Q4 2024 Canada Goose Holdings Inc Earnings Call

John: Thank you for standing by. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the Canada Goose fourth quarter fiscal year 2024 earnings call. All lines have been placed on mute to prevent any background noise.

Thank you for standing by my name is John and I'll be your conference operator today at despite all the backfill welcome everyone to the Canada Goose fourth quarter fiscal year 2024 earnings call.

Since I have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you wish to ask a question. During this time seem to grasp our fault, but the number one on your telephone keypad and if you would like to withdraw your question. Please press star one again. Thank you I would now like to turn the call over to Ana Raman head of.

John: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, please press star one again. Thank you. I would now like to turn the call over to Ana Raman, head of investor relations. Please go ahead.

Speaker Change: Relations. Please go ahead.

Ana Raman: Thank you, Operator, and good morning, everyone. With me are Dani Reiss, our Chairman and CEO, Neil Bowden, Chief Financial Officer, Carrie Baker, President of Brand and Commercial, and Beth Clymer, President of Finance Strategy and Administration. We will make forward-looking statements on our call today that are based on assumptions and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected. In addition, the outlook that we provide today supersedes all prior financial outlook statements made by Canada Goose. We undertake no obligation to update these statements, except as required by law.

Speaker Change: Thank you operator, and good morning, everyone with me are Danny Reese, our chairman and CEO, Neil <unk> Chief Financial Officer.

Ana Raman: You can read about these assumptions, risks, and uncertainties in our press release this morning, as well as in our filings with U.S. and Canadian regulators. These documents are also available on the Investor Relations section of our website, along with our Form 20-F for Fiscal 2024, in which you'll find additional information and new disclosures that we believe will strengthen your understanding of our business strategy, business model, and performance. We report in Canadian dollars, so all amounts discussed today are in Canadian dollars unless otherwise indicated.

Speaker Change: Cary Baker President of brand and commercial and best climber, President of Finance strategy and administration.

Speaker Change: We will make forward looking statements on our call today that are based on assumptions and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected. In addition, the outlook that we provide today supersedes all prior financial outlook statements made by Canada.

We undertake no obligation to update these statements except as required by law.

Speaker Change: You can read about these assumptions risks and uncertainties in our press release this morning, as well as in our filings with U S and Canadian regulators. These documents are also available on the Investor Relations section of our website along with our form 20-F for fiscal 'twenty 'twenty four and <unk>.

Speaker Change: You will find additional information and new disclosures that we believe will strengthen your understanding of our business strategy business model and performance.

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

Speaker Change: Please note that financial results described on today's call will compare fourth quarter results ended March 31, 2024 with the same period ended April 2nd 2023, unless otherwise noted.

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

Ana Raman: Please note that financial results described on today's call will compare fourth-quarter results ended March 31, 2024, but the same period ended April 2, 2023, unless otherwise noted. Lastly, our commentary today will also include certain non-IFRS financial measures, which are reconciled at the end of our earnings press release. For today's call, Dani, Neil, Carrie, and Beth will deliver prepared remarks, following which we will open the call to take questions. With that, I'll turn the call over to Dani.

Speaker Change: For today's call Dani Neill Currie and Beth will deliver prepared remarks, following which we will open the call to take questions with that I'll turn the call over to Danny.

Dani Reiss: Thanks, Ana, and good morning, everyone. Canada Goose reported a solid fourth quarter, growing revenue and adjusted EBIT by 22% and 51%, respectively, year over year. Our performance in the quarter surpassed our expectations and capped off an important year of execution across a strategic pillar. For fiscal 2024, we delivered $1.33 billion in total revenue, up nearly 10% over last year, and adjusted EBIT of $171.8 million. I'm extremely proud of the business we're building, of our rich heritage and craftsmanship, and the progress we've made toward transforming our business to achieve sustained rates of growth in the future. The year included several noteworthy accomplishments. Let me let me share some of those highlights.

Dani Reiss: Thanks, Anna and good morning, everyone, Canada reported a solid fourth quarter growing revenue and adjusted EBIT by 22% and 51% respectively year over year.

Dani Reiss: Four months in the quarter surpassed our expectations and capped off an important year of execution across our strategic pillars.

Speaker Change: For fiscal 2024, we delivered $1.33 billion in total revenue up nearly 10% over last year and adjusted EBIT.

Speaker Change: Of $171 8 million.

Speaker Change: I'm extremely proud of the business, we were building of a rich heritage of craftsmanship and the progress we've made towards transforming our business to achieve sustained rates of growth in the future.

Speaker Change: The year included several noteworthy accomplishments.

Speaker Change: Let me share some of those islands.

Dani Reiss: We expanded our global retail footprint to 68 permanent stores in our key markets, more than triple the number that we had five years ago. We successfully expanded our product offering with our new sneaker line. And importantly, we implemented our transformation program to improve our operational infrastructure and set the foundation for our future growth. As part of this work, we realized cost savings, lowered inventory, and simplified how we work while reorganizing our management team and placing the right leaders in the right roles to improve collaboration, speed to market, and the efficiency with which we operate. Well, we accomplished a lot in fiscal 24, but we didn't make as much financial progress as we would have liked.

Speaker Change: We expanded our global retail footprint to 68 permanent stores in our key markets, we're going to triple the number that we had five years ago.

Speaker Change: Excess spread.

Speaker Change: Expanded our product offering with our new Sneaker line and importantly, we implemented our transformation program to improve our operational infrastructure and set the foundation for future growth.

Speaker Change: As part of this work, we realized cost savings lower inventory and simplified how we work with reorganizing our management team I assume the right leaders in the right roles to improve collaboration speed to market.

Speaker Change: The efficiency with which we operate.

Speaker Change: While we accomplished a lot in fiscal 'twenty four we didn't make as much financial progress as we would have liked.

Dani Reiss: Some of this was due to external factors outside of our control, such as the ongoing challenging consumer environment and the warm winter. But after a period of rapid growth and retail expansion, we also recognize that our resources were spread across too many priorities, impacting our ability to deliver our ambitious, near, and long-term targets. To this end, our leadership team began our fiscal 25 planning process with the goal of operational excellence in mind. We exited this process with the three strategic growth pillars we communicated last year intact. As a reminder,

This was due to external factors outside of our control such as the ongoing challenging consumer environment and a warm winter.

Speaker Change: After a period of rapid growth and retail expansion. We also recognize that our resources were spread across too many priorities impacting our ability to deliver on our ambitious near and long term targets.

Speaker Change: To this end our leadership team began our fiscal 'twenty five planning process with the goal of operational excellence in mind.

Speaker Change: We exited this process with the three strategic growth pillars, we communicated last year impact.

Speaker Change: As a reminder.

Speaker Change: These were building a DTC network driving consumer focused growth and product expansion.

Dani Reiss: These were building a DTC network, driving consumer-focused growth, and product expansion. We also emerged from that process with three critical operating imperatives for this fiscal year, which focus on us doing fewer things really, really well. These things are number one, setting the foundation for the next phase of our product and brand evolution; two, implementing best-in-class luxury retail execution; and three, simplifying our business and the way we operate. Our first imperative focus on product and brand is underway as we welcome our first ever creative director, Heider Ackerman, to our company.

Speaker Change: We also emerge from that process with three critical operating imperatives for this fiscal year, which focused on us doing fewer things really really well.

Things are number one setting the foundation for the next phase of our product and brand evolution to <unk>.

Speaker Change: Implementing best in class luxury retail execution, and three simplifying our business and the way we operate.

Speaker Change: Our first imperative focus on product and brand is underway as we welcome our first ever creative director Hydro acumen to our company hydro as influential in the luxury space and will lead the evolution of our product vision as we've reached an inflection point in our brands growth.

Dani Reiss: Hyder is influential in the luxury space and will lead the evolution of our product vision as we reach an inflection point in our brand's growth. When I met Heider, it was clear that he understood our heritage and our vision to be an enduring luxury brand that leads with function, craftsmanship, and style. With Heider on board, we intend to elevate the Canada Goose brand and take our offer to another level. From our new design studio in Paris, Hydro will be working closely with our teams to integrate Canada Goose values and vision in innovative ways over the coming season.

Speaker Change: When I met Hyder it was clear that he understood our heritage and a revision to be an enduring luxury branded leaves with function craftsmanship and style with Hydra onboard we intend to elevate the Kennedys brand and take our offering to another level.

Speaker Change: From our new design studio in Paris, Hydro will be working closely.

Speaker Change: Our teams to integrate tend to use values and vision innovative ways over the coming seasons.

Dani Reiss: While his first seasonal capsule collection will be available in the 2024 fall winter season, his mark on our company is already visible with renewed excitement and energy across the entire organization. Yesterday, along with our announcement of Hyder's appointment, we launched a new hoodie he designed, benefiting Polar Bears International, a long-standing partner to raise awareness of the impact of global climate change. This launch features an integrated marketing campaign with Academy Award-winning actor, producer, author, and activist Jane Fonda, with proceeds from the sale of a sweatshirt going to PBI to fund vital conservation research and education that they do.

Speaker Change: While his first seasonal capsule collection will be available in the 2020 for fall winter season, as Mark on our company is already visible with renewed excitement and energy across the entire organization.

Speaker Change: Yesterday, along with our announcement of hydrous appointment, we launched a new hoodie. He designed benefiting polar bears international a long standing partner to raise awareness of the impact of global climate change.

Speaker Change: This launch features an integrated marketing campaign with Academy Award, winning actor producer Arthur and Actavis Jane Fonda with proceeds from the sale of the Sweatshirt go into <unk> to find a vital conservation research and education that they do.

Dani Reiss: We are super excited to have Haider on board and to see his vision unfold across our product portfolio. On our call today, we will discuss our fourth quarter results and accomplishments and share more details on our key operating imperatives for fiscal 2025 as we prepare the next phase of our growth. Before I pass over to Neil to discuss our financial performance, I want to thank our exceptionally talented and hardworking team. You are the backbone of our company, and we truly value your passion and your contribution.

Speaker Change: We are super excited to have heightened onboard and to see envision unfold across our product portfolio.

Speaker Change: On our call today, we will discuss our fourth quarter results and accomplishments and share more details on our.

Speaker Change: Our key operating imperatives for fiscal 2025, as we prepare the next phase of our growth.

Speaker Change: Before I pass over to Neil to discuss our financial performance I want to thank our exceptionally talented and hardworking team.

Speaker Change: Are the backbone of our company and we truly value your passion and your contributions.

Dani Reiss: And to the investor community, we are still only a $1.3 billion Canadian revenue brand in a space with significant market potential. And we are just getting started. You will hear from us today that we have work to do, but also that we have a strong team in place, an incredible brand, and a plan we are all confident in delivering this year. We're super energized to unleash our potential. Thanks, Dani.

Speaker Change: And to the Investor community, we are still only a $1 3 billion Canadian revenue brand in the space with significant market potential and we are just getting started.

Neil: You will hear from US today that we have work to do but also that we have a strong team in place and incredible brand and our plan. We are all confident in delivering this year, where super energized to unleash our potential.

Speaker Change: Thanks Danny.

Neil Bowden: Stepping into the CFO role at this moment is exciting, and I look forward to sharing more about the financial performance of this iconic brand today and for future earnings. I'll first provide a review of our Q4 financial performance and later discuss our outlook for Fiscal 25. Revenue in our fourth quarter increased 22% year over year or 23% on a constant currency basis to $358 million. DTC sales of $271.5 million grew 19% or 21% on a constant currency basis over the same period last year.

Speaker Change: Stepping into the CFO role at this moment is exciting and I look forward to sharing more about the financial performance of this iconic brand today and on future earnings calls.

Speaker Change: I'll first provide a review of our Q4 financial performance and later discuss our outlook for fiscal 'twenty five.

Speaker Change: Revenue in our fourth quarter increased 22% year over year or 23% on a constant currency basis to $358 million.

Speaker Change: <unk> sales of 271, 5 million grew 19% or 21% on a constant currency basis over the same period last year.

Neil Bowden: Our D2C performance was driven by strong retail sales in Asia-Pacific, supported by healthy traffic in advance of the Lunar New Year, and in North America, as online traffic increased in January, with the later onset of more seasonal weather versus last year. Breaking this down further, First,

Speaker Change: Our DTC performance was driven by strong retail sales in Asia Pacific supported by healthy traffic in advance of the lunar new year and in North America as online traffic increased in January with the later onset of more seasonal weather versus last year breaking this down further.

Speaker Change: First.

Neil Bowden: From a sales channel perspective, store comps were relatively flat, while e-commerce experienced outsized positive performance, mainly on the strength of improved return levels this year compared to last. Store sales represented over 70% of our overall D2C revenue, both in Q4 and for the full fiscal year. Second, at the regional level, both North America and Asia-Pacific delivered comparable sales growth in the mid-single digits during the quarter. This performance was noteworthy, especially in Asia Pacific, as the region competed against a very good Q4 in fiscal 2020.

Speaker Change: From a sales channel perspective store comps were relatively flat while e-commerce experienced outsized positive performance, mainly on the strength of improved return levels this year compared to last year.

Speaker Change: Store sales represented over 70% of our overall DTC revenue both in Q4 and for the full fiscal year.

Speaker Change: Second at the regional level, both North America, and Asia Pacific delivered comparable sales growth in the mid single digits. During the quarter. This performance was noteworthy, especially in Asia Pacific is the region Comped against a very good Q4 and fiscal 2023.

Neil Bowden: EMEA experienced a more promotional environment among both competitors and wholesalers, which challenged our D2C execution. A note on our sales per square foot. For the year ending March 31st, average sales per square foot for stores open for the full 52 weeks in fiscal 24 were $3,963 per square foot, which was relatively flat compared to the average sales per square foot of stores open for the same period of time in the prior fiscal year.

Speaker Change: EMEA experienced a more promotional environment, among both competitors and wholesalers, which challenged our D to C execution.

Speaker Change: A note on our sales per square foot for the year ending March 31 average sales per square foot for stores opened for the full 52 weeks in fiscal 'twenty four was $3963 per square foot, which was relatively flat to the average sales per square foot of stores opened for the say.

Speaker Change: <unk> period of time in the prior fiscal year.

Neil Bowden: While this is a very strong sales per square foot baseline that we are proud of, it is below historical levels as higher sales per square foot in Asia Pacific during the fiscal year were offset by lower sales per square foot in both North America and EMEA. You've heard us talk about the $4,000 per square foot threshold with regard to our store economics, and we expect to work towards this as a key performance indicator in our D2C segment as we improve the efficiency and execution of our retail operations. Carrie will share some of the detailed tactics that we expect will deliver results shortly.

Speaker Change: This is a very strong sales per square foot baseline that we're proud of it is below historical levels as higher sales per square foot in Asia Pacific during the fiscal year was offset by lower sales per square foot in both North America and EMEA.

Speaker Change: You've heard us talk about the $4000 per square foot threshold with regards to our store economics, and we expect to work towards this as a key performance indicator in our D to C segment, as we improve the efficiency and execution of our retail operations carry will share some of the detailed tactics that we expect will deliver results shortly.

Neil Bowden: In Q4, wholesale revenue of $41.4 million was down 9% year over year, or 8% on a constant currency basis. This reflected our strategy to tighten supply to wholesale partners in a softer wholesale business environment and the continued winnowing of partners that are not aligned with our brand position. Q4 revenue in our other segment was $45.1 million, compared with $20.2 million in the same period last year. As a reminder, this segment comprises revenue from sales to employees, friends, and family sales, and third-party sales from our newly acquired knitwear facility.

Speaker Change: In Q4 wholesale revenue of $41 4 million was down 9% year over year or 8% on a constant currency basis. This reflected our strategy to tightened supply to wholesale partners and a softer wholesale business environment and the continued winnowing of partners that are not aligned with our <unk>.

<unk> positioning.

Speaker Change: Q4 revenue in our other segment was $45 1 million compared with $20 2 million in the same period last year.

Speaker Change: As a reminder, this segment comprises revenue from sales to employees friends and family sales and third party sales from our newly acquired Knitwear facility.

Neil Bowden: The year-over-year growth in this segment is primarily the result of additional friends and family sales conducted versus the fourth quarter last year, which is in line with our inventory management strategy, as Beth will detail shortly. Less of a factor but still meaningful was our employee sales program that was implemented this past fiscal year and allows our people to purchase product at a significant discount, empowering them to be brand ambassadors around the world. Moving on to a brief regional overview.

Speaker Change: The year over year growth in this segment is primarily the result of additional friends and family sales conducted versus the fourth quarter last year, which is in line with our inventory management strategy as Beth will detail shortly.

Speaker Change: Less of a factor, but still meaningful was our employee sales program that was implemented this past fiscal year and allows our people to purchase product at a significant discount empowering them to be brand ambassadors around the world.

Speaker Change: Moving to a brief regional overview.

Neil Bowden: In Q4, Asia-Pacific was our fastest-growing region, with revenue up 33% on a constant currency basis over the same period last year, supported by domestic shopping in mainland China and mainland Chinese tourists, driving strong growth in Hong Kong and Macau, reflecting positive consumer response to our ongoing product planning and merchandising. Online and in-store sales in the period were bolstered by our Lunar New Year marketing campaign and complemented by a longer peak selling period given the later date of the Lunar New Year compared to last year.

Speaker Change: In Q4 Asia Pacific was our fastest growing region with revenue up 33% on a constant currency basis over the same period last year supported by domestic shopping in mainland China in mainland Chinese tourists.

Speaker Change: Driving strong growth in Hong Kong, and Macau, reflecting positive consumer response to our ongoing product planning and merchandising efforts.

Speaker Change: Online and in store sales in the period were bolstered by our lunar new year marketing campaign and complemented by a longer peak selling period, given the later dated lunar new year compared to last year.

Neil Bowden: We also saw a significant increase in tourists from mainland China shopping at our Japanese stores in Q4, contributing to double-digit sales growth in that country. Overall, Chinese clients increased spending with us both domestically and outside of their home market, reflecting the strength of our brand with this important consumer cohort and despite macro and economic pressures impacting that market. North America revenue increased 24.2% on a constant currency basis over the same period last year, with each of Canada and the United States delivering more than 20% year over year growth on the strength of new stores in the US, D to C comparable sales across the region, and successful execution of friends and family events.

Speaker Change: We also saw a significant increase in tourists from mainland China shopping at our Japan stores in Q4 contributing to double digit sales growth in that country.

Speaker Change: Overall Chinese clients increased spending with us both domestically and outside of their home market, reflecting the strength of our brand with this important consumer cohort and despite macro and economic pressures impacting that market.

North America revenue increased 24, 2% on a constant currency basis over the same period last year with each of Canada, and the United States delivering more than 20% year over year growth on the strength of new stores in the U S. DTC comparable sales across the region and successful execution of friends and family events.

Speaker Change: <unk>.

Neil Bowden: AMIA grew 2.7% year over year on a constant currency basis, supported by sales from our new stores and friends and family sales during the quarter, but continued to contend with pressured consumer spending and an intense promotional environment on product. Q4 provides a unique opportunity for our consumers to experience the full range of our product assortment. We started the quarter with strong performance from heavyweight down, owing to more typical seasonal temperatures as well as the Lunar New Year. As the quarter proceeded, and much of the world embraced spring, we saw significant growth in apparel, specifically fleece and sweats, and our everyday collection, which includes windwear.

Speaker Change: EMEA grew two 7% year over year on a constant currency basis supported by sales from our new stores and friends and family sales during the quarter, but continued to contend with pressured consumer spending and an intense promotional environment.

Speaker Change: On product.

Speaker Change: Q4 provides a unique opportunity for our consumers to experience the full range of our product assortment. We started the quarter with strong performance from heavyweight down owing to more typical seasonal temperatures as well as lunar new year.

Speaker Change: As the quarter proceeded and much of the world embrace spring we.

Speaker Change: We saw significant growth in apparel, specifically fleece sweats, and our everyday collection, which includes wind where these categories have increased materially over the past few years as we have broadened our offering.

Neil Bowden: These categories have increased materially over the past few years as we have broadened our offer. Turning to gross profit. Our fourth quarter gross profit grew 22% year-over-year to $233 million, driven by higher D2C and other revenue, leading to 20 basis points of gross margin expansion. Q4 D to C gross margin increased 60 basis points to 73.9% due to pricing, favorable freight and duty, and product mix, partially offset by an inventory adjustment related to our generations business.

Speaker Change: Turning to gross profit.

Speaker Change: Our fourth quarter gross profit grew 22% year over year to $233 million driven by higher DTC and other revenue leading to 20 basis points of gross margin expansion.

Speaker Change: Q4 D to C. Gross margin increased 60 basis points to 73, 9% due to pricing favorable freight and duty and product mix, partially offset by an inventory adjustment related to our generation business.

Neil Bowden: Wholesale gross margin rose 400 basis points to 39.6%, mainly due to raw material provisions taken in Q4 of fiscal 23 that did not recur this year, partially offset by a lower proportion of heavyweight down sales in our product mix during the quarter. D2C operating income increased by $14.4 million year over year in Q4 to $104.8 million.

Speaker Change: Wholesale gross margin rose 400 basis points to 39, 6%, mainly due to raw material provisions taken in Q4 of fiscal 'twenty three that did not recur this year, partially offset by a lower proportion of heavy weighed down sales in our product mix during the quarter.

Speaker Change: Okay.

Speaker Change: <unk> operating income increased by $14 $4 million year over year in Q4 to $104 8 million.

Neil Bowden: Operating margin, however, declined 110 basis points despite modest gross margin improvement due to the number of new store additions and D to C comparable sales. Wholesale operating income was $3.9 million, with an operating margin of 9.4%, up 0.2 million and 130 basis points, respectively, over last year, due to the improvement in wholesale gross margin, partially offset by operating de-leverage and lower wholesale revenue during the quarter. Adjusted EBIT was $40.1 million, up from $26.6 million in Q4 last year due to higher gross profit, partially offset by higher SG&As. The increase in SG&A spend was primarily due to costs associated with the expansion of our retail business.

Speaker Change: Operating margin, however declined 110 basis points, despite modest gross margin improvement due to the number of new store additions despite DTC comparable sales growth.

Speaker Change: Wholesale operating income was $3 9 million.

Speaker Change: With an operating margin of nine 4% up zero point $2 million and 130 basis points, respectively over last year due to the improvement in wholesale gross margin, partially offset by operating deleverage on lower wholesale revenue during the quarter.

Speaker Change: Adjusted EBIT was $40 1 million up from $26 6 million in Q4 last year due to higher gross profit, partially offset by higher SG&A spend.

Speaker Change: The increase in SG&A spend was primarily due to costs associated with the expansion of our retail network.

Neil Bowden: While SG&A costs related to our transformation program are excluded from adjusted EBIT, we wound down our consulting engagements and associated costs related to the program in Q4. We also took an $11.1 million severance charge as a result of the workforce reduction completed in March, which has been adjusted. Finally, Q4 adjusted net income attributable to shareholders was $19.3 million, or 19 cents per diluted share, with some EPS benefits realized through our active buyback program during fiscal 2024, when we repurchased approximately 7.8 million shares throughout the year, including $1.7 million in Q4 alone.

While SG&A costs related to our transformation program are excluded from adjusted EBIT.

Speaker Change: We wound down our consulting engagements and associated costs related to the program. In Q4. We also took an $11 1 million severance charge as a result of the work force reduction completed in March which has been adjusted.

Speaker Change: Finally, Q4, adjusted net income attributable to shareholders was $19 3 million or <unk> 19 per diluted share with some EPS benefit realized through our active buyback program during fiscal 2024, when we repurchased approximately seven 8 million shares throughout the year, including one point.

Speaker Change: $7 million in Q4 alone.

Neil Bowden: Turning to our balance sheet, at year end, inventory was $445.2 million, down 6% year over year, driven by a notable decrease in finished goods and raw materials, offset by an increase in work in process as we onboarded our new knitwear facility. We ended the year with $584.1 million of net debt on our balance sheet compared with $468.1 million at the end of the fourth quarter of fiscal 23.

Speaker Change: Turning to our balance sheet.

Speaker Change: At year end inventory was $445 2 million down 6% year over year driven by a notable decrease in finished goods and raw materials offset by an increase in work in process as we on boarded our new knitwear facility.

Speaker Change: We ended the year with $584 1 million of net debt on our balance sheet compared with $468 1 million at the end of the fourth quarter of fiscal 'twenty three our net debt leverage at the end of Q4 of two times adjusted EBITDA was well within our acceptable range down.

Neil Bowden: Our net debt leverage at the end of Q4 of two times adjusted EBITDA was well within our acceptable range, down slightly compared to 2.1 times at the end of Q3, but up from 1.7 times at the end of Q4 of fiscal 23, due to the lower cash levels on hand at the end of this fiscal year. Now, on to our transformation program. In February 2023, we shared a target of achieving $150 million of transformation program benefits.

Speaker Change: Slightly compared to two one times at the end of Q3.

Speaker Change: But up from one seven times at the end of Q4 fiscal 'twenty three to the lower cash levels on hand at the end of this fiscal year.

Now onto our transformation program.

Speaker Change: In February 2023, we shared a target of achieving $150 million of transformation program benefits.

Neil Bowden: As a reminder, this target was a combination of hard cost takeout and store and marketing productivity, which means higher revenue and improved operating margin on that revenue and future cost avoidance. In fiscal 24, we realized approximately $30 million of in-year benefits related to the transformation program that is captured in our annual results that we are reporting today, split evenly between cost savings, including headcount, and productivity. It is not lost on us, however, that while delivering $30 million of benefits is a significant achievement, we have also reported flat adjusted EBIT compared to our last fiscal year. This is simply not good enough.

Speaker Change: As a reminder, this target was a combination of hard cost takeout.

Speaker Change: <unk> and marketing productivity, which means higher revenue and improved operating margin on that revenue and future cost avoidance.

Speaker Change: In fiscal 'twenty, four we realized approximately $30 million of in year benefits related to the transformation program that is captured in our annual results that we're reporting today.

Speaker Change: Split evenly between cost savings, including head count and productivity.

Speaker Change: It is not lost on us however, that while delivering $30 million of benefits is a significant achievement.

Speaker Change: We have also reported flat adjusted EBIT compared to our last fiscal year. This.

Speaker Change: This is simply not good enough.

Neil Bowden: To build on these efforts and improve operating leverage, which is the ultimate goal of this program, we are rolling the workstreams of our transformation program into the operating imperatives Dani mentioned earlier. We believe this will lead to lower SG&A as a percentage of revenue through measurable and observable cost reduction and improvements in our D2C comp sales. The first concrete step, which simplified our organizational structure and will lead to an immediate improvement in the cost base, was the reduction of our workforce at the end of fiscal 2020.

Speaker Change: To build on these efforts and improve operating leverage which is the ultimate goal of this program.

Speaker Change: We are rolling the work streams of our transformation program into the operating imperatives, Danny mentioned earlier.

Speaker Change: We believe this will lead to lower SG&A as a percentage of revenue through measurable and observable cost reduction.

Speaker Change: And improvements in our DTC comp sales.

Speaker Change: The first concrete step, which simplified our organizational structure and will lead to immediate improvement in the cost base was the reduction of our workforce at the end of fiscal 'twenty four.

Neil Bowden: That wraps up the financial summary for our fourth quarter. I'll now hand it to Carrie and Beth to discuss our three operating imperatives for the year, and I'll be back after that to share our Fiscal 25 financial outlook.

Speaker Change: That wraps up the financial summary for our fourth quarter.

Speaker Change: I'll now hand, it to carry in Bath to discuss our three operating imperatives for the year and I will be back after that to share our fiscal 'twenty five financial outlook.

Carrie Baker: Thanks, Neil. As Dani mentioned, our three key operating imperatives for Fiscal 25 are number one, product and brand evolution, number two, best-in-class luxury retail execution, and number three, simplifying our business. I'm excited to share more context on the first two, so let's start with our product and brand evolution. Canada Goose is globally renowned for warmth and outerwear.

Speaker Change: Thanks Neil.

Dani Reiss: Danny mentioned, our three key operating imperatives for fiscal 'twenty five our number one product and brand evolution to best in class luxury retail execution and three simplifying our business I'm excited to share more context on the first two so let's start with our product and brand evolution.

Dani Reiss: Canada Goose is globally renowned for warmth and outerwear, our opportunity and our aspirations. However are much bigger.

Carrie Baker: Our opportunity and our aspirations, however, are much bigger. We are on a journey, one that delights our customers across all seasons, in all regions, and enables them to thrive in any environment. We've already made great strides. Customers are increasingly choosing Canada Goose for different occasions in different climates. Of course, we remain top of mind for protection from the cold, but now also for our lightweight puffers, sweaters, apparel, windwear, and rainwear, and, of course, footwear.

Dani Reiss: We are on a journey, one that delights our customers across all season in all regions and enables them to thrive in any environment.

Dani Reiss: We have already made great strides customers are increasingly choosing Canada goose for different occasions and different climate.

Dani Reiss: Of course, we remain top of mind for protection from the cold, but now also far lightweight puffers sweaters apparel, when we're in rainwear and of course footwear.

Carrie Baker: Some of our best-selling products last year included our Highbridge Knit Jacket, the Huron Hoodie, and the Stormont Zip Sweater, indicating just how far we've come in expanding our share in the closets of our loyal clients and becoming a brand of choice beyond the parka. Our opportunity and task now is to drive this at scale. We also know we have an opportunity to make more significant strides on the style spectrum while retaining our heritage as a function-first brand.

Dani Reiss: Some of our best selling products last year include our hybrids net jacket to Huron Hoodie and the storm flatter, indicating just how far we've come and expanding our share in the clauses of our loyal clients and becoming a brand of choice beyond just the parka.

Dani Reiss: Our opportunity now is to drive this at scale.

Dani Reiss: We also know we have an opportunity to make more significant strides on our style spectrum, while retaining our heritage as a function first brand.

Carrie Baker: We've taken a major step forward in this by bringing Haider Ackman on board, who we believe will help us bring fresh energy, style, and a new boldness to our offering. At the same time, we're reshaping our approach to brand building and marketing. Our brand strength remains, and we are well-recognized all over the world.

Dani Reiss: We've taken a major step forward.

Dani Reiss: With bringing either Ahmed on board, who we believe will help us bring fresh energy style and a new boldness into our offering.

Dani Reiss: At the same time, we're reshaping our approach to brand building and marketing.

Dani Reiss: Our brand strength remains and we are well recognized all over the world, but we have an opportunity to inject new energy and significantly grow our customer base as we attract new audiences and deepen our relationship with our existing customers.

Carrie Baker: But we have an opportunity to inject new energy and significantly grow our customer base as we attract new audiences and deepen our relationship with our existing customers. This year, we plan to invest in our brand with a focus on big brand moments and bolder brand expressions to accelerate brand momentum, meaning we plan to execute fewer brand stories with greater impact. We've built this brand on a belief that it's more powerful to make impressions than buy them, and in that way, we're returning to our roots.

Dani Reiss: This year, we plan to invest in our brand with a focus on big brand moments and bolder brand expressions to accelerate brand momentum, meaning we plan to execute fewer brand story with greater impact.

Dani Reiss: This brand on a belief that it's more powerful to make impressions than by them and in that way, we're returning to our rates.

Carrie Baker: What that involves is a multi-pronged approach from more tightly curating our social media content to beefing up our celebrity and influencer programs to creating disruptive experiences that can only be delivered by Canada Goose. This is different from how we've executed marketing over the past few years, but it's an old family recipe that we know delivers. The campaign we launched yesterday with Hyder and cultural icon Jane Fonda is a great example of how we intend to show up this year.

Dani Reiss: What that involves is a multipronged approach for more tightly curated our social media content to become celebrity and Influencer program to creating disruptive experiences that can only be delivered by can't indicate.

Dani Reiss: This is different from how we've executed marketing over the past few years, but it is an old family recipe that we know delivers.

Dani Reiss: The campaign, we launched yesterday with tighter and cultural icon Jane Fonda is a great example of how we intend to show up this year.

Carrie Baker: With a more tactical lens to drive new customer acquisition and repeat customer engagement, we're leveraging more targeted marketing activations through email, direct outreach, and curated in-store events that we started in earnest last year around things like NBA All-Star Weekend and the Lunar New Year, which generated solid revenue and EBIT. And our email campaigns in Q4 generated 55% more revenue compared to last year's campaigns as we scaled automated journeys, increased the frequency of communications, and implemented greater personalization.

Dani Reiss: With a more tactical Latin to drive new customer acquisition and repeat customer engagement, we're leveraging more targeted marketing activations through email direct outreach and curated in store events that we started in earnest last year around things like NBA, All star weekend, and lunar new year, which generated solid revenue and EBIT.

Dani Reiss: And our E mail campaigns in Q4 generated 65% more revenue compared to last year's campaigns as we scaled automated journeys increased the frequency of communications and implemented greater personalization.

Carrie Baker: We believe that digital marketing initiatives like these, plus our work to improve the content and speed of our e-commerce sites, will be a tailwind to Cisco 25 revenue, but it's important to understand that we will be focusing most of our resources on our retail store network. A big part of our brand evolution and showing up differently extends to our wholesale channel, which remains a vital part of our distribution network. We continue to reset and refresh our wholesale footprint.

Dani Reiss: We believe that digital marketing initiatives like these plus our work to improve the content and speed of our E. Commerce sites will be a tailwind to fiscal 'twenty five revenue, but it is important to understand that we will be focusing most of our resources on our retail store network.

Dani Reiss: A big part of our brand evolution and showing up differently extends to our wholesale channel, which remains a vital part of our distribution network.

Dani Reiss: We continue to reset and refresh our wholesale footprint.

Carrie Baker: To focus our efforts with partners that are aligned with our luxury brand positioning by first tightening the supply of inventory, which helps increase the exclusivity of our product and allows us to better control how our brand shows up to customers, and second, by continuing to reduce the number of partners and the number of doors within our larger partners. We will make significant headway on this front in fiscal 25. As Neil will describe more, we expect this activity to result in a decline in wholesale revenue next year.

Dani Reiss: To focus our efforts with partners that are aligned with our luxury brand positioning my first tightening of supply of inventory, which helps increase the exclusivity of our product and allows us to better control, how our brand shows up to customers.

Dani Reiss: And second by continuing to reduce the number of partners and number of doors within our larger partners.

Dani Reiss: We will make significant headway on this.

Dani Reiss: Fiscal 'twenty five.

Speaker Change: As Neal will describe more we expect this activity to result in a decline in wholesale revenue next year. However, we strongly believe that this pullback for more effectively support our DTC growth in fiscal 'twenty five better elevate our brand and re grow this channel in the future.

Carrie Baker: However, we strongly believe that this pullback will more effectively support our DTC growth in fiscal 25, better elevate our brand, and reinvigorate this channel in the future. So, let me now give some color and context to our second operating imperative, which is implementing best-in-class luxury retail execution. In Q4, we added new locations in Honolulu, Hawaii; Nanjing, China; and Melbourne, Australia, bringing our permanent store count to 68 at the end of March.

Speaker Change: So let me now give some color and context to our second operating imperative, which is implementing best in class luxury retail execution.

Speaker Change: In Q4, we added new locations in Honolulu, Hawaii, Nanjing, China, and Melbourne, Australia, bringing a permanent store count to 68 at the end of March.

Carrie Baker: With only seven years under our belts as retailers, we're proud of the speed and breadth of our retail expansion, particularly given the fact that we did it during a very disruptive global pandemic. But we also know we must get more out of the store network we have, which is why retail execution will continue to be a key area of focus. As part of our recent organizational streamlining, our global stores function was moved to Dan Binder, who has decades of luxury retail experience and now has end-to-end oversight over our global stores and sales planning and operations.

Speaker Change: With only seven years under our belt as retailers were proud of the speed and breadth of our retail expansion, particularly given the fact that we did it during a very disruptive global pandemic.

But we also know we must get more out of the store network. We have which is why retail execution will continue to be a key area of focus as par.

Speaker Change: Our recent work streamlining our global store assumption was moved to Dan Binder, who has decades of luxury retail experience and now has end to end oversight of our global stores and sales planning and operations.

Speaker Change: With this updated structure, we're doing three things to increase the productivity of our global network.

Carrie Baker: With this updated structure, we are doing three things to increase the productivity of our global network. First, we are slowing the pace of new store openings. We plan to open three new stand-alone stores this year, compared with 14 out of the 17 permanent stores opened in fiscal 24 being stand-alone.

Speaker Change: First we are slowing the pace of new store openings, we plan to open three new Standalone stores. This year compared with 14 out of the 17 permanent stores opened in fiscal 'twenty four being stand alone.

Carrie Baker: In addition, in FY25, we will open four concessions and convert three temporary stores to permanent. This change in pace is intentional, and this year allows us to focus primarily on driving sales productivity and comp sales growth in our current footprint. Second, we are leveling up our retail operations and processes. You all know the saying, retail is detail.

Speaker Change: In addition in FY 'twenty five we will open for concessions and convert three temporary storage to permanent.

Speaker Change: This change in pace is intentional and this year allows us to focus primarily on driving sales productivity and comp sales growth in our current footprint.

Speaker Change: Second we are leveling up our retail operations and processes.

Speaker Change: I'll notice AG retail is detail, we are still a young retailer and learning how to perfect our operations alongside rapid product and geographic expansion.

Carrie Baker: We are still a young retailer and learning how to perfect our operations alongside rapid product and geographic expansion. In fiscal 24, we started to introduce initiatives focused on enhancing merchandising planning, localizing product assortment, as well as improving labor productivity and our returns process, all informed by our transformation program.

Speaker Change: In fiscal 'twenty four we started to introduce initiatives focused on enhancing merchandising planning localizing product assortment as well as improving labor productivity and our returns process all informed by our transformation program.

Carrie Baker: We saw some benefits in our early phases of implementation, and we still have work to do across these areas and others to address the foundation of our network, as well as build resilience so that we are well equipped to compete, even when external conditions are not favorable. As a result, we expect to more profitably grow our sales as we better align product assortments by store to best serve their customers, better balance team schedules with traffic levels, and optimize the replenishment process to ensure we deliver the right products in the right place at the right time, cost effectively. The third area of retail execution is to elevate the customer experience. In luxury, experience is everything.

Speaker Change: We saw some benefits in our early phases of implementation and we still have work to do across these areas and others to address the foundation of our network as well as the resilience we are well equipped to compete even when external conditions are not favorable.

Speaker Change: As a result, we expected more profitably grow our sales as we better aligned product assortments by store to best serve their customers better balanced team schedules with traffic levels and optimize the replenishment process to ensure we deliver the right products in the right place at the right time cost effectively.

Speaker Change: The third area of retail execution is to elevate the customer experience.

Speaker Change: In luxury experience is everything.

Carrie Baker: Our Canadian Warmth program is at the core of ensuring the in-store consumer journey feels distinctly luxury and Canada Goose, to convert browsers into long-term, repeat customers and brand advocates. Our focus in Fiscal 25 is to embed this at scale across our network. Our goal is a more consistent execution of Canadian warmth, achieved by stepping up our trading programs and implementing relevant and compelling incentives to generate conversion, cross-sell, and up-sell benefits. All of this work will take time.

Speaker Change: Canadian work program is at the core of ensuring the in store consumer journey, you'll distinctly luxury and Canada goose to convert browsers into long time repeat customers and brand advocates.

Speaker Change: Our focus in fiscal 'twenty five the trend benders that scale across our network.

Speaker Change: Our goal is a more consistent execution of Canadian warm.

Speaker Change: <unk> by stepping up our training programs and implementing relevant and compelling incentives to.

Speaker Change: Generate conversion cross sell and upsell benefits.

Elizabeth Danaher Clymer: However, we believe we will unlock significant value this fiscal year and cement best practices for years to come. Now I will pass it over to Beth, who will discuss our third operating imperative for fiscal 2025. Thanks, Carrie. Good morning, all.

Speaker Change: All of this work will take time. However, we believe we will unlock significant value this fiscal and cement best practices for years to come.

Speaker Change: Now I will pass it over to Beth who will discuss our third operating imperative for fiscal 2025.

Beth: Thanks, Carrie and good morning all.

Elizabeth Danaher Clymer: I'll now talk about our third operating imperative, to simplify and focus the way we operate. We are doing this with two anchors. Internal Operating Excellence and Focused Capital Deployment. First, achieving internal operating excellence. Put simply, this means we need fewer people working more effectively on fewer priorities and ensuring the results show up in our KPIs and in our P&L. As part of the organizational changes we made in March, we reduced our headcount. But it was about much more than just saving money. It was also about greater speed and agility.

Beth: I'll now talk about our third operating imperative.

Beth: To simplify and focus the way we operate.

Beth: We are doing this with two anchors.

Beth: Internal operating excellence and focused capital deployment.

Beth: First achieving internal operating excellence.

Beth: Put simply this means we need fewer people working more effectively on fewer priorities and ensuring the results show up in our Kpis and in our P&L.

Beth: As part of the Org changes we made in March we reduced our head count.

Beth: But it was about much more than just saving money it.

Beth: It was also about greater speed and agility.

Elizabeth Danaher Clymer: As we streamlined the organization, we also got our structure right. We increased our spans of control. We combine teams that were working on overlapping tasks or where silos have been making us less coordinated and less efficient. For example, in our operations organization, prior to the March changes, we had 12 people at the VP level and above. Well, this part of our organization is obviously large and complex, given our manufacturing footprint and our global supply chain. Candidly, this was just too much management overhead, and it led to additional complexity and siloed behavior.

Beth: As we streamline the organization, we also got our structure right.

Beth: We increased our spans of control.

Beth: We combine teams that were working on overlapping tasks or silos have been making us less coordinated and less efficient.

Beth: For example in our operations organization prior to the March changes, we had 12 people at the VP level and above.

Beth: While this part of our organization is obviously large and complex given our manufacturing footprint and our global supply chain candidly. This was just too much management overhead and it led to additional complexity in syler behaviors.

Elizabeth Danaher Clymer: Today, after the changes, we have only six VP and up positions in this function, a reduction of 50%, and those leaders are working more cross-functionally, nimbly, and effectively together to drive results. There are examples like this across the business. Overall, we eliminated over 25% of senior management roles in our corporate organization, compared to the total 17% headcount reduction.

Beth: Today after the changes we have only six VP in our possessions and assumption a reduction of 50% and those leaders are working more cross functionally nimbly and effectively together to drive results.

Beth: There are examples like that across the business overall, we eliminated over 25% of senior management roles in our corporate organization compared to the total 17% head count reduction.

Elizabeth Danaher Clymer: We've also eliminated meetings that aren't necessary anymore, and killed reports that took time but weren't being used to drive the business. All of this is about simplifying how we work. We are also narrowing our focus on initiatives we believe will drive more impact. Some examples we've already shared today, including opening fewer stores and dedicating the resources we freed up to retail execution, and also making fewer and more focused marketing bets. We're using data more rigorously to ensure we're making progress against these initiatives and driving accountability through the organization. Fewer people working more effectively on fewer priorities and driving results.

Beth: We've also eliminated meetings that arent necessary anymore killed report that took time, but werent being used to drive the business. All of this is about simplifying how we work.

Beth: We are also narrowing our focus on initiatives, we believe will drive more impact.

Beth: Some examples we've already shared today, including opening fewer stores and dedicating the resources to be freed up to retail execution.

Beth: Also making fewer and more focused marketing bets.

Beth: We're using data more rigorously to ensure we are making progress against these initiatives and driving accountability through the organization.

Beth: Fewer people working more effectively on fewer priorities in driving the results that's operating excellence.

Elizabeth Danaher Clymer: That's operating excellence. Second, we plan to deploy fewer capital expenditures in fiscal 25. Specifically, we're investing in a very selective group of new stores and a priority set of technology investments that bolster our retail operations, such as intelligent order management, as well as in the data architecture that supports our efforts to be a more data-driven organization. We also plan to right-size our inventory levels this year. Our inventory position is unique in a very positive way; we are vertically integrated for a large majority of our products.

Beth: Second we plan to deploy less capital expenditures in fiscal 'twenty five spin.

Beth: Specifically, we are investing in a very selective group of new stores and our priority set of technology investments that bolster our retail operations such as intelligent order management.

As well as in the data architecture that supports our efforts to be a more data driven organization.

Beth: We also plan to right size, our inventory levels this year.

Beth: Our inventory position is unique and a very positive way where.

Beth: We're vertically integrated for a large majority of our products.

Elizabeth Danaher Clymer: We carry high-quality, evergreen inventory, and our products are sold at full price in our mainline stores. And they're actually sold for more in the second or third year than they were in the first. That means we have lower obsolescence, markdown, and margin risk. These are great strengths.

Beth: We carry high quality ever evergreen inventory.

Beth: And our products are sold at full price in our mainline stores and they are actually sold for more in the second or third year than they were in the first.

Beth: That means we have lower obsolescence markdown and margin risk.

Beth: These are great strengths.

Elizabeth Danaher Clymer: But it also led us over the past few years to probably build more inventory than we should have. We wanted to be prepared to meet demand if it occurred, and we knew the inventory would hold its value. In fiscal 25, we'll shift focus to increasing our inventory efficiency, increasing working capital, and improving cash conversion. To do this, we are temporarily reducing production levels. First, with our third-party contract manufacturers and also at our own manufacturing facility.

Beth: But it also led us over the past few years to probably build more inventory than we should have we wanted to be prepared to meet the demand if it occurred and we knew the inventory would hold its value.

Beth: In fiscal 'twenty, five we'll shift that.

Beth: Focus on increasing our inventory efficiency, freeing up working capital and improving cash conversion to.

Beth: To do this we are temporarily reducing production levels first with our third party contract manufacturers and also at our own manufacturing facilities.

Elizabeth Danaher Clymer: We're also continuing a responsible buildout of an exit inventory strategy. Over the last year, we have thoughtfully used friends and family sales to exit slow moving and discontinued inventory. As a full price brand across our mainline stores, this is an environmentally friendly and brand-led way to exit discontinued styles and broken size runs. We will continue to leverage these in Fiscal 25. We expect these two efforts, plus achieving the sales goals Neil will outline, to help us improve our inventory turns from approximately 0.9 times in Fiscal 24 to above 1 in Fiscal 25.

Beth: We're also continuing our responsible buildout of an exit inventory strategy.

Beth: Over the last year, we have thoughtfully used friends and family sales to exit slow moving and discontinued inventory.

Beth: A full price brand across our mainline stores. This isn't an environmentally friendly and brand led way to exit discontinued styles and broken size run well.

Beth: We will continue to leverage these in fiscal 'twenty five.

Beth: We expect these two efforts plus achieving the sales calls and you'll outline to help us improve our inventory turns from approximately <unk> nine times in fiscal 'twenty four to above one in fiscal 'twenty five we've accomplished a lot in fiscal 'twenty four and so far in fiscal 'twenty, five simplifying and focusing the way we operate and we look forward to sharing more.

Elizabeth Danaher Clymer: We've accomplished a lot in Fiscal 24 and so far in Fiscal 25, simplifying and focusing the way we operate. And we look forward to sharing more on this over the course of the year. I'll now pass it over to Neal to wrap it up with our Outlook for Fiscal 25. Thanks.

Beth: On this over the course of the year.

Beth: I'll now pass it over to Neil to wrap it up with our outlook for fiscal 'twenty five.

Neil Bowden: Thanks, Beth. To start, for Fiscal 25, we are resuming annual financial guidance, which was our practice prior to Fiscal 2021. We believe that an annual view rather than quarterly offers better insight into and understanding of our evolving D2C model in the context of the seasonal nature of our business. It is also another example of simplification.

Neil: Thanks, Beth to start for fiscal 'twenty five we are resuming annual financial guidance, which was our practice prior to fiscal 2021, we.

Neil: We believe that an annual view rather than quarterly offers better insight into an understanding of our evolving DTC model in the context of the seasonal nature of our business.

Neil: It is also another example of simplification.

Neil Bowden: While our business planning requires detailed focus on every consumer who visits our retail stores and every jacket that we produce in our manufacturing facilities, our business is planned over the annual cycle, as we maintain a relentless focus to deliver throughout our peak season, even as demand for our products expands beyond this time. It is a key objective for the entire Canada Goose team to prepare for and execute on this massive opportunity, both from a consumer and revenue perspective.

Neil: While our business planning requires detailed focus on every consumer who visits our retail stores and every jacket that we produced in our manufacturing facilities. Our business is planned over the annual cycle as we maintain a relentless focus to deliver throughout our peak season, even as demand for our products expands beyond this timeframe.

Neil: It is a key objective for the entire Canada goose team to prepare for and execute on this massive opportunity both from a consumer and revenue perspective.

Neil Bowden: Our outlook for fiscal 25 continues to expect pressure on consumer spending due to the higher interest rate environment and geopolitical uncertainty. Also, while the team is focused on executing our operating imperatives, we acknowledge that change is hard, and as a result, expect the benefits of our work to be reflected gradually in our KPIs over fiscal 25, with more meaningful impact in the years ahead. With this in mind, in fiscal 25, we anticipate total revenue to grow in the low single digits year-over-year, with an approximate 25-75% split between the first half and second half of the fiscal year, respectively.

Our outlook for fiscal 'twenty five continues to expect pressure on consumer spending due to the higher interest rate environment and geopolitical uncertainty.

Neil: So while the team is focused on executing our operating imperatives. We acknowledged that change is hard and as a result expect the benefits of our work to be reflected gradually in our kpis over fiscal 'twenty five with more meaningful impact in the years ahead.

Neil: With this in mind in fiscal 'twenty five we anticipate total revenue to grow in the low single digits year over year with an approximate $25 to 75% split between the first half and second half of the fiscal year respectively.

Neil Bowden: We expect our D2C business to drive top line growth primarily due to low single-digit D2C comparable sales growth, largely driven by our efforts to strengthen our retail operations, as well as incremental revenue from our new stores you've heard about, the majority of which we plan to open ahead of our peak selling season. We plan to add 10 stores to our permanent store count, which includes three new standalone locations, three conversions from temporary stores, and four concessions.

Neil: We expect our DTC business to drive top line growth, primarily due to low single digit DTC comparable sales growth largely driven by our efforts to strengthen our retail operations as well as incremental revenue from our new stores, you've heard about the majority of which we plan to open ahead of our peak selling season.

Neil: Specifically.

Neil: We plan to add 10 stores to a permanent store count, which includes three new standalone locations three conversions from temporary stores and four concessions. Therefore, while we expect to incur less capital expenditure related to new stores. This year. We also expect less of an incremental topline impact from this cohort.

Neil Bowden: Therefore, while we expect to incur less capital expenditure related to new stores this year, we also expect less of an incremental top-line impact from this cohort on a per-store basis. Additionally, while we expect overall unit sales to grow in fiscal 25, we anticipate a continued shift in our product mix towards our emerging category. Also benefiting revenue growth is an average mid-single-digit price increase over last year across our D2C and wholesale channels, in line with Fiscal 25.

Neil: On a per store basis.

Neil: While we expect overall unit sales to grow in fiscal 'twenty five we anticipate a continued shift in our product mix towards our emerging categories.

Also benefiting revenue growth is an average mid single digit price increase over last year across our DTC and wholesale channels in line with fiscal 'twenty four.

Neil Bowden: We expect revenue growth driven by these factors to be largely offset by a year-over-year decrease in wholesale revenue of approximately 20% as we tighten the supply of inventory to our wholesale partners with a reduced order book, await inventory levels in this channel to improve, and continue rationalizing our wholesale accounts to elevate our distribution in that channel. Consolidated gross margin percentage is expected to be similar to fiscal 24, as benefits relating to the continued shift to D2C and pricing are offset by higher production costs on lower planned outcomes.

Neil: We expect revenue growth driven by these factors to be largely offset by a year over year decrease in wholesale revenue of approximately 20% as we tightened the supply of inventory to our wholesale partners with a reduced order book away inventory levels in this channel to improve and continue rationalizing our wholesale accounts.

Neil: To elevate our distribution in that channel.

Neil: Consolidated gross margin percentage is expected to be similar to fiscal 'twenty four as benefits relating to the continued shift to DTC and pricing are offset by higher production costs on lower planned output.

Neil Bowden: As a result... D2C operating margin is expected to be relatively flat with the prior year, and wholesale operating margin is expected to decline, driven by lower revenue and further deleveraging fixed costs. Corporate costs are also expected to be down year over year. Continuing with SG&A, the consulting fees and severance costs related to our transformation program of approximately $40 million in fiscal 24 will not recur from this year. And while they are not adjusted in our metrics for either period, they are important to isolate.

Neil: As a result.

Neil: <unk> operating margin is expected to be relatively flat with the prior year and wholesale operating margin is expected to decline driven by lower revenue further deleveraging fixed costs.

Neil: Corporate costs are also expected to be down year over year.

Neil: Continuing with SG&A, the consulting fees and severance costs with respect to our transformation program of approximately $40 million in fiscal 'twenty four will not recur from this year and while they are not adjusted in our metrics for either period. They are important to isolate.

Neil Bowden: Annualized transformation program benefits of approximately $25 million are expected to flow through our P&L, which includes some headwinds for inflation and annual people cost increases. These are further offset by a planned bonus for senior management levels for Fiscal 25, which we did not pay in Fiscal 24 in light of performance against our expectations, as well as key investments in our operating imperatives, particularly in our new creative director and Paris design studio.

Neil: Annualized transformation program benefits of approximately $25 million are expected to flow through our P&L, which includes some headwinds for inflation and annual people cost increases.

Neil: These are further offset by a planned bonus for senior management levels for fiscal 'twenty, five, which we did not pay in fiscal 'twenty four in light of performance against our expectations.

Neil: As well as key investments in our operating imperatives, particularly in our new creative director in Paris design studio.

Neil Bowden: Overall, we expect SG&A expenses, after considering these factors, to be flat in dollars compared to the prior year, with an improvement as a percentage of revenue. When we add it all up, we expect Adjusted Event Margin to expand by approximately 100 basis points compared to fiscal 2024. Finally, we expect adjusted net income per diluted share to grow by a mid-teen percentage over last year, with weighted average diluted shares outstanding of approximately $99 million for the balance of fiscal 2015.

Neil: Overall, we expect SG&A expenses after considering these factors to be flat in dollars compared to the prior year with an improvement as a percentage of revenue.

Neil: When we add it all up we expect adjusted EBIT margin to expand by approximately 100 basis points compared to fiscal 2024.

Neil: Finally, we expect adjusted net income per diluted share to grow by a mid teen percentage over last year with weighted average diluted shares outstanding of approximately $99 million for the balance of fiscal 'twenty five.

Neil: Finally.

Neil Bowden: We are providing an update on our long-term financial outlook. Over the past year, business conditions have changed significantly, and we're operating in a more challenging consumer environment since our long-term outlook was shared in February 2023. As we've discussed today, we also recognize that there are foundational pieces of work we must continue, particularly around D2C execution and operational discipline, leading to improved top-line performance and EBIT margin expansion. Therefore, we believe it is prudent to remove our long-term financial targets.

Neil: We are providing an update on our long term financial outlook over the past year business conditions have changed significantly and we're operating in a more challenging consumer environment since our long term outlook with shared in February 2023.

Neil: As we've discussed today, we also recognize that there are foundational pieces of work, we must continue particularly around DTC execution and operational discipline, leading to improved top line performance and EBIT margin expansion.

Neil: And therefore.

Neil: We believe it is prudent to remove our long term financial targets.

Neil Bowden: We continue to believe that Canada Goose has the potential to grow to a significant scale, given our rich heritage, iconic brand, and the considerable white space opportunity that lies ahead of us in terms of product, consumer, and D2C expansion. During fiscal 25, We expect to make significant progress on the operating imperatives you've heard about today, and at the appropriate time, when we have established a pattern of success with a clearer line of sight to build on that success.

Neil: We continue to believe that Canada goose is the potential to grow to significant scale, given our rich heritage iconic brand.

Neil: And the considerable white space opportunity that lies ahead of us in terms of product consumer and D to C expansion.

During fiscal 'twenty five.

Neil: We expect to make significant progress on the operating imperatives, you've heard about today and.

Neil: And at the appropriate time, when we have established a pattern of success with a clearer line of sight to build on that success, we plan to reintroduce long term financial targets.

Neil Bowden: We plan to reintroduce long-term financial planning. As Dani said, and I'll reiterate here on behalf of the Canada Goose management team, thank you to our committed group of people around the world who are passionate about Canada Goose and are relentlessly focused on delivering for our consumers every day so that we can collectively reach our potential. We'll now turn it back over to the operator to begin the Q&A.

Speaker Change: As Danny said and I'll reiterate here on behalf of the Canada Goose management team.

Speaker Change: In Q2, our committed group of people around the world.

Speaker Change: We're passionate about Canada goose and are relentlessly focused on delivering for our consumers every day. So that we can collectively reach our potential.

Speaker Change: I will now turn it back over to the operator to begin the Q&A.

Operator: Thank you. We will now begin our question and answer session. At this time, if you would like to ask a question, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. As a reminder, please limit yourself to one question and one follow-up only. We'll pause for a moment to compile the Q&A roster. Thank you. The first question comes from the line of Brooke Roach from Goldman Sachs. Please go ahead.

Speaker Change: Thank you we will now begin our question and answer session. At this time, if you would like to ask a question press star followed by the number one on your telephone keypad. If you would like to withdraw your question simply press Star one again.

Speaker Change: A reminder, please limit yourself to one question and one follow up only we'll pause for a moment to compile the Q&A roster. Thank you.

Speaker Change: The first question comes from the line of Brooke Roach from Goldman Sachs. Please go ahead.

Brooke Siler Roach: Good morning, and thank you for taking our question. As you evaluate the key initiatives you've identified today, as well as the commentary that you provided about the benefits of the work to be expected gradually becoming more meaningful over time, can you provide some guardrails about what you're currently thinking about the path and pace to stronger margin and profit improvement beyond FY25, understanding that you're not providing an updated long-term guide?

Good morning, and thank you for taking our question as you evaluate the key initiatives you've identified today as well as the commentary that you provided about the benefits of the work to be expected gradually becoming more meaningful over time can you provide some guardrails.

Speaker Change: That you are currently thinking about the path and pace to stronger margin and profit improvement beyond FY 'twenty five understanding that youre not providing an updated long term guidance.

Neil Bowden: Morning, Brooke. Your interest is welcome, and it's good to hear from you. You know, I think at this point in time, you've heard the commentary in the script that our focus is entirely on fiscal 25 and building in the operating discipline that's necessary for us to feel more confident about what the long-term margin profile could look like and the pace at which we would get there. And so I think at this point in time, we're going to just remain silent on fiscal 26 and beyond, although... Without a doubt, the level of conviction in this organization, at the management table, and at the board table, is very high about what the potential is for this business, and we intend to pursue that.

Brook: Good morning Brook.

Speaker Change: Thanks for your interest and good to hear you.

Speaker Change: I think at this point in time, you've heard the commentary in the script.

Speaker Change: Our focus is entirely on fiscal 'twenty, five and building in the operating discipline, that's necessary for us to feel more confident about what the long term margin profile could look like and the pace at which we would get there and so I think at this point in time.

Speaker Change: We're going to just remain silent on fiscal 'twenty, six and beyond although.

Speaker Change: Without a doubt the level of conviction in this organization at the management table at the board table is very high on what Angelus for this business and we intend to pursue that.

Neil Bowden: Great, thank you. And just one quick follow-up. As you think about the opportunity for fiscal 25 revenue growth, you identified an opportunity for some improvement in sales this year. Can you provide a little bit more color on how you think that sales growth might break down by geography? What are you expecting for the macro versus the Canada Goose initiatives that you've identified today for both North America, China, and EMEA?

Speaker Change: Great. Thank you and just one quick follow up as you think about the opportunity for fiscal 'twenty five revenue growth.

Speaker Change: You identified an opportunity for <unk>.

Speaker Change: Some improvement in sales in the year.

Speaker Change: Eric can you provide a little bit more color on how you think that sales growth might breakdown by geography, what are you expecting for the macro versus the Canada goose initiatives that you've identified today for both North America, China and EMEA.

Neil Bowden: Yeah, sure. I'll start with the macro.

Speaker Change: Okay.

Eric: Yes, sure I'll start with the macro but I think the data points that we would look at would be sort of what a bank consensus look like.

Speaker Change: Look around at what our peers are saying I think the view sort of being a mid single digit growth for luxury business as kind of the consensus.

Neil Bowden: And I think the data points that we would look at would be sort of what a bank consensus looks like, and, you know, look around at what our peers are saying. I think the view of sort of being a mid single-digit growth for the luxury business is kind of the consensus. Our experience in China over the last, really an APAC over the last three months has been more or less in line with that, and as we noted on the call, against a pretty strong calm period. And so we feel pretty good about the pace that we've experienced in terms of operating performance in that part of the world.

Speaker Change: Our experience in China over the last and really in APAC over the last three months has been.

Speaker Change: More or less in line with that and as we noted on the call against a pretty strong comp period, and so we feel pretty good about the pace that we've experienced in terms of operating performance. There in that part of the World North America has been under a little bit more pressure and as we as we noted the market in Europe.

Neil Bowden: North America has been under a little bit more pressure, and as we noted, the market in Europe, at least as it relates to our business, continues to be pressured, and a little bit of that is the wholesale situation and what those businesses are feeling and how that's If we zoom out... We're looking at sort of a mid-single-digit growth in total revenue. The major components of that are that the DTC business will grow, and we think it will grow meaningfully, with comps being somewhere in the low single digits, which, pricing helps, and mix is a little bit of a negative.

Speaker Change: At least as it relates to our it relates to our business continues to be pressured in a little bit of that is the wholesale situation and what.

Those businesses are feeling and how that's impacting the DTC business.

Zoom out.

Speaker Change: We're looking at sort of the mid single digits growth on.

Speaker Change: In total on revenue.

Speaker Change: The major components of that are that the DTC business will grow and we think it will grow meaningfully.

Speaker Change: You see comps being somewhere in the low single digits, which pricing helps.

Speaker Change: Mix is a little bit of a negative.

Neil Bowden: The big issue that we're facing is, as we normalize the wholesale business, it's a major headwind. And it's a major headwind both on the top line as well as on EBIT. When we see our way through that, we'll feel very good. That's the revenue story.

Speaker Change: The big issue.

Speaker Change: As as we normalize the wholesale business, it's a major headwind and it's a major headwind both on the top line as well as on EBIT.

Speaker Change: When we see our way through that will be very feel very good.

Speaker Change: Revenue story.

Brooke Siler Roach: Great. Thank you so much. I'll pass it on.

Great. Thank you so much I'll pass it on.

Operator: The next question comes from the line of Adrian Yee from Barclays; please go ahead.

Speaker Change: The next question comes from the line of Adrian <unk> from Barclays. Please go ahead.

Michael Vu: Good morning, this is Michael Vu on behalf of Adrian Yee. And thank you for taking our questions.

Mike: Good morning. This is Mike will do on for Adrienne and thank you for taking our questions. So related to the cadence of releasing new products. What is the strategy on a typical release and de released the product that stores are in specific geographies and finally, what are the steps and strategies to rollout the product everywhere aircrafts.

Mike: [laughter].

Carrie Baker: So related to the cadence of releasing new products, what is the strategy on a typical release? And do you release a product in specific stores or in specific geographies? And finally, what are the steps and strategies to roll out the product everywhere?

Speaker Change: Thank you for your question.

Speaker Change: This year, we have on top of our normal cadence and releasing products.

Speaker Change: It is over time and the units that we bring our new creative director of rider is going to infuse a hole.

Speaker Change: Level of new energy and excitement and tube into a broad one.

Speaker Change: That started.

Speaker Change: Yesterday in fact, when we launched our first step.

Speaker Change: Periodically.

Carrie Baker: Thank you for your question. We, this year, we have, you know, on top of our normal cadence of releasing products, the sort of time and the newness that we bring, our new creative director, Ida, is going to infuse a whole level of new energy and excitement into a product line that started yesterday, in fact, when we launched our first product by him, which is a PBI hoodie for Fara And beyond that, we're going to see drops of his capsule collections in our retail stores in fiscal 24, and beyond that, in every relevant period following.

Speaker Change: And beyond that we're going to see drops in the cost.

Speaker Change: But his capsule collections into our retail stores in fiscal 'twenty, four and beyond that.

Speaker Change: And every relevant period following.

Carrie Baker: Great, thank you. And then, as a follow-up, when adding the additional SKUs into the product mix, do you have any internal targets? For example, like in FY1Q25 or FY25, do you sell a certain number of SKUs, or is it more dependent on market trends rather than a specific number?

Speaker Change: Great. Thank you and then as a follow up one adding any additional skus into the product mix do you have any internal targets for example, like in FY <unk> FY 'twenty five you saw certain number of skus or is it more dependent on market trends rather than a specific number.

Carrie Baker: Yeah, I think that we look at the correct number of shoes that we need to have for our business. And when we always introduce new product categories and product lines, not always new categories but new products in general, our margin is in line with the rest of the margin for the rest of the business, in general.

Speaker Change: Yes.

Speaker Change: We looked at it the correct number of Skus that we need to have for our business and we always have.

Speaker Change: In time, we introduced new product categories and product lines.

Speaker Change: It's not always new category new products in general.

Speaker Change: Our margin is in line with the rest of the margin for the rest of the business in general.

Michael Vu: Sounds good. Thank you very much.

Speaker Change: Sounds good thank you very much.

Operator: The next question comes from the line of Oliver Chen from TD Cowen. Please go ahead.

The next question comes from the line of Oliver Chen from TD, Kevin. Please go ahead.

Oliver Chen: Hi, a lot of exciting announcements about Haider Ackerman. His DNA is from Paris and Belgium and in Galiano. Quite sophisticated. Just what was your vision for why he why he's the best for this role also? And as you see the evolution of what he does, what might be earlier in the term or later in terms of how you're thinking about the sequencing and also the non-PARCA opportunity? Also, just to follow up, North America e-commerce, that number was quite robust overall. What's happening there in terms of conversion rates and what you're seeing with trust? And if you're happy with it? Thank you very much.

Speaker Change: Hi, a lot of exciting announcements on either Ackerman.

Speaker Change: It's from parents in Belgium, and Gallianos quite sophisticated what what's your vision for them why why he's the best for this role also in as you see the evolution of what it does what it might be earlier.

Or later.

Speaker Change: Or how youre thinking about the sequencing and also the non parka opportunity also just a follow up North America E. Commerce that number was quite robust overall, what's happening there in terms of conversion rates and what you're seeing with traffic and and if you are happy with it. Thank you very much.

Dani Reiss: Thanks, Oliver. You know, I'm gonna have to talk to you a little bit about Hydro.

Oliver: Thanks Oliver.

Oliver: Yeah.

Dani Reiss: We are so excited to have him join us as Creative Director, and we were so excited to make the announcement yesterday. You know, this was a search that was a long time in the making and took me probably somewhere in the vicinity of two years to find the right person. I met all kinds of people from all over the world. I met Haider.

Speaker Change: Obviously, a little bit, but hydro we are so excited and dryness as creative director and were so seismic catastrophe yesterday.

So it was a surge which is a long time in the making it probably somewhere in the vicinity of two years, finding the right person.

Speaker Change: All kinds of people from all over the World group assignment.

Dani Reiss: He really struck me as somebody who shared my vision, who understood that Canada Goose is a function-first, quality, craftsmanship-driven brand, and something that he really felt that he could help elevate to the next level, which is, at this point in our journey, we feel is, you know, a flexible moment. He felt that he really had to do that he really wanted to, and it's something he found to be very exciting. And we certainly had a meeting of the minds on that, and so that's how we made the decision.

Speaker Change: Either he.

Speaker Change: He really struck me as somebody who shared my vision, who understood that Canada uses a function first quality craftsmanship driven brand and something that you really felt that he could help elevate it to the next level, which is at this point in our journey.

Speaker Change: We feel as you know.

Speaker Change: But at one point a moment if you felt that you really add to that if you really wanted to in this southern he found to be very exciting.

Speaker Change: We have.

Speaker Change: Certainly at a meeting of the minds on that and we end and so that's why we made the decision in.

Dani Reiss: You know, we're both super excited about the future and about all that's to come. And, you know, this TBI, a little anecdote about this PBI hoodie that came out yesterday. And one of the first things that we did when he joined us was go up to Churchill, Manitoba, to visit the home of the Polar Bears and Polar Bears International that we've been supporting for almost 15 years, over 15 years at this point.

Speaker Change: And up over both were both Super excited about the future and all of this to come and another distributor.

Speaker Change: No.

Speaker Change: Anecdote about the people, who do that came out yesterday and one of the first things that we did when he joined us.

Speaker Change: But we will have to Churchill, Manitoba to visit the home and the polar bears.

Speaker Change: Quarter, whereas international that we've been we've been supporting.

Speaker Change: For almost 16 years over 15 years at this point and.

Dani Reiss: And Ed and I went up there, and he really got inspired by the landscape and by the bears and by the people. And he just said to me, you know what? I'd like to design the city, and I'd like this to be the way we we launch our partnership. And we rolled with that, and we launched this product yesterday with tremendous commercial success on its first day.

Speaker Change: And then I went up there and he really got inspired by the landscaping by the pairs of other people.

Speaker Change: He said to me.

I'd like to design, a study in <unk> and <unk>.

Speaker Change: I'd like this to be the way, we we we launch our partnership and.

Speaker Change: And we have all of that and we launched this launched.

Speaker Change: <unk> product yesterday with tremendous commercial success on his first day in and.

Speaker Change: And.

Speaker Change: Let's take up.

Carrie Baker: Oliver, let me talk to you about North America Ecom. So yes, Ecom is doing well. Ecom sales were up. Traffic UPT both up year over year. I would say for North America, specifically, conversion remains an opportunity. So I think it's both in store and online.

Speaker Change: Okay. Let me, let me talking about North America E. Comm, So yes E com. Meanwhile.

Speaker Change: Comp sales were up.

Speaker Change: Traffic <unk>, both up year over year, I would say for North America, specifically conversion remains an opportunity.

Speaker Change: I think it's embarked in store and online.

Speaker Change: But we're happy to see traffic up happy to Capt up AUR up but.

Carrie Baker: But we're happy to see traffic up happy to see APT up, AUR up, but they'll the opportunity. And that's a focus for us. And so, you know, that gives me comfort, our brand is strong, we're getting the traffic, I think for, for us, the idea is how do we convert those into actual sales, I will just say something on ecom, you know, we, there are going to be a lot of things that we're doing, whether it's site speed, improvements, whether it's how we show up online, it's going to look a little bit different now that we have Heider on board and showing up, helping us show up in a different way.

Speaker Change: CA opportunity and that's a focus for us.

Speaker Change: That gives me comfort our brand is strong we're getting the traffic I think for for US. The idea is how do we convert those into actual sales I will just say something on E com.

Speaker Change: Can be a lot of things that we're doing whether it's site speed can vary.

Speaker Change: Improvements, whether it's how we show up online is going to look a little bit different now that we have higher onboard and showing up helping us show up in a different way, but the most of our focus in terms of conversion and where the majority of our initiatives and our investments contiguous ensures we see that as really being the biggest driver of impact on revenue growth. This year.

Carrie Baker: But most of our focus in terms of conversion, and where the majority of our initiatives and our investments are going to go, is in stores; we see that as really being the biggest driver of impact and revenue growth. Thank you.

Speaker Change: Sure.

Oliver Chen: Thank you. It sounds exciting. Best regards.

Speaker Change: Thank you it sounds encouraging best regards.

Speaker Change: Okay.

Speaker Change: Okay.

Operator: The next question comes from the line of Rakesh Patel from Raymond James. Please go ahead.

Speaker Change: The next question comes from the line of Rick Patel from Raymond James. Please go ahead.

Rakesh Babarbhai Patel: Thank you, good morning, and congratulations on a strong end to the year. Question on gross margins being planned, planned flat year over year in fiscal 25. I hope you can provide additional color on the increase in costs that you're seeing that are offsetting the positive impact from the mixed shift towards DTC. And I know you're moving away from quarterly guidance, but I'm curious if you can provide any color on the shape of gross margins as you move forward.

Rakesh Babarbhai Patel: Thank you good morning, and congrats on strong end of the year.

Rakesh Babarbhai Patel: A question on gross margins being plan planned flat year over year in fiscal 'twenty five hoping you can provide additional color on the increase in cost that youre seeing that are offsetting the positive impact from the mix shift towards DTC and I know youre moving away from quarterly guidance, but curious if you can provide any color on the shape of gross margins as the year moves.

Rakesh Babarbhai Patel: Forward.

Neil Bowden: Sure, Rick. Thanks for the question. As it relates to gross margin flat for the year, we've got obviously a benefit on the pricing, but as we've taken a look at the inventory levels and supply, we've been a little more surgical about planning our inventory build this year. And as a vertically integrated manufacturer, the advantages around having flexibility are very significant. But at a time when we slow production down a little bit, we've got to absorb some additional fixed costs.

Speaker Change: Sure Rick Thanks for the question.

Speaker Change: As it relates to gross margin flat for the year.

Speaker Change: We've got obviously a benefit on the on the pricing.

Speaker Change: But as we've taken a look at the inventory levels and supply we've been a little more surgical about planning.

Speaker Change: Inventory build this year.

Speaker Change: As a vertically integrated manufacturer.

Speaker Change: Advantages around having flexibility are very significant but.

Speaker Change: At a time when we slow production a little bit we got to absorb some additional fixed cost and so we're expecting that's going to be a little bit of a headwind for this year.

Neil Bowden: And so we're expecting that to be a little bit of a headwind for this year. And, you know, that will work itself out as we sort of realign those production levels with what the event looks like as the years progress. As it relates to the quarterly shape of gross margin, I'll frustrate you a little bit in that we're pretty clear about sticking to the annual profile, and making assumptions about, given the revenue guide, what that will look like.

Speaker Change: Yeah.

Yes.

Speaker Change: Will work itself out as we sort of realign those production levels with what the.

Speaker Change: It looks like.

Speaker Change: The year has progressed.

Speaker Change: As it relates to quarterly shape of gross margin.

Speaker Change: <unk>.

Speaker Change: I'll frustrate you a little bit in that.

We're pretty clear about.

Speaker Change: Sticking to the annual profile.

Speaker Change: You can make assumptions about given the revenue guide what that will look like and I think more or less channels will be in line with where you would expect over the year and so I think that whatever your assumptions are for <unk>.

Neil Bowden: And, you know, I think more or less channels will be in line with where you'd expect them over the year. And so I think that, whatever your assumptions are for the quarterly progression of revenue and channel split, the margins will follow.

Speaker Change: Progression of revenue and channel split.

Speaker Change: <unk> will follow.

Neil Bowden: Also, a question on B2C expectations for fiscal 25. Can you provide any additional insights on how we should think about comparable sales by region?

Speaker Change: Also a question on DTC expectations for fiscal 'twenty can you provide any additional insights on how we should think about comparable sales.

Speaker Change: By region.

Speaker Change: Yeah.

Neil Bowden: Yeah, I mean, I think...

Neil Bowden: I think at a high level, comp sales by region sort of squares with our view of what the health of those markets is. And so, you know, Asia, Asia Pacific, and one level down in China, we certainly are drafting off of a pretty decent Q4. And so we'd expect that to probably be the strongest region, followed by North America, where there are clearly still some headwinds around consumer spending and, specifically, consumer luxury spending.

Speaker Change: Yeah.

Speaker Change: At a high level.

Speaker Change: Comp sales by region sort of squares with our view of what the health of those markets are and so Asia.

Speaker Change: Asia Pacific and one.

Speaker Change: One level down in China, we certainly are drafting off of a pretty decent in Q4.

Speaker Change: And so we'd expect those.

Speaker Change: That would probably be the strongest region, followed by North America, where there is clearly still some headwinds around consumer spending and specifically consumer luxury spending.

Neil Bowden: I think in Europe, our expectations are a bit more moderated, but in all cases, we're anticipating a slightly positive income. And just to see if I can add to that, I think one of the things that...

Speaker Change: I think in Europe, where our expectations are a bit more moderated.

Speaker Change: But in all cases, we're anticipating to be.

Speaker Change: Slightly positive comp.

And thank you if I can add to that.

Speaker Change: One of the things that.

I'm confident that that is that we're already seeing I think North America particular, our share of transactions from repeat customers.

And up year over year, and so we would expect that to continue.

Carrie Baker: And just if I can add to that, I think one of the things that gives us confidence in that is that we're already seeing, in North America, in particular, our share of transactions from repeat customers is up year over year. And so we'd expect that to continue. And then specifically, when you look at the US in terms of the number of stores, so last year, we opened 16 versus eight the year previous. So we have lots of opportunity to be driving those clumps. And that really is our focus for this.

Speaker Change: Specifically when you look at the U S. In terms of number of stores last year, we opened 16 versus eight the ear premise that we have lots of opportunity to be to be driving comps and that really is our focus for that kind of start him.

Speaker Change: I appreciate the answers.

Rakesh Babarbhai Patel: Thanks, Rick.

Operator: The next question comes from the line of Michael Benetti from Evercore. Please go ahead.

Speaker Change: The next question comes from the line of Michael Binetti from Evercore. Please go ahead.

Jesslyn Wong: Hi, this is Jesslyn Wong on behalf of MICA. I would just want to ask about the SG&A leverage there; the guidance implied roughly about 100 basis points of leverage, but the D2C, given wholesale is guided down 20%, the makeshift is likely to be a hit-win. So we just want to know what the puts and picks are and what's driving the leverage there. And on the wholesale guide down 20%, in terms of cadence, are we expected this to be first half weighted and then improve as the second half of the year? How should we be thinking about this? And just to clarify, I think you guys mentioned ASP is up across both D2C and wholesale, but revenue.

Speaker Change: Hi, This is Josh <unk> on behalf of Michael.

I just wanted to ask on the SG&A.

Speaker Change: SG&A leverage that the guidance implies roughly about 100 basis points of leverage.

Speaker Change: But the D to C. Given wholesale it's got a down 20% the mix shift is likely to be hidden.

Speaker Change: I just wanted to know what the puts and takes are and what's driving the leverage there and.

Speaker Change: And on the wholesale got down 20%.

Speaker Change: In terms of cadence, we expect that this to be first half weighted and then improve our second half into.

Speaker Change: How should we be just thinking about this and just to clarify I guess, you guys mentioned asps up across both DTC and wholesale.

Speaker Change: Revenue.

Speaker Change: It's only guiding up.

Cynthia: Low single digit Cynthia that does this imply that Oh for all units is down thank you.

Neil Bowden: Sure, thanks for your questions on the business. So I'll repeat what I said in the prepared remarks as it relates to how the... (inaudible) dollars, operating dollars. And so you're going to get a little bit of leverage out of absolute dollars there. Wholesale decent d leverage 20% decline in the top line. Despite the fact that we will and have taken some measures around costs, we're not going to be able to fully offset that.

Speaker Change: Sure. Thanks for your questions on the business.

Cynthia: So.

Cynthia: I'll repeat what I said in the prepared remarks as it relates to how the.

Cynthia: EBIT margin is going to flow through so we're expecting to be more or less flat in terms of operating margin inside the D to C channel, although the operating margin the operating.

Cynthia: Segment operating.

Cynthia: Dollars will increase operating.

Cynthia: And so you're going to get a little bit of leverage out of out of an increase in the absolute dollars. There wholesale go see some deleverage 20% topline.

Cynthia: <unk>. The fact that we will and have taken some measures around cost, we're not going to be able to fully offset that and so we are expecting to see some deleverage in terms of the operating margin. There and then as we noted corporate costs will be lower than they were last year.

Neil Bowden: And so we're expecting to see some de-leverage in terms of the operating margin there. And then, as we noted, corporate costs will be lower than they were last year, which is really a flow-through from a transformation program. Some, very surgical investments around some of the operating imperatives in the. As far as the Wholesale Guide goes, our pattern of wholesale business on a quarterly basis is more or less established.

Cynthia: Which is really a flow through from transformation program.

Cynthia: And some.

Cynthia: Tailored it very surgical investments around some of the operating imperatives in the business.

Cynthia: As far as the wholesale Guy goes.

Cynthia: Our pattern of wholesale business on a quarterly basis is more or less established and so I would anticipate that to the extent that you're using that as a baseline that 20% decline is a reasonable.

Neil Bowden: And so I would anticipate that to the extent that you're using that as a baseline, that 20% decline is a reasonable, is a reasonable baseline, although we're not going to guide specifically on a quarterly or first half, second half basis. And then last on the low single digits is volume impacted. I think the pricing dynamic is important to understand because we're going to be mid-single digits on pricing. That is positive, obviously, to the overall story, but the mix within those categories is really critical to understand, and specifically inside the D2C business, where some heavyweight down growth is expected, although very moderate, and we will continue to expect to see some of those other categories where we've seen really material growth, whether that's apparel and And so on a unit volume basis, I'm not sure it's as relevant as how the mix is moving and how we're protecting that gross margin as well.

Cynthia: It's a reasonable baseline, although we're not going to guide specifically on a quarterly or first half second half basis.

Cynthia: And then last on the low single digits as volume impacted I think in.

Pricing dynamic it's important to understand because.

Cynthia: We've suggested that we're going to be mid single digits on pricing that is positive.

Cynthia: Obviously to the overall story, but the mix within those categories is really critical to understand and specifically inside the D to C business, where some horse some heavy weight down rather.

Cynthia: Growth is expected, although very moderate and we will continue to expect to see some of those other categories, where we've seen really material growth, whether that's apparel at inside apparel fleece or whether that's accessories footwear is starting to come on and so on a unit volume basis I'm not sure it's as relevant as how the mix is moving and how.

Cynthia: We're protecting that gross margin is the mix of those.

Speaker Change: Got it thank you.

Operator: The next question comes from the line of Ike Boruchow from Wells Fargo. Please go ahead.

Speaker Change: The next question comes from the line of Ike Bar Chow from both Fargo. Please go ahead.

Irwin Bernard Boruchow: Hey, good morning, everybody. Neil, I just wanted to ask you something about the DTC business. So I know we're not talking about anything beyond this year, but I guess at a higher level, you gave some of the metrics on how the business looked last year. Can you just maybe tell us what are the KPIs you're really looking for as you kind of moderate growth, whether it's sales per foot, four wall margins, operating margins, just basically, what are you looking for to see that you're ready to maybe start accelerating the growth again? Or conversely, what are you looking at to maybe make a decision down the road that maybe we need to downsize the fleet a little bit because it Yeah, I mean, I'll just, I'll...

Speaker Change: Hey, good morning, everybody Neil just wanted to ask about the DTC business. So I know, we're not talking about anything beyond this year, but I guess at a higher level you gave some of the metrics on how the business looked last year can you just maybe tell us like what are the Kpis you are really looking for as you kind of moderate growth.

Speaker Change: Whether it's sales per foot.

Four wall margins op margins just to.

Speaker Change: Yes, basically what are you looking for to me to see that Youre ready to maybe start accelerating the growth again or Conversely, what what are you looking at to maybe make a decision down the road that maybe we need to call the fleet a little bit because it's not meeting expectations.

Neil Bowden: Yeah, I mean, I'll just stop right there at the last point that there's no consideration of culling the fleet. Although, you know, as any good retailer will tell you that once you establish a strong performance track record, you want to ensure that everything in the fleet is delivering above that track record. And that would be the pattern I'd expect us to follow. As it relates to it, I'll speak about stores specifically, because I think that's the nature of the question.

Speaker Change: Yeah, I mean I'll just.

Speaker Change: Stop right there at the last point that there is no consideration of culling the fleet, although as any good retailer will will tell you that once you establish strong performance track record do you want to ensure that everything in the fleet is delivering above that track record and that would be the pattern I would expect us to follow.

Speaker Change: As it relates to I'll speak about storage, specifically, because I think thats the nature of the question.

Neil Bowden: We certainly want to be driving top line because, in this business, with such a healthy gross margin profile, that allows us to leverage. And so we want to have stores that are well above our 4,000 square foot, dollars a square foot productivity levels. We need comparable sales growth to be at least in the mid single digits on a sort of a normalized basis, and Carrie talked about a lot of the options around that.

Speaker Change: We certainly want to be driving top line because that in this business with such a healthy gross gross margin profile that allows us to leverage and so we want to have stores that are well above our 4000 square foot.

Speaker Change: That was a square foot.

Speaker Change: Productivity levels, we need comparable sales growth to be at least in the mid single digits on a sort of a normalized basis and Gary talked about a lot of the options around that.

Neil Bowden: But none of that is great unless that translates into a really healthy four-wall event. And so we know we have some work to do there around execution within our stores. We're certain that as the product expansion occurs and we start to spread into some of the other seasons, there's opportunity there, but that's more of a medium-term situation. In the next 12 to 24 months, it has to be about what we do in the stores every single day and what we do in the support offices to ensure that they're best prepared to deliver.

Speaker Change: But none of that has great unless that translates into really healthy four wall EBIT.

And so we know we have some work to do there around execution within our stores, we're certain that as the as the product expansion occurs and we start to spread into some of the other seasons, there's opportunity there, but that's more of a medium term.

Speaker Change: Situation in the in the next 12 months to 24 months. This has to be about what we do in our stores every single day and what we do on the support offices to ensure that they are best prepared to deliver.

Irwin Bernard Boruchow: Got it. And then maybe, at a high level, just what are your expectations, specifically in North America, but by region, if you can, just on the inventory backdrop for outerwear in general, you know, maybe at the higher price point, maybe the mid-tier, just trying to understand, like, what are your expectations in terms of how competitive the category might look as you kind of get closer to the winter season? Are you, you know, does inventory look aligned when you look at other brands?

Speaker Change: Got it and then maybe at a high level just what are your expectations.

Speaker Change: Specifically in North America, but policy by region. If you can just on on the inventory backdrop for outerwear in general maybe at the higher price point, maybe the mid tier just trying to understand like what are your expectations in terms of how competitive the category might look as you kind of get closer to the to the winter season.

Speaker Change: Does inventory look aligned when you look at other brands I'm kind of just talking more big picture not so much your specific business just trying to see is that part of the reason for the wholesale pullback that you're just kind of don't want to play in that channel. If that's what's going to go on so just kind of curious what exactly youre expectations are there.

Irwin Bernard Boruchow: I'm kind of just talking more big picture, not so much your specific business, just trying to see, you know, is that part of the reason for the wholesale pullback that you just kind of don't want to play in that channel if that's what's going to happen. So just kind of curious what exactly your expectations are there. I'll take that one.

Elizabeth Danaher Clymer: I'll take that one. This is Beth, and Carrie may add on later.

Bath: I'll take that one this is bath and carry may add on look this is a competitive market for sure and so we saw competitive intensity to be strong in fiscal 'twenty. Five we expect that will be the same next year that said, we particularly in outerwear have a real ownership position and so.

Elizabeth Danaher Clymer: Look, this is a competitive market for sure, and so we saw competitive intensity be strong in fiscal 25. We expect that will be the same next year.

Carrie Baker: That said, we, particularly in Outerwear, have a real ownership position, and so we plan to continue to capitalize on and leverage that strong, great strength we have in our DCC channels and in wholesale. But to your question specifically about wholesale, that pullback is in large part to control the inventory that's in the channel and make sure our brand is being represented correctly. We have no interest in going down market. As Beth said, we own this, we have a very ownable position, and it's exciting for us to be able to really fulfill that.

Bath: We plan to continue to capitalize and leverage that strong brand strength, we have in our DTC channels and in wholesale but to your question specifically about wholesale yes that pullback is in large part the control of the inventory that's in the channel and make sure our brand is being represented correctly.

Bath: A cure of inventory.

Gary: And our own DTC channels, where we can deliver the customer experience a lot Gary.

Gary: Yeah, I would say, it's less about it's not really I mean of course inventory is a factor, but I mean, we still see massive potential in whether it's price.

Gary: Price points that we're currently not serving our customers and particularly in outerwear. So again tighter his capsules will come and we expect that would probably be at the highest end of our price points, but we also believe that there is other round to introduce other products again, we're not we have no interest in going down market.

We own this we have a very honorable position on.

Gary: And it's exciting for us to be able to really fulfill into that.

Carrie Baker: But I think for us, the biggest focus is the brand and how it shows up. So, you know, I talked about wholesale being a reset, but it's also a refresh. And so we want to make sure that our customers that walk into our store also have a similar experience in seeing the brand show up in the way that we want to, which, you know, that's our biggest focus to make sure that happens. And we think that is going to drive the health of that.

Gary: I think for US the biggest focus is about the brand and how it shows up so if you're talking about a wholesale being a reset but it's also a refresh and so we want to make sure that our customers that walk into our store or outside the similar experience in seeing that.

Gary: The brands show up in the way that we want to which you know that's our biggest focus to make sure and we think that is going to drive the health of that channel.

Speaker Change: Got it thank you.

Greg: Thanks, Greg.

Operator: The next question comes from the line of Jonathan Komp from Baird: please go ahead. Yeah, I could

Speaker Change: The next question comes from the line of Jonathan Komp from Baird. Please go ahead.

Jonathan Robert Komp: Yeah, hi, good morning. Thank you. I want to follow up Neil, I know you're suspending talking about, you know, formal targets beyond fiscal 2025. But you did mention more benefits of the actions you're taking this year and in the years to come. So just curious, as you think about the long-term margin profile of this business, is it still realistic to think back to the mid-20s at some point in any sort of reference or context around, you know, really a credible path to get back there?

Yes, hi, good morning. Thank you I wanted to follow up Neil I know you are.

Neil: The spending you're talking about four of all targets beyond fiscal 2025, but you did mentioned more benefits of the actions you are taking this year in the years to come.

Neil: Just curious as you think about the long term margin profile of this business is it still realistic to.

Speaker Change: Thank you and back to the mid 20 percents at some point in any any sort of.

Speaker Change: Reference or context around really a credible path to get back there.

Speaker Change: Yeah.

Speaker Change: I mean.

Neil Bowden: I don't have any doubt that where we've been historically is a place that we can get back to. And that, just to be really clear, that's the mid-20s and old.

Speaker Change: I don't have any doubt that where we've been historically as a place that we can get back to.

Speaker Change: And that just to be really clear thats mid twenties.

Speaker Change: So.

Neil Bowden: And we have started, obviously, to plot the path to get back to that level. But the first step on that path is execution on our channels, particularly in our D2C channel, fiscal 25. I don't think there's a whole lot of complexity in terms of what the necessary things are. It's just a matter of us taking them on and executing against them in a really disciplined way, learning from things that perhaps don't go the way that we expected, course correcting, and building on that.

Speaker Change: And we have started obviously to plot in the past.

Speaker Change: To get back to that level, but the first step in that pad is.

Speaker Change: Execution.

Speaker Change: In our channels, particularly in our DTC channel.

Speaker Change: In fiscal 'twenty five.

Speaker Change: I don't think there is a whole lot of complexity in terms of what the necessary things are its just a matter of us taking them on and executing against them in a really disciplined way learning from things that perhaps don't go the way that we expected of course correcting.

Neil Bowden: And so I appreciate that's not as clear a bridge as you'd like, probably between today and where we're going to get to, but I think you can rest assured that when we feel confident about it, we'll share that, and we'll take you on.

Speaker Change: And building on that.

Speaker Change: And so I appreciate that's not.

Speaker Change: As clear of a bridges you'd like probably between today, and where we're going to get to but.

Speaker Change: I think rest assured that when we feel confident about it we'll share that it will take you through that.

Elizabeth Danaher Clymer: John, I'll add to that. There are three real places where we can get a lot more out of the assets in our business. Worse, in our stores by driving productivity, in our manufacturing facilities, and our operations infrastructure in general, supply chain, et cetera, and our corporate cost base. There's a lot of opportunity to leverage off of all of those as we drive growth. To Neil's point, the execution to drive growth in the areas where we have these existing assets is the focus, and then there's a lot of leverage that can come thereafter.

John: And John I'll add to that there's three real places, where we can get a lot more out of the assets in our business both in our stores by driving productivity.

Neil: Factoring facilities and our operations infrastructure in general supply chain et cetera, and are part of our cost base. There's a lot of opportunity to leverage off of all of those as we drive growth so to neil's point the execution.

Neil: To drive the growth in the areas, where we have these existing assets is the focus and there's a lot of leverage that can come thereafter.

Jonathan Robert Komp: And maybe just to follow up as we think about, you know, building our models or rebuilding our models after this year, should we think your priority should be centered around the mark, you know, repairing margin fully, first and foremost, over, say, getting back to, you know, double digit growth or some higher level of growth rate, or how should we think about prioritizing? Uh, you have those two competing forces after this here. I think, in order of priority,

And maybe just a follow up as we think about building our model to rebuilding our model. After this year. It should we should we think your priority.

Speaker Change: Centered around the Mark.

Speaker Change: Repairing margin poly first and foremost over say getting back to double digit growth. There are some higher level of growth rate or how should we think about prioritizing.

Speaker Change: Those two competing forces that after this year.

Speaker Change: I think in order of priority.

Speaker Change: Uh huh.

Speaker Change: Having a a.

Neil Bowden: well-established track record on margin, and The mission that we can continue to grow that is number one, but we need scale in order to get to a sort of mid-20s level, and scale will come when we're confident that we can build on the platform that we're going to establish.

Speaker Change: Well established track record on margin and.

Speaker Change: Conviction that we can continue to grow that.

Speaker Change: Number one, but we need scale in order to get to a sort of mid twenties level and scale will come when we're confident that we can build on.

Speaker Change: The platform that we're going to establish here.

Neil Bowden: That's a helpful context, thank you.

Speaker Change: That's helpful context, thank you.

Speaker Change: Thanks, Sean.

Ana Raman: Ladies and gentlemen, this concludes our Q&A session. I would like to turn the call over to Ana Raman for her closing remarks.

Speaker Change: Ladies and gentlemen, this concludes our Q&A session I would like to turn the call over back to Ana Raman for closing remarks.

Ana Raman: Thank you everyone for joining us and listening to us this morning. As always, please reach out to me and Investor Relations if you do have any further questions.

Ana Raman: Thank you everyone for joining us and listening to us. This morning as always please reach out to me in Investor Relations. If you do have any further questions. Thank you.

Operator: This now concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: This now concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.