overall gross margin. And you also touched on an improvement in late October.

Hey, Robert Thanks for your question yet so there is absolutely no change with regards to our strategy Uhm.

Russell brand.

Sell through very well at full price and the value that is inherent in the process that we build here in Canada is something the Arkansas recognize and now with the demand that we vote for our promises is it's something that we've always taken great pride and and and so yeah. So now we have we have no plans to change our our <unk>.

Jonathan Sinclair: Can you just expand on that? Does that reflect marketing or product activation or is it a function of week to week volatility? I think you're right. We do touch on the fact that we're seeing sequential improvement. And I think that's obviously key. Inevitably, there are activities that we do as we get into peak season. That's true every year. I think the around us, you're also getting the advent of fall, which you're probably seeing a feeling first hand.

Right.

And any thoughts on you know changes in distribution strategy, you know maybe opening up more with Amazon as an example.

No in fact, it without there's time will be sold through emblem. Many years ago, we decided that the software.

Decision turned out to the right, one for us and and and <unk>.

Oh, I'm gonna do with all the time. So you know we feel that we have the right uhm.

Jonathan Sinclair: And as that happens as well, you've got the coalescence, if you like, of the activity that we're undertaking and the climate becoming a little bit more seasonal. And so the two come together and the business starts to build. Absolutely. That's the time when we expect to see this happen. This is where our business is the flow of our business every year. And starting in September every week is beginning in the previous week. And so the acceleration we started to see at the end of October is promising. And it's not enough yet to indicate a complete shift in trends, but it's certainly a respawn in rural and rural families.

Right.

The right the ultimate of.

Partners and Uhm, we're gonna stick with the yeah.

Yeah, I think that's probably got turned on that day.

Jonathan Sinclair: Thank you very much.

Alright, just to add some color on the walls.

Staying with the same strategy, we may add some uhm doors, we're not looking to add volume of two orders that strategic accounts influence or a Catholic question does change you. After a year season. After season, you know I think you need a different customer that we'd want to reach though those are where we think about adding generally I think for this talk about streamlining small, let's make sure that we're doing better.

Stinker business with the right partner that you know treat the primary I understand that it's a full price brand full price popping proposition. So nothing on that friend has changed but I just want to clarify who we would address if we did.

Otherwise it has to be brand creative.

That is that's on guiding light and ultimately that's why with even further witness D. T C. In this journey.

Robbie Ohms: Next question comes from Robbie Ohms from Bank of America. Please go ahead and line is open.

Terrific. Thanks, so much.

Robbie Ohms: Good morning. Thanks for taking my question. I was curious if given the change in the global operating environment, if you're thinking about changes in the promotional strategy for Canada goose to drive better response from customers and also just with the weakness in the wholesale channel, are there any thoughts of any adjustments to strategy and wholesale, maybe more of a relationship with Amazon or other distribution channels to support revenue growth in this tougher environment.

Our next question comes from Jonathan Cops <unk>. Please go ahead your line is open.

Yeah, Good morning, and thank you Jonathan Congrats on the new role I wanted to ask you just about that transition and I know it will.

Take some time to occur but could you just maybe elaborate more on the reasons for the the leadership change in the Asia Pacific Region, and then maybe more near term. If you could just talk a little bit more about separate of the easy comparisons in China. The next few months, yeah, what what your sense of the recovery for the Chinese consumer and how that's Barry.

Versus your expectations.

Robbie Ohms: Hey, Robbie, thanks for your question, so from our point, there is absolutely no change with regards to our strategy. When we're in our grocery brand, our product sells through very well, our full price and the value that is inherent in the product that we've built here in Canada is something that our consumer recognized. And, you know, the demand that we've built for our product is something that we've always taken very pride in and so yes, you know, we have no plans to change our product.

He started for question is there anything I'll I'll, just I'll I'll start up.

I'll have a commentary on the.

The management changes in leadership changes, which I'm very excited about to start with.

Jonathan moving to APAC, you know obviously Jonathan.

Tremendous knowledge of our business over the years and I go to that.

It goes without saying and.

Also got tremendous knowledge of the agent market from this business in past businesses.

Robbie Ohms: In any thoughts on, you know, changes in distribution strategy, you know, maybe opening up more with Amazon as an example. And I know, in fact, we don't sound, there's time when we sold through Amazon and years ago we decided to stop doing that and that's been turned out to be the right one for us and and help accelerate our own online bills at the time. So, you know, we feel that we have the right, the right, the right, the ultimate of partners and we're going to say what's up.

Been involved with them in that region.

Knowledge of the retail landscape storage area since he is and that.

Was.

<unk> also in a negotiating hundred GB room, what's your pet so jonathan's purpose as soon as that wrong. It was it gives me someone another person that I that I deeply.

Put it in that region.

Important.

<unk> <unk> working I can't use for a long time now and those are our business and our brand intimately as a protector of it and that is.

Robbie Ohms: Yeah, I think just take up in on the, we're just to add some color on the whole state stay with the same strategy, we may add some doors. We're not looking to add volume of doors, but strategic accounts, influencer accounts, of course, those change year after year. Season after season, who, you know, are they being a different customer that we want to reach so those are where we think about adding. Generally, as you've heard a talk about, you know, it's streamlining for sales to make sure that we're doing better business bigger business with the right partners that, you know, treat the brand right understand that it's a full price brand full price pop from proposition.

<unk> has been has been.

We've been we've been holding him in building opt for this role and he's ready to take on it is very exciting for Ross and brand new with that.

That.

That's [noise], we've we've reached as well <unk>.

So it's it's.

Suicide of future and.

Jonathan talk but.

So to answer that.

And thank you for your feel come in so but to answer your question about mainland China.

Robbie Ohms: So nothing on that front of the change, but I just wanted to clarify who we would add to us. If we did otherwise, it has to be brand creative and that is that's our guiding light and ultimately that's why we're being further into DTC in this journey.

I think that you'll recall what was happening a year ago I think <unk>. It's been an interesting time. This yeah. It's no it's no bitterness sort of peak.

Robbie Ohms: Terrific, thanks so much.

Uhm, we've experienced studying Greek of it.

Jonathan Komp: Our next question comes from Jonathan Komp from Baird. Please go ahead and line his open. Good morning. Thank you. Jonathan, congrats on the new role. I want to ask just about that transition and I know it will take some time to occur, but could you just maybe elaborate more on the reasons for the leadership change. In the Asia Pacific region, and then maybe more near term, if you could just talk a little bit more about separate of the easy comparisons in China the next few months. Yeah, what your sense of the recovery for the Chinese consumer and how that's bearing versus your expectations. Any short of question.

<unk>, but you know what weird cause we look forward you know we gotta be open in November will be opening in December and these are critical months is.

S. As important as October is November is way more or design, but way more of them to get in.

We're looking forward to food trading and all of our stools, we got all of the right inventory well staged around the region.

And we believe we're well positioned tight take advantage of of assume it developed and particularly it's S. A cooler temperatures uhm settling which is.

Probably.

Dani Reiss: Daniel, I'll start to. I'm a high-level commenter on the on the management changes and leadership changes, which I'm very excited about. So Jonathan moving to APAC, you know, obviously Jonathan's a tremendous knowledge of our business over the years. And I go to that goes on the same, and he's also got tremendous knowledge of the Asian market from this business and past businesses that he's been involved with. In that region, great knowledge of the retail landscape and storage agencies and was was a key also in the negotiating or drink to be with Japan. So John is perfectly suited to our role and gives me someone another person that I was deeply in that region. And that's very important to him.

Beginning to happen built in China in Shanghai still very well.

That's really helpful. And then I can just ask one follow up on the margin outlook I know about the lower half of the guidance this year.

<unk> lower EBIT margin year over year for the four year is there any way as we look forward you can give a better sense of what S. G and a growth might look like and just any more context around I hear the multi year margin recovery potential.

Thanks, again, yeah, I mean, we [laughter], yes.

We remain very.

Clear that there are three things that will drive overall margin recovery.

One is called Crows, and clearly that's a pressure point right now the second is successful opening of stores doing the expected levels of productivity and the third is the transformation program well, we're already making headway.

Dani Reiss: We thought we'd go to Neil. And Neil's been, you know, working, accounting for a lot of time now knows our business and our brand intimately as a protector of it. And, you know, has been, has been, has been, has been, we've been holding him and building him up for this role. And he's really taking an answer. If I'm for Ross and Brandon, we've, we've reached this moment. So it's, it's, it's, it's, it's, it's.

Hearing today that not only are we okay. We'll run rate savings you've got in your savings and the best way I can manifest operational execution to you is if you look at the upper end of the guidance now I look at the level of profitability. That's been built into it it's the same level of profitability.

Jonathan Sinclair: So it's going to be the same future and I don't know, Jonathan talking about that. So to answer it, and thank you for your comments, but to answer your question about men and China, I think that you'll recall what was happening in a year ago, I think the old week has been an interesting time this year. It's not been the sort of peak that we've experienced setting pre-COVID in years prior. But what we look forward, we're going to be open in November, we're going to be open in December and these are critical months as important as October is November is way more or more of them again.

But we were expecting when we got to a higher level of revenue previously so we've been able to bring into the makes a significant.

Step that simple because that gives us some of the momentum we need to start building that served leg about what we focus on building comb crotalin continuing with the retail network development alongside.

Understood. Thanks, Thanks again.

Well.

Our next question comes from Mac Petri from CIBC. Please check your line is open.

Yeah. Good morning. Thanks for the question I just wanted to follow up on the U S. Specifically and if you could give any more color with regards to sort of the detail on sales patterns, particularly by regions. And then also we're Stoke store cohorts and I appreciate any comments about the ramp up of stores opened in the last year or so.

Jonathan Sinclair: And we're looking forward to full trading in all of our stores we've got, all of the right inventories that are well staged around the region. And we believe we're well positioned to take advantage of the consumer demand. And particularly as the cooler temperatures settle in, which is probably it's only just the beginning to happen in China and Shanghai is still very warm.

Jonathan Sinclair: That's really helpful.

Okay perfect. So the U S. Yeah, we talked about it since I'm under some pressure obviously revenues down in your ears 11 per cent uhm, but the good news is we talked about a lot and this is our opportunity to win is traffic substantially higher. So obviously doubled our store account you will be three new stories that center.

Jonathan Sinclair: And then if I could just ask one follow up on the margin outlook, I know that lower half of the guidance this year embeds lower even margin year over year for the full year. If there are any ways we look forward, you can give a better sense of what SG&A growth might look like and just any more context around the multi-year margin recovery potential. Thanks again. Yeah, I mean, we, yes, we remain very clear that there are three things that will drive our overall margin recovery.

And then king of Prussia, so traffic it they're they're coming in engaging with the brand as I said I think there's a bit of a hit to that aspirational customer <unk> generally people are just meeting waiting to see the urgency isn't the same as we've seen in years previous.

In terms of.

Recently that I mean, we we continue Ted Uhm, 16th similar to Canada, where tourism is happening. So you see that in the West Coast you see that in New York area Mmm Mmm.

Mmm not a new phenomenon for us that continue to see that new stores are opening well I would say because we're opening it in this environment, where it's a little bit more challenge, we're not seeing the same types of.

Jonathan Sinclair: One is concrete growth and clearly that's a pressure point right now. The second is successful opening of stores doing the expected levels of productivity. And the third is the transformation program where we're already making headway. You're hearing today that not only are we, can we have run rate savings who've got in year savings. And the best way I can manifest that operational execution to you is if you look at the upper end of the guidance now and look at the level of profitability that's been built into it.

Instant line upset when you lived before I can still very happy with the traffic and the engagement in the brand bags around that but you know a little bit more tempered I would say then maybe.

[noise] pre pandemic that maybe in the last three years. So it hasn't changed our strategy again retail stores for the long term that we know that those are the right locations, we know that that's where the traffic will.

[noise] isn't that they will convert so we're just gonna change.

To start happening.

You know, we're seeing a good contribution from the <unk> from the store expansion to the overall business in the U S to the point, where you know it.

Jonathan Sinclair: It's the same level of profitability that we were expecting when we got to a higher level of revenue previously. So we've been able to bring into the mix a significant first step. That's important because that gives us some of the momentum we need to start building that third leg of our growth. So we focus on building concrete and continuing the next, the retail and that what development alongside. There's there.

Would expect and hope, but nevertheless.

It's important we reaffirm we're actually seeing significant top line growth in total stools cold in the U S <unk> negative over the Colts.

Yep I understood. Okay, all the best in holiday take care.

Mmm.

Our next question comes from <unk> from Barclays. Please go ahead. Your line is open.

Jonathan Sinclair: Thanks. Thanks again. Welcome.

Good morning, Yeah as I've already said this is Michael <unk> and I'm on for Adrian <unk> and thank you for taking my question.

Mark Petrie: Our next question comes from Mark Petrie from CIBC. Please head to line is open. Yeah, good morning. Thanks for the question. I just wanted to follow up on the US specifically. And if you could give any more color with regards to sort of the detail on sales patterns, particularly by regions. And then also with stock store cohorts and appreciate any comments about the ramp up of stores opened in the last year or so.

So your inventory position has vastly improved but we were wondering how does yep sales guidance impact fiscal year and inventory expectations.

Yeah. It's you know obviously as a <unk> a fairly broad range the range is clearly.

Driven by.

Mm DTC volatility and if.

Mark Petrie: Thanks. Thanks Mark, so the US, yeah, we talked about, you know, under some pressure, obviously revenues down near over years at 11%, but the good news as we talked about a lot and this is what our opportunity to win is traffic substantially higher. So obviously we doubled our store count, we opened three new stores and that's center in tip-faza and then King of Prussia. So traffic is there, they're coming, they're engaging with the brand.

If you go with that and then you'll get your going to assume that range has a maximum impact of 25% of that revenue number on the on the infantry on the inventory at the end of the year.

Therefore, it is possible that we had the instead of being flat being slightly off but.

Mark Petrie: As we said, I think there's a bit of a hit to that aspirational customer that and generally people are just maybe waiting to see the urgency isn't the same as we've seen in years previous. In terms of regional news, I mean, we continue to succeed with similar to Canada where tourism is happening. So you see that in the West Coast, you see that in New York area, that's the new phenomenon for us, but continue to see that.

You know, we working very hard to make sure that our production plans and all such thing Uhm, Alright, uhm arthritis as they can be to what we're saying because we we are still driving for improvements in inventory tons, but this yeah and overtime.

What you've also seen this quarter is as you note is also it's excessive.

Cultural inventory deceleration.

Mark Petrie: New stores are opening well. I would say because we're opening it in this environment where it's a little bit more challenge, we're not seeing the same types of, you know, instant lineups that we would before, again, still very happy with the traffic and the engagement and the brand buzz around that, but, you know, a little bit more tempered, I would say then maybe definitely pre-pandemic, but maybe in the last three years.

And I think that's important we said we'd set up all alone. We continue to expect that to be the case and obviously, we are working to make sure. We got it up at the bottom of the revenue right in any of it.

Great. Thank you and then could I ask one follow up question since we're discussing inventory. So how much more do you plan to manufacture in house this year versus last year and would you. Please repeat what you said about the improved merch margin drivers from in-house manufacturing.

Dani Reiss: So it hasn't changed our strategy. Again, we build stores for the long-term success. We know that those are the right locations. We know that that's the traffic will eventually, and that they will convert. So we're just keeping those things to start happening. We're seeing a good contribution from the, from the store expansion to the overall business in the US to the point where, you know, it, as you'd expect and hope, but nevertheless, it's important. We're really firm. We're actually seeing significant top line growth in our total stores cohort in the US, even if we're negative on the calls. Yeah, I understand.

Yeah, I mean, the so we're running at 85%.

Now I think we were.

Memories 70, 578 in the previous cool, but with this quarter, we were 85 <unk> loans, we'd like having complementary C. M T manufacture.

It allows us to put the right manufacturing in the right location gives us flexibility. It gives us resilience, but it's it's sort of if that helps us in terms of how we operate when it comes to the tailwind comes right. There were some of these tailwind.

Michael Boo: Okay, all of us in holiday, take care. Thank you.

Jonathan Sinclair: Our next question comes from Michael Boo from Barclays. Please go ahead, your line is open. Good morning. Yeah, as Aubrey said, this is Michael Boo and I'm on for Adrian Yee and thank you for taking our question. So your inventory position has vastly improved, but we were wondering, how does the update sales guidance impact fiscal year and inventory expectations? Yeah, it's, you know, obviously there's a fairly broad range. The range is clearly driven by a CDC volatility.

But none of them.

Think about where where it comes from because the materials coming from us.

So if you think about product might've brought up my Cup and call it 40% to 40% like the 20% overhead.

Jonathan Sinclair: And if you go with that and then you're going to assume that that range has a maximum impact of 25% of that revenue number on the inventory at the end of the year. But therefore, it is possible that we end the, instead of being flat, things like the art. But, you know, we're working very hard to make sure that our production plans and our purchasing are very, are as tailored as they can be to what we're seeing.

The extent as a profit settlement the profit elements on the Labour Neopets and all the materials because because it's C. M T.

Getting the packages of materials from us in the first place. So it's it's one of the components of tailwind.

But we create alongside pricing alongside sourcing efficiencies.

But it sits within the overall mulch, an algorithm, which I was talking about before is normally being mid seventies mid to high voltage between the two he channels and this just low fifties because of the effects tailwind and wholesome.

[noise] great. Thank you very much.

Our last question will come from J. So often you'll be asked. Please go ahead. Your line is open.

[noise] great. Thank you so much for taking the question. My question is you know Europe said, you're opening 15 stories. This year, how many leases have you committed to for next year for next year store openings. Thank you.

Jonathan Sinclair: Because we are still driving for improvements in inventory turns both this year and over time. And what you've also seen this water is, as you, you know, it's our third successive quarter of inventory decelerate, and I think that's important. We've said it all along, we continue to expect that to be the case and obviously we're working to make sure we don't end up with a volume of the revenue right in any of it. Great.

Yeah. We're we're relatively early isn't that journey at the moment as you'd expect.

Jonathan Sinclair: Thank you.

So when we would probably go with someone with the same single digits.

Jonathan Sinclair: And I ask one follow-up question since we're discussing inventory.

Right.

<unk> at this point as you would expect but obviously, we we we have all plans and we'd go that's all good location somewhere I'll, let him with it I go Jason. So it's it's just sort of way you would expect to find this at this point in time.

And then can you tell us how many stores do you expect to open next year.

Jonathan Sinclair: So how much more do you plan to manufacture in houses here versus last year? And would you please repeat what you said about the improved merge margin drivers from in housing and factory? Yeah, I mean, so we're running at 85%. Now, I think we would remember 75% in the previous quarter, but with this quarter we were at 85, that's sort of where it belongs.

It's a little early for that at the moment, because we haven't talked specifically up at plans for next year, but what I would remind you.

The from the invest pay is that we set off stole out for call. It 130 to 150 stores over a five year time horizon, including conversion of stores that might be under different arrangements today and tomorrow network. So uhm.

Jonathan Sinclair: We like having complementary CMT manufacture. It allows us to put the right manufacturing in the right locations, gives us flexibility, it's as resilient. But it's sort of, it that helps us in terms of how we operate.

That's that's the best guidance.

<unk> I can give you with a G and in that sense.

Gives you a sense of pacing.

Got it okay. That's helpful. Thank you so much.

Jonathan Sinclair: When it comes to the tailwind that comes through it, there is a modest tailwind tailwind. But what I'm going to think about where it comes from because the materials come from us. So if you think about product manufacturing, call it 40% material, 40% labour 20% overheads. To the extent there's a profit element, the profit element on the labour and the overheads and on the materials, because it's the MT that they're getting the packages of materials from us in the first place.

Very well.

We have no further questions I would like to turn the call back over and around and for clothing I Max.

Thanks, everyone for joining us today, if you have any questions. Please reach out to us at <unk> at <unk> Dot com have a great day. Thank you.

This concludes today's conference call. Thank you for your participation you may not disconnect.

[music].

Jonathan Sinclair: So it's one of the components of tailwind that we create alongside pricing alongside sourcing efficiencies. But it sits within our overall margin algorithm. We've always talked about before as normally being mid 70s, mid to high 40s between the two key channels, and this is a low 50s because of the effect tailwind and wholesale.

Jonathan Sinclair: Great.

Jonathan Sinclair: Thank you very much.

Jay Sol: Our last question will come from Jay Sol from UBS. Please go ahead. Your line is open. Great. Thank you so much for taking the question. My question is, you know, you're sitting your link 15th doors this year. How many leases have you committed to for next year for next year's store openings? Thank you. Yeah, we've relatively early in that journey at the moment, as you'd expect. So when we probably go with somewhere in the single digits.

Jay Sol: I've really had a handful of stalls at this point, as you'd expect. But obviously we have our plans and we've got our target locations and we're on well on with the negotiation. So it's just sort of where you'd expect to find this at this point in time.

Jonathan Sinclair: And John, can you tell us how many stores you expect to open next year? It's a little early for that at the moment, because we haven't talked specifically up at our plans for next year. But what I would remind you from the, from the invest day is that we set our store out for all it 130 to 150 stores over a five year time horizon. Including conversion of stores that might be under different arrangements today into our own.

Jonathan Sinclair: Network. So that's, that's the best guide guidance point I can give you a little g in that sense. That, that gives you a sense of pacing. Got it. Okay, that's helpful. Thank you so much. Very well.

Operator: We have no further questions.

Ana Raman: I would like to turn the call back over to Ana Raman for closing remarks. Thanks everyone for joining us today. If you have any questions, please reach out to us at IR at Canada Goose.com.

Ana Raman: Have a great day. Thank you.

Operator: This concludes today's conference call. Thank you for your participation.

Operator: You may now disconnect.