Q3 2025 Canada Goose Holdings Inc Earnings Call
Ladies and gentlemen, thank you for standing by my name is Christa and I will be your conference operator today at this time I would like to welcome everyone to Canada Goose third quarter fiscal year 'twenty five earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remark.
There will be a question and answer session if you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad and if you'd like to withdraw that question got impressed our one.
Neil: Thank you and I would now like to turn the conference over to Neal <unk>, Chief Financial Officer, Neil You may begin.
Neil: Good morning, everyone.
Speaker Change: With me today are Danny Reese, our chairman and CEO Cary Baker President of brand and commercial best climber, President of finance strategy and administration.
Speaker Change: Today's presentation will contain forward looking statements that are based on assumptions and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected 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 issued this morning as well as in our filings with the U S and Canadian regulators.
Speaker Change: These documents are also available on the Investor Relations section of our website.
Speaker Change: We report in Canadian dollars. So all amounts discussed today are in Canadian dollars unless otherwise indicated.
Speaker Change: Please note that the financial results described on today's call. We will compare our third quarter results ended December 29, 2024 with the same period ended December 32023, unless otherwise noted.
Speaker Change: For today's call Dani carry Beth and I will deliver prepared remarks, following which we will open the call to take questions with that I will turn the call over to Danny.
Danny: Thanks, Neil and good morning, everyone I'll start my thoughts on our third quarter performance and progress before turning it over to the team to review our results in greater detail.
Danny: The third quarter marked solid progress towards our three operating imperatives, leading to favorable momentum throughout the month of December and into the new year.
Danny: Our third quarter revenue was slightly lower year over year, primarily due to the expected decline in wholesale revenue.
The direct to consumer business showed positive momentum, we delivered a negative 6% DTC comp, which while below our expectations with an improvement from our year to date comp.
Danny: More importantly, with a very significant improvement in the month of December, particularly in North America, where comp sales grew 22%.
Danny: We are particularly encouraged by this performance as it validates the inherent strength of our business, when we execute well across product and marketing.
Danny: Third quarter results witness continued progress across our three operating paradigms first setting the foundation for the next stage of our brand and product evolution.
Danny: A major highlight was the launch of our first capsule collection, we created retro hydrocarbon under their heritage label Snow Goose, which happened in November.
Danny: Still whose counsel re imagines our heritage through a new lens, while staying true to our performance routes.
Danny: The launch was amplified by an integrated global launch featuring influential talent in a corner and is Sweden activations around the world.
Danny: We set records in earned media over 30 billion impressions, representing our highest margin in recent history.
Danny: A purposeful and strategic efforts around this long stroke significant impact across key brand heat metrics and establishes the foundation for our marketing strategy in the future.
Danny: The commercial results were equally impressive 25% of the people who purchased snow goes also bought mainline products well nearly two thirds of existing customers returning to the brand.
Danny: We also hit a three year high and U S search interest and exceeded our customer acquisition targets.
Danny: All of this validates the more intensive mature approach, we took with our marketing and organizational alignment to original loyal fans and new customers.
Danny: Our evolving marketing strategy. This quarter included increased investment behind <unk> and peak holiday activities.
Danny: Our mainline collection resonated well beyond our traditional channels showing up on the film set of within and on the screen and Baby girl.
Danny: Having a robust prevalence across the film and entertainment industry has always been a hallmark of our brand and demonstrates our broad cultural relevance.
Danny: Key fashion capitals, like Paris, London, and Italy drove significant follower growth as well.
Danny: And our brand ambassador should yield us Alexandra the NBA MVP front runner continued to perfectly embody our combination of style and performance.
Danny: Breath and caliber of these campaigns alongside the extraordinary reach of the snow Goose campaign showcases the growing global relevance of Canada Goose as a lifestyle brand.
Danny: We are incredibly proud of what the team has accomplished.
Danny: Now turning to our second operating imperative implementing best in class retail execution.
Danny: Here, our precise focus on inventory management labor optimization, and boosting sales training drove improvements in store conversion rates year over year, particularly in North America and EMEA.
Danny: Yes.
Danny: Third simplifying the way we operate we continue to streamline operations, while maintaining strategic investments in key growth areas.
Danny: We've diligently managed our operating expenses and our inventory position improved significantly year over year, marking our fifth consecutive quarter of decreases.
Danny: During the third quarter, while macro factors influence consumer behavior in certain markets overall, with our strong performance and the operational improvement and marketing initiatives gain traction.
Danny: As we continue our transformation journey, we are energized by the strong execution of our strategy and the increasing global resonance of our brand positive response to initiatives like snow Goose the related marketing campaign, and an expanded product offering demonstrates how we are building and sustaining our momentum with consumers worldwide.
Danny: Now I'll turn it over to Carrie to discuss our commercial performance in more detail.
Carrie: Thanks Danny.
Q3 marked a foundational transformation for Canada goose, as we executed with focus discipline and strategic intent, we saw meaningful progress across our operating imperative, particularly in December I'm excited to share the results. So.
Carrie: So first let me start by discussing our first operating imperative setting the foundation for the next stage of our brand and our product evolution. Our performance in the third quarter was shaped by our strategic decision to fully support the <unk> launch at the end of November our biggest brand moment for the year.
Carrie: To do that we deliberately concentrated our marketing investments in the second half of the quarter, which meant that we require than we normally would be in October and early November.
Carrie: As Danny mentioned once we activated our efforts delivered a remarkable improvement in brand momentum and commercial results across all regions and this continued through the end of the year.
Carrie: Our snow Goose launched marked a sea change it was a defining moment for us not just for the quarter before how we move forward our campaign creative set a new standard we showed up differently in all markets Boulder, louder and yet unmistakably true to our brand.
Carrie: And in doing so we built a new muscle of executing engaging immersive and fully integrated global campaigns that drive real results.
Carrie: On the product front, our mix continues to evolve in the third quarter with lighter downfield outerwear revenue growing year over year, particularly in December.
Carrie: At the same time, we saw robust growth in our apparel offering which demonstrates our accelerating brand heat confirms our relevance beyond extreme cold weather moment and reinforces our position beyond outerwear.
Carrie: Best Sellers included the Grand view crop jacket invest part of our new fall Winter 2000, and for collection and the beloved Chilliwack Fleece bomber, which was a top seller within apparel.
Carrie: That product evolution continued this month with our expansion into eyewear, representing another milestone in our product journey.
Carrie: There is a natural next step for us and we are bringing a uniquely Canada goose perspective to the category inspired by nature designed with purpose and delivering function and style.
Carrie: The launch complements the momentum we saw in lighter downfield outerwear and apparel during peak season, and it underscores our transformation into a brand with year round relevance and assortment for any market.
Speaker Change: Lastly, we strengthened our product leadership team in January welcoming Judy <unk> as our new SVP of merchandising with nearly 20 years of luxury and fashion experience Judy will oversee our global merchandising and pricing strategies from our London office.
Speaker Change: He will work closely with Hydra acumen in partnership with our design and product development teams to bring his vision to life, while guiding the expansion and the evolution of our product roadmap.
Speaker Change: One of the other key elements of our brand evolution is a wholesale strategy bottom line is it's working we intentionally limited allocations, we invested with strategic partners with brand aligned values and we executed brand first activations.
Speaker Change: This drove higher sell through rates year over year, particularly in North America. It increased appetite for in season, Reorders and it means cleaner markets overall.
Speaker Change: Across the entire channel. We also saw wholesale partners holding to our full price positioning much more consistently in Q3 than last year. This is exactly where we want to be and this progress that's a strong foundation for our strategy going forward.
Speaker Change: Now, let me share some more detail about our second operating imperative delivering best in class retail execution.
Speaker Change: Danny mentioned, our DTC performance accelerated notably through the third quarter with December delivering improvement in both brand momentum and commercial results, which have carried through through present day.
Speaker Change: The intensity of our actions to improve conversion and productivity started to pay dividends, despite the headwinds of lower traffic and macroeconomic pressures.
Speaker Change: In North America, we saw encouraging results with DTC comparable sales growing 3% in Q3, driven by strength in the U S market.
Speaker Change: Our focus on streamlining retail operations weekend staffing optimization and the introduction of hosted positions across key locations drove meaningful improvements in customer engagement <unk>.
Speaker Change: <unk> and conversion.
Speaker Change: During the busiest shopping season, when People's expectations are highest and their time is at a premium our hosts were critical in not only managing Q wait times, but in making sure. Our customers were served with Canadian work.
Speaker Change: Also we're guided quickly and accurately to find the product they desired.
Speaker Change: In EMEA, our focus on improved execution delivered meaningful improvements in conversion rates, but not enough to offset the more challenging traffic trends, while broader market conditions led to slower foot traffic, particularly in the U K I'm proud of how our teams capitalized on every selling opportunity driving higher conversion <unk> and AUR.
Speaker Change: Our year over year. This is a direct outcome of our retail initiatives and training programs.
Speaker Change: In Asia Pacific, We saw positive momentum during key shopping periods, including Golden week in singles day, Despite slower traffic in some markets. This momentum has carried into Q4 with positive trends around lunar new year.
Speaker Change: In Japan, we opened two more department store concession and DTC for the quarter improved significantly year over year as we continue to build into the demand in this important global market.
Speaker Change: Looking at our online business, while ecommerce faced headwinds in Q3 that impacted conversion global traffic saw a substantial year over year growth. We continue to believe this is a channel that can deliver stronger results and are actively implementing initiatives to enhance the digital experience improved site speed and drive improved performance we are.
Speaker Change: Seeing some bright spots, though we launched live shopping on <unk> in September and despite facing challenges in mainland China. It continues to show promise as a new channel for us and in North America branded search demand increased approximately 20% in December pointing to the considerable growth potential as we continue to have our digital capabilities.
Speaker Change: This quarter was a defining moment for us and goes beyond strong commercial performance, we have proven our ability to execute complex global initiatives like snow goose, driving meaningful retail improvements and strengthening our position in the wholesale channel all while maintaining brand discipline and full price positioning.
Speaker Change: This demonstrates not just the power of our strategy, but our increasing capability to deliver against that as we look ahead. It's clear. These foundations will continue driving both brand heat and commercial momentum across all our channels.
Speaker Change: I'll now turn it over to that.
Speaker Change: Thanks, Carrie and Hello, all.
Speaker Change: As a reminder, our third operating imperatives for fiscal 2025 is to simplify and focus the way we operate.
Speaker Change: We are doing this through internal operating excellence and focused capital deployment.
Speaker Change: Pleased to share our progress in the third quarter.
Speaker Change: Starting with achieving operating excellence.
Speaker Change: As you have heard me say each quarter, we remain ruthlessly focused on prudently managing our head count and third party cockpit.
Speaker Change: We are making critical hires in key areas of our business for example design and product development talent to support our brand and product evolution and welcoming <unk> to the team.
Speaker Change: Even with these investments our corporate head count has not grown since our March organizational changes and we are continually making changes were required to ensure our organization is fit for purpose.
Additionally, we have been working to make our operations capabilities and more flexible and nimbler to support the business.
Speaker Change: We demonstrated that with the snow goods capsule. These products included new fabrics trims and design features yet we brought them from design conception to consumers in a record time.
Speaker Change: This required new ways of working across our organization.
Speaker Change: We are also now manufacturing in season small quantities of mainline product in response to consumer demand signals for example, our human nature shallow actually bomber a very popular product in one of my personal favorites is manufactured in Winnipeg.
Speaker Change: And in response to strong consumer demand, we produce more of that style in season.
Speaker Change: This has enabled us to capture incremental revenue opportunities and maintain strong sell through rates.
Speaker Change: We have done that despite all of the teams involved in this work being smaller in Q3. This year than they were at the same time last year. This is about being simpler and more effective.
Speaker Change: As you will recall the metric we look at to measure success of this operating imperative is SG&A expenses as a percentage of revenue.
Speaker Change: This metric as reported improved by 40 bps year over year in Q3 fiscal 2025.
Speaker Change: However, after accounting for the EBIT adjustments from last year's transformation program investments SG&A as a percentage of revenue. Unfortunately remains higher year over year for both Q3 and year to date.
Speaker Change: Let's break that down S.
Speaker Change: SG&A Deleveraged by 110 bps, primarily driven by 230 bps of higher direct costs associated with expanding our store base.
Speaker Change: And our year to date comp sales performance not being as strong as we had hoped to give us greater leverage on this call.
Speaker Change: This was however, offset by approximately 120 bps of efficiency in our overhead costs. These were driven by corporate savings from our two workforce reductions and our continued focus on optimizing head count and third party costs.
Speaker Change: We are proud of this overhead cost leverage, but we are of course, not satisfied with our aggregate SG&A as a percent of revenue and remain committed to improving efficiency in SG&A independent of topline performance.
Speaker Change: Turning to capital deployment I'll first speak to our focused capital expenditures.
Speaker Change: You'll recall, we are opening fewer stores in fiscal 'twenty five as we concentrate on optimizing our existing footprint.
Speaker Change: This along with a general focus on prudent capital allocation has resulted in a significant year over year decline in capex for the third quarter.
Speaker Change: At the same time, we continue to invest in critical areas that drive revenue and fortify the foundation of our business.
Speaker Change: Next inventory, we remain proud of our progress here are Q3 inventory decreased 15% year over year, marking our fifth consecutive quarter of reduction or.
Speaker Change: Our inventory turns were <unk> 95 times, a 16% increase versus last year. Both of these reductions are an acceleration and improvement from prior quarters.
Speaker Change: Similar to prior quarters. This was due to the temporary reduction in production levels, reducing aged inventory through responsible like the channels and an improvement in our planning and operations processes.
Speaker Change: Given our progress in inventory, where we ramping our production capacity from the temporarily lower levels at which we started the year. We intentionally remained below historical levels and will maintain our disciplined approach to inventory management, while also planning effectively for the next fiscal year.
Speaker Change: This progress on our third operating imperative reflects our commitment to simplifying our organization and driving greater efficiency, while maintaining strategic investment in key areas. We believe the foundation, we are building positions us well for sustainable and profitable growth.
Speaker Change: I'll now turn it over to Neil to review, our financial performance and outlook.
Neil: Thanks Beth.
Neil: I'll now review, our third quarter financial results and provide an update on our outlook.
Neil: Revenue for the third quarter was $608 million slightly below last year's $610 million.
Neil: This reflects revenue growth in the DTC channel offset by the anticipated decline in the wholesale channel Here's a breakdown of our channel performance on a year over year constant currency basis.
Neil: From a channel perspective, DTC revenue increased to $518 million from $514 million last year, reflecting sales from our 74 permanent stores up from 65 in Q3 fiscal 2024, well comparable DTC sales declined 6%. We saw promising results in North America is comparable.
Sales up for the third quarter.
Neil: While we recorded positive comparable sales growth in both October and December of these were not enough to overcome a very challenging November.
Neil: As we noted in our Q2 earnings call and what we was repeated today.
Neil: We chose to be quieter and marketing leading to the snow Goose launch in late November our massive grand heat moment <unk>.
Neil: Since then with marketing spend more in line with historical levels. We have seen positive results with both North America, and APAC delivering positive comparable sales growth in January.
Neil: Specifically in APAC, we've been encouraged by the consumer response to our brand during lunar new year.
Neil: Wholesale revenue declined 8% on a reported basis and constant currency basis, aligning with our strategy to reduce wholesale order volume over the year for the first nine months of the year wholesale revenue was down 17% tracking toward our full year expectation of a 20% decline channel inventory improved significantly year over year in <unk>.
Neil: That we welcome as we turn our attention towards next year's order book.
Neil: Other revenue rose to $14 4 million essentially flat from $14 $1 million last year, we expect full year revenue from this segment to align with fiscal 2024 levels.
Neil: Now some color on regional performance.
Neil: North America revenue declined 2% driven by a planned reduction in wholesale order volume. This was partially offset by strong DTC performance in both the U S and Canada, which continued to show momentum into January.
Neil: North America Q3 D to C comparable sales was up 3% year over year.
Neil: In APAC revenue fell 2%, primarily due to macroeconomic factors impacting DTC in greater China. However, wholesale revenue grew due to timing shifts from Q4 to Q3 and higher travel retail sales, excluding greater China APAC saw robust growth, particularly in Japan.
Neil: In EMEA revenue was down 4%.
Neil: As the U K was weaker compared to the rest of EMEA impacting DTC results wholesale revenue also declined slightly year over year as expected.
Neil: Now, let's turn to gross profit.
Neil: Gross margin expanded by 70 basis points to 74, 4% driven by favorable pricing and reduced inventory provisions, partially offset by a greater mix of apparel accessories and everyday product. We see this product growth is a major positive as these categories are clearly resonating with consumers.
Neil: Adjusted EBIT for Q3 was $205 2 million, representing a margin of 33, 8% compared to $207 2 million and a margin of 34% last year SG&A expenses decreased to $248 million from $251 million a year ago.
Neil: We have mentioned several ongoing initiatives aimed at driving top line, while also demonstrating discipline in managing our cost base.
Neil: G&A as a percentage of sales.
Neil: It was 47%.
Neil: 140 basis points year over year.
Neil: You have heard the details on this from Beth but it is worth underlining a few key points first margin compression from DTC comparable sales decline is a function of our business model and why we are so focused on the activities that drive those metrics positively specifically traffic generation and conversion.
Second as we simplify the business we are seeing real gains in corporate costs that are holding and finally marketing expense, particularly related to snow goose, but also demand generation activities in Q3 were significantly higher year over year as we capitalized on this key brand a moment and.
Neil: Tumor interest during the period.
Neil: Beyond these three items the year over year improvement on a reported basis reflects favorable foreign exchange impacts and transformation program costs incurred in fiscal 2024 that did not recur this year as well as investment in the store network during Q3 year over year.
Neil: We remain committed to enhancing efficiency and overhead costs, regardless of top line performance.
Neil: Adjusted net income attributable to shareholders was $148 3 million or $1 51 per diluted share up from $138 6 million or $1 37 per diluted share in Q3 fiscal 'twenty four driven.
Neil: Driven in part by share repurchases in the last fiscal year and a more favorable effective tax rate for this quarter.
Neil: Inventory decreased 15% year over year, driven by reductions primarily in finished goods and raw materials, which drove strong cash generation in the quarter relative to the same period last year as a result net debt at quarter end was $546 million compared to $587 million last year.
Neil: Net debt leverage was down to one nine times adjusted EBITDA from two one times EBITDA a year ago and is expected to end the year below historical levels.
Neil: Our capital allocation priorities remain focused on driving shareholder value in the medium and long term first investing in organic growth opportunities such as brand and product development and expanding our retail network secondly, enhancing businesses foundational needs, including upgrading our technology and third.
Neil: Maintaining an efficient capital structure.
Neil: Turning now to our fiscal 2025 financial outlook.
We are maintaining our full year revenue guidance to a range between a low single digit increase to a low single digit decline compared to fiscal 'twenty four.
Neil: Considering our year to date DTC performance was below our expectation in particular comparable sales growth and we had a quieter October and November in marketing ahead of the snow Goose campaign, we have adjusted our full year DTC comp sales outlook, we now expect DTC comparable sales to range between flat growth to date.
Neil: Mid single digit decrease compared to our previous range of a low single digit increase to low single digit decrease.
Neil: Our wholesale revenue outlook remains unchanged with an expected decrease of approximately 20% year over year Sim.
Neil: Similarly, we continue to expect gross margin to stay consistent with fiscal 'twenty four.
Neil: Based on our performance in the first nine months and revised outlook for DTC comparable sales and a higher investment in marketing activities. We now expect the adjusted EBIT margin to range between flat to down 100 basis points compared to the prior year. This is a revision from our previous range of an increase of 60 basis points to a <unk>.
Neil: Klein of 60 basis points.
Neil: As a result, we expect non <unk> adjusted income per diluted share to range between low single digit increase to flat compared to last year with approximately 98 million weighted average diluted shares outstanding.
Neil: As a reminder, we continue to expect revenue distribution between the first half and second half of fiscal 'twenty four to follow our historical pattern of approximately 25% to 75% respectively.
Neil: To close out today's remarks, we are seeing clear signs of progress against each of our strategic priorities. The snow Goose launch demonstrated the power of our brand to captivate consumers and we are excited about this next phase for Canada Goose in our channels. We are pursuing best in class retail execution and have seen evidence.
Neil: That our plans are working both in the consumer response, but also in the growth capabilities of our team.
Neil: As we look ahead, we remain focused on what we can control elevating our brand driving operational excellence and nurturing deeper connections with our customers around the globe.
Neil: On behalf of the senior leadership team I want to thank our teams around the world for everything they are doing to navigate the current environment, while evolving the brand and delivering for our consumers on a day to day basis.
Neil: With that let me turn the call over to our operator for questions. Operator, you can open the lines.
Neil: Thank you and we will now begin the question and answer session.
Neil: I'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue and if you'd like to withdraw that question I got and press Star. One. We also ask that you limit yourself to one question and one follow up your.
Speaker Change: First question comes from the line of Alex Perry with Bank of America. Please go ahead.
Alex Perry: Hi, Thanks for taking my questions here, just first I wanted to ask about the revenue guide. So you kept the topline the same but lowered the DTC comp sales forecast with no change the wholesale guide.
Alex Perry: What are the puts and takes there to sort of get you in the same revenue range does it sort of assume a higher other revenue I. That's my first question. Thanks.
Speaker Change: Sure Alex Thanks for your question, Yes, So I think a couple of things.
Speaker Change: As it relates to obviously, where we are on the first of February or so.
Speaker Change: And so we've got it clearly a handful of weeks under our belt and performance in January which were happy about I think our issue is that.
Speaker Change: Not enough time left in the year, we didn't think that we can deliver our original expectation around D. C and so we probably put a little bit of conservatism in that in that comparable sales forecast.
Speaker Change: And where there may be upside in terms of performance that we've seen today, well, we'll happily take that.
Speaker Change: As it relates to other we're not anticipating really to be materially different than last year, which is where the guidance and the same thing is true, but also although that's a channel where there is a possibility of some upside.
Speaker Change: If the rest of the year goes.
Speaker Change: Better than expected.
Speaker Change: Perfect and then just as my follow up I wanted to ask about 22% comp in North America in December if I heard that correctly can you just talk about what you think drove that was that mostly the shift in the marketing activation.
Speaker Change: And then in terms of the momentum you're seeing in January I think you spoke to.
Speaker Change: Positive comps in January was that overall DTC comps in January are positive at the company level, then where do you think is driving the January in my mind, if it goes well. Thank you.
Speaker Change: Thanks, Alex I'll take the first one so.
Speaker Change: 22% comp in December yes for North America, So really that's driven.
Speaker Change: <unk> of the U S and there's a few reasons for that of course. It was absolutely was about the initiatives that we put in place. Our teams were well trained they know how to capitalize on all the traffic that was coming they knew.
Speaker Change: That inventory.
Speaker Change: The the marketing no component I think is a big thing. So if you remember we were intentionally quiet in the October and November to really support the <unk> launch and so once that we fully turned that on and started activating that really drove strong momentum around the world, but saw the results of that in North America in stores in particular and that has continued.
Speaker Change: So I think of course in certain markets. It was a little bit colder and so that always is an added benefit but primarily it's the combo of our teams do it they have to do they executed really well against our imperatives and then turning on the marketing just drove the momentum and give us the reach we are looking for.
Speaker Change: In January.
Speaker Change: Yes, I think your question really is about some color on where positive comps are.
Speaker Change: So we are seeing.
Speaker Change: At a consolidated level, our consolidated D to C positive comp stores are particularly outstanding and that's across the world. So we're really happy about that now it's a little bit of a timing shift in Asia in terms of having earlier neutral enter a new year and so as we get into the comp.
Speaker Change: And to that for last year's lunar new year, which was a little bit later as possible going to feel a little bit of slowing in performance in Asia in the first few weeks of February but.
Speaker Change: We're really excited about what we've seen in the stores and what feels like a continued acceleration and I'll just underscore the point Gary made.
Speaker Change: And this goes a little bit to where the EBIT guide as well we have continued to spend on demand generation and marketing activities, both top and bottom funnel as we come through January because we know and see that it's working and so we.
Speaker Change: You guys had that it might have a little bit of short term pressure in terms of our ability to deliver EBIT for the year, but no that's right.
Speaker Change: Thanks very helpful Best of luck going forward.
Speaker Change: Thanks, Alex.
Speaker Change: Okay, and if you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Next question comes from the line of Jonathan Komp with Baird. Please go ahead.
Jonathan Komp: Yeah, Hi, good morning. Thank you maybe just first to follow up there Neil could you could you give any more color I know the implied fourth quarter, given the seasonality of the business.
Speaker Change: Pretty wide range on outcomes yet.
Speaker Change: <unk> by the full year guidance. So just any other detail or color you can share some of your assumptions youre, making in the fourth quarter.
Speaker Change: Yeah, I mean, I think the math kind of squares with the full year guide, but I think the one other thing I'd point to is that we're anticipating to be just a little bit better on gross margin year over year, and so that may not be.
Speaker Change: Completely clear in the.
Speaker Change: In the guide because full year guide is.
Speaker Change: Is flat on gross margin, but the Q4 number likely to be a little bit better and thats going to translate to some benefit.
Speaker Change: As I, just said that we continue to expect to spend in marketing while we.
Speaker Change: While those numbers are delivering and so down the P&L, that's going to put some pressure on the operating income ahead of course.
Speaker Change: If revenue Outperforms then that's also helped.
Speaker Change: Yeah.
Speaker Change: Okay. Thanks for that and then maybe just a bigger picture takeaway question.
Speaker Change: Step back and look at the performance of the new product and merchandising initiatives.
Speaker Change: The shift in marketing strategy, but also some of the short term pressures.
Speaker Change: What have you taken away in terms of factors that are unique to the quarter versus.
Speaker Change: Any changes or implications for the future growth of the business as well as the profitability just as we think forward.
Speaker Change: The fourth quarter here.
Speaker Change: Yeah, So I'll take that I think the biggest thing for us is.
Speaker Change: We know we again it was intentional but starting later, obviously has an impact on that from a short term basis on Q3, So it's really not activating our marketing until.
Speaker Change: End of November and that has an impact and that wouldn't be our plan moving forward I think the thing to take away from that though and this was really such a foundational moment. So has an impact short term, but when you think about that long term and we are seeing the impact of that throughout the quarter and then into Q4 as this is such a different way to come to market.
Speaker Change: A different creative level it was a different execution level in terms of the quality.
Speaker Change: The boldness of the events that we did whether it was in APAC and EMEA, whether it was in North America. So that is like a new way forward for us and that will continue to pay dividends in Q4, and Q1 Q2 Q3 forever.
Speaker Change: And so that's how we're thinking about that in terms of just the strategic or the time.
Speaker Change: Timing and the strategy around marketing of course, we would always want to be pulling out earlier and so that's reflected in our plans as we look at FY 'twenty six.
Speaker Change: I think I'd add to that but what's really encouraging to us that the proportion of the business that's happening outside of downfield outerwear, and so really strong performance in apparel and fleece and the other categories and so as we move away from.
Speaker Change: In terms of the retail footprint away from sort of traditional colder weather spots, we loved that what we're seeing in terms of adoption rate for those for those other categories and clearly that's an area, where we expect to lean into.
Speaker Change: Yeah.
Speaker Change: Your next question comes from the line of Brooke Roach with Goldman Sachs. Please go ahead.
Brooke Roach: Good morning, and thank you for taking our question.
Brooke Roach: I was hoping we could dive a little bit deeper into the brand residents that youre seeing with the Chinese consumer Theres, some noise with marketing timing shifts and shift of the lunar new year, but as you spend more money marketing in the market and launched new products. Specifically snow goes can you talk a little bit about the consumer.
Speaker Change: Spots you saw with the Chinese consumer as well as what you view as the current competitive and macro environment, leading to potential for growth in that market on a go forward basis. Thank you.
Brian: Sure. Thanks for your question Brian.
Brian: The response was it pretty consistent globally in terms of just how.
Speaker Change: How are people responding to <unk>.
Speaker Change: As a capsule collection, but in China, you got to remember, it's one of our healthiest markets in terms of brand awareness brand strength and so the the addition, and all the energy and the marketing investments that we made in that market only amplify that and so we continue to see that as I said.
Speaker Change: In January their activation I can't remember the exact date, but it was it was close to mid December and so that really started to turn on and we've just seen that momentum.
Speaker Change: Build over the week over week. So the response has been really strong they loved the newness.
Speaker Change: As Danny mentioned I think in his remarks.
Speaker Change: It didn't just bring in new customers. It also really appeal to existing customers. So two thirds of the purchasers globally a snow goose.
Speaker Change: Our existing customers. So it did the job that we needed to do and we saw that in China. We saw that in EMEA. We saw that in North America, So very happy with those results.
Speaker Change: In terms of.
Speaker Change: The macros.
Speaker Change: It continues to be pressure when you look at Hong Kong, Macau, and Taiwan those markets, we're still seeing lower traffic levels mainland China is a little bit our mix. We had really strong performance on doing as we talked about Golden week was strong lunar new year, and we're really happy with what we're seeing there. So it's still a tough market, but we are at.
Speaker Change: The momentum in the places that we are investing in and so those commercial moments, we're really happy with the results that we're seeing.
Speaker Change: Just one quick follow up if we could pivot to the outlook for wholesale.
Speaker Change: Great to see some improving sell throughs in North America wholesale can you speak to how those conversations with your wholesale partners are trending for fall and winter 2025, what is your outlook for stabilization in the wholesale channel into the next fiscal year.
Speaker Change: So wholesale as I as I said in my remarks, the strategy is working so we're having very positive conversations with our partners. So.
Speaker Change: US being very selective on the ones that we're investing with the ones that are brand aligned that see the future of that see the potential for us to be.
Speaker Change: 360 relevant brand those are going really well so the partnerships that we've got and then.
Speaker Change: You've heard us talk about the <unk>.
Speaker Change: Tbi activation at Selfridges.
Speaker Change: That those are working so not only just in the quarter of driving stronger sell through so it has lower inventory, but theyre seeing stronger sell through results, which is exactly what we want to see because of that there's cleaner markets and they are holding price and so that is boding well for future conversations that were really excited about tighter and what he's bringing in.
Speaker Change: The energy and the newness in sort of the bold colored pilot. So it feels like there is a renewed energy and a trust there that.
Speaker Change: It goes both ways that we're really excited about what that means for the future. So.
Speaker Change: We saw most of that in Q3 in <unk>.
Speaker Change: North American by having strong conversations in EMEA as well.
Speaker Change: Ags orders in both in both of those markets in APAC, it's much more of a growth on it from a travel retail perspective, and so that obviously you know that.
Speaker Change: It goes into our wholesale channel, but similar response very excited understand the future see what we're doing with investments and it's starting to pay off.
Speaker Change: As far as 2006 goes we're worried about all of our process. So we'll update that.
Speaker Change: That outlook on the next call as we normally do.
Speaker Change: Great. Thanks, so much I'll pass it on.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Oliver Chen with TD Cowen. Please go ahead.
Speaker Change: Yeah.
Speaker Change: A lot of the hydro product has been exciting would've been key learnings and also your thoughts on launch cadence and the interplay with the new design and product development talent you mentioned.
Speaker Change: Second on traffic, how has that trended digitally and physically in terms of store traffic or any major call outs by geographies would be helpful as well.
And third longer term on pricing, what do you see happening across the portfolio, perhaps like for like in mix as you think about modernization of the of the assortment.
Stephanie: Hey, Oliver Thanks for the question Stephanie.
Speaker Change: Key learnings from the first.
Stephanie: Comparable or better.
Stephanie: We're really happy with how it performed I think that town.
Stephanie: Hum.
Stephanie: It would be validated that.
Stephanie: This.
Stephanie: Using the new introduced pulp off of the brand and the new way, we launching snowing produce really.
Stephanie: While our new customers existing customers that also there's lots of cross selling lots of cross selling that went on so.
It really it really is what it was supposed to do in terms of the.
Stephanie: Hum.
Stephanie: In terms of cross selling and bringing more faster.
Stephanie: I think I think the product was we got some amazing product Feedbox amazing congrats on the campaigns that we did I think.
Stephanie: I think that we're entering a whole new place now.
Stephanie: With regards to.
Stephanie: On the way our brand is.
Stephanie: Would it be perceived again.
I think that.
Stephanie: Water.
Stephanie: Hydrorhiza Craig references as really catalyze that I'm really excited for the next received and it's come up.
Stephanie: We have doubled down on its going to be even better.
Oliver Chen: I think I'll add to that Oliver is that.
Oliver Chen: Some of the product development and operations and sites you heard me say in the remarks, our new and different that's what's for US. These products look very different than materials are very different the elevation design and the speed at which we executed. It was also really different and so that just required new muscles across the organization the way design product development.
Oliver Chen: Manufacturing supply chain, all linked together and the way we migrate product from the floor of the factory to the stores at a much faster period of time, we experimented with a lot of new statements there and.
Oliver Chen: And those will have pay future dividends both in futures note. This capsule, but more importantly, we're taking a lot of those learnings about how to be more nimble into the mainline Judah.
Oliver Chen: Prior to joining with the additional investment again behind product development resources or capability Theyre only going to grow.
Oliver Chen: Far as traffic goes just on the sort of second theme Oliver.
Oliver Chen: I'll start with E Commerce, I think that dovetails nicely with that.
Oliver Chen: So Danny gave around how much interest there has been.
Oliver Chen: The snow business moment and.
Oliver Chen: The rest of them.
Oliver Chen: Particularly digital marketing spend.
Oliver Chen: Spend that we've had we're way up on traffic to the E Commerce site over.
Oliver Chen: In the third quarter, which is exciting.
Oliver Chen: If I carve out a little bit of that there is some benefit to <unk>, which I'm sure you understand has maybe much higher for a number of sessions, but that's also encouraging that new channel a new type of commercial experienced new type of new way to touch with touch.
Oliver Chen: Our customers have.
Oliver Chen: Also been been met with some some real interest I think as it relates to the store traffic is maybe a little bit more of an indication of the macro environment that we experienced throughout the quarter and so.
Oliver Chen: Traffic was down a little bit across the entire portfolio within the individual regions U S and Canada in particular as the quarter wore on improved.
Oliver Chen: And over the quarter was up in Asia flat on the quarter, but again early part of the quarter challenged and good in markets like Japan, where there continues to be an influx of tourism a little bit softer in China.
Oliver Chen: And again in January as the calendar is turned to January is unfolded, it's been it's been pretty good as well.
Oliver Chen: Europe's a market where.
Oliver Chen: It's sort of a tale of two halves the U K.
Oliver Chen: As a spot where we have experienced and seen more macro headwinds then than we have in continental Europe, where our traffic's up and we're really happy with the performance I think the UK is a market that continues to be challenging and it's not that's not a surprise I don't think given given the news.
Oliver Chen: I'll just make a real quick comment on the pricing.
Oliver Chen: We haven't really done a lot of different things on pricing, we continue to look at it across the categories across the world.
Oliver Chen: But mainly focused on.
Oliver Chen: What the consumer value proposition is and exactly what.
Speaker Change: We are delivering for the consumers and as Judy It gets her arms around what the merchandising plan looks like and we introduced our things.
Oliver Chen: Mr. Oghuz collection, we will continue to evolve at that pricing it looks like I think.
Oliver Chen: One quick point on just some pricing the one thing that we're encouraged by is it's we're not seeing it as a limiter. So when you look at the moments like whether it's black Friday holiday.
Speaker Change: Price is not an issue and so that is obviously a factor. So you know thats known cause is already at the top of the pyramid and that will continue but as Neil said we're.
Oliver Chen: Researching that.
Oliver Chen: It's about meeting that consumer demand with the right price point with the right product.
Oliver Chen: Okay.
Oliver Chen: Helpful. Thanks Best regards.
Oliver Chen: Thanks Al.
Oliver Chen: And that concludes our question and answer session and I will now turn the call back over to management for closing comments.
Speaker Change: Thank you operator, and thank you everyone for your continued interest in Canada Goose.
Speaker Change: Stent that there may be additional questions. We're always here either myself or the IR team to handle those take care and great day.
Speaker Change: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Hum.
Speaker Change: Okay.
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Speaker Change: Yeah.
Speaker Change: Yeah.
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