Canada Goose Reports Results For Second Quarter Fiscal 2020

Canada Goose Holdings Inc. (“Canada Goose” or the “Company”) (NYSE:GOOS, TSX:GOOS) today announced financial results for the second quarter ended September 29, 2019. The Company’s Management’s Discussion and Analysis and Unaudited Condensed Consolidated Interim Financial Statements for the second and two quarters ended September 29, 2019 will be filed on SEDAR at www.sedar.com, the EDGAR section of the U.S. Securities and Exchange Commission website at www.sec.gov and posted on the Company’s website at investor.canadagoose.com.

Second Quarter Fiscal 2020 Highlights (in millions of Canadian dollars):

• Total revenue increased by 27.7% to $294.0m
• Adjusted EBIT was $79.2m, representing a 26.9% margin
• Net income was $60.6m, or $0.55 per diluted share
• Adjusted net income per diluted share increased by 23.9% to $0.57

The figures above are as compared to the Second Quarter Fiscal 2019.

Adjusted EBIT and adjusted net income per diluted share are non-IFRS financial measures. See “Note Regarding Non-IFRS Financial Measures”.

“Our performance in the first half reflects the strength of our brand and power of our unique business model. Through global brand equity, selective distribution and operational flexibility, we delivered another set of strong results despite continuing external uncertainties,” said Dani Reiss, President & CEO. “Alongside continued growth at home, we are making great strides internationally, and we believe we are well positioned going into our peak selling season.”

Second Quarter Fiscal 2020 Business Highlights (Compared to Second Quarter Fiscal 2019)

• Strong revenue growth in key markets, with standout performances in Asia, which nearly doubled to $48.9m from $26.6m, and the United States, which increased by 38.5% on a constant currency basis(1).
• The successful commercial introduction of BRANTA, a limited-edition collection marrying technical innovation with inventive silhouettes. BRANTA is an elevated interpretation of Canada Goose’s heritage, designed to inspire loyal brand fans and reach new audiences with pinnacle product.
• Increased flexibility through expanded in-house manufacturing capacity to respond to continuing requests from wholesale partners for earlier shipments.

(1) See “Note Regarding Non-IFRS Financial Measures”.

Second Quarter Fiscal 2020 Results (Compared to Second Quarter Fiscal 2019):

• Total revenue increased by 27.7% to $294.0m from $230.3m, or 28.3% on a constant currency basis(1).
  • DTC revenue increased to $74.2m from $50.4m, driven by incremental revenue from new retail stores.
  • Wholesale revenue increased to $219.8m from $179.9m. The increase was driven by higher order values from existing partners, complemented by customer requests for earlier shipment timing relative to last year. It also reflects incremental revenue from Baffin in its peak quarter, which was acquired in November 2018.
• Gross profit was $160.4m, a gross margin of 54.6%. The increase of $31.9m in gross profit was driven by revenue growth in both channels.
  • DTC gross profit was $56.1m, a gross margin of 75.6%. The 40 bps increase in gross margin reflects the net positive impact of pricing relative to costs.
  • Wholesale gross profit was $104.3m, a gross margin of 47.5%. The 290 bps decrease in gross margin reflects a normalization relative to the second quarter of fiscal 2019, which was elevated due to the timing of production efficiencies and reductions in import duties on goods sold in Europe.
• Operating income was $75.4m. The increase of $10.4m in operating income was driven by revenue growth in both channels.
  • DTC operating income was $30.0m, an operating margin of 40.4%. The impact of strong sales productivity and profitability across all components of the channel was partially offset by the costs of a larger store opening program relative to last year. Pre-store opening costs of $3.6m were incurred for locations not yet open. Excluding pre-store opening costs in both periods, DTC operating margin increased to 45.3% in fiscal 2020 from 43.7% in fiscal 2019.
  • Wholesale operating income was $90.9m, an operating margin of 41.4%. With the decrease in channel gross margin described above, the increase in operating income was driven by revenue growth.
• Unallocated corporate expenses were $43.2m, compared to $34.2m. The increase was primarily attributable to investments to support growth in marketing, people, technology and expansion in Greater China.
• Unallocated depreciation and amortization expenses were $2.3m, compared to $1.8m.
• Net income was $60.6m, or $0.55 per diluted share, compared to $49.9m, or $0.45 per diluted share.
• Adjusted EBIT(1) was $79.2m, compared to $66.5m.
• Adjusted net income(1) was $63.6m, or $0.57 per diluted share, compared to adjusted net income(1) of $51.1m, or $0.46 per diluted share

(1) See “Note Regarding Non-IFRS Financial Measures”.

Fiscal 2020 Outlook

The Company reiterates the fiscal 2020 outlook and key assumptions underlying such outlook which were issued on May 29, 2019, in the press release announcing the Company’s results for Fiscal Year 2019 under the heading “Fiscal Year 2020 and Long-Term Outlook”. Within the meaning of applicable securities laws, this outlook constitutes forward-looking information. Actual results could vary materially as a result of numerous factors, including certain risk factors, many of which are beyond the Company’s control. See “Cautionary Note Regarding Forward-Looking Statements”.