Canada Goose Holdings Inc T.GOOS

TD

[retiredcf]

Canada Goose

(GOOS-T, GOOS-N) C$55.67 | US$44.44

Q1/F22 First Look: A Mixed View Event

 This morning, Canada Goose (GOOS) reported Q1/F22 results exceeding our forecast/consensus. Revenue of $56mm was ahead of our forecast/consensus of $49mm/$50mm and an Adjusted loss/share of $0.45 was ahead of our forecast/ consensus of -$0.57/-$0.53. Conference call is at 9:00 a.m. ET.

Impact: MIXED

 Q1/F22 Revenue: Total revenue of $56.3mm increased ~116% y/y.
 Wholesale revenue of $25.8mm increased ~200% y/y, compared to our forecast of $17.8mm and was ahead of management's guidance for revenue to approximately double y/y. The y/y improvement was due to higher shipments

to wholesale and international distributor partners.

 DTC revenue of $29.4mm increased ~183% y/y, compared to our forecast of $27.6mm and was slightly ahead of management's guidance (revenue 2.5x y/y). This was driven by growth in global eCommerce and Mainland China. Continued store traffic headwinds and temporary store closures for ~20% of Q1/F22 operating days offset growth in part.

• Adjusted EBIT: Gross margin of 54.5% increased materially y/y yet was below our forecast of 64.9%, due to product mix weighted to non-parka categories. This was offset by lower-than-anticipated SG&A as a percentage of sales due to higher revenue, and despite investments in marketing.

• Inventory/Balance Sheet: Inventory declined ~6% y/y, despite continued expansion of GOOS' retail footprint. On a pre-IFRS 16 basis, leverage is <0.5x as at Q1/F22.

• Q2/F22 Guidance: Wholesale revenue to increase in the low double digits y/y; DTC revenue to increase 1.5x y/y. This implies revenue in the range of $200mm, below consensus of $245mm (range of $207-$277mm).

• Conclusion: Our initial take on the Q1/F22 release and guidance is mixed. On the call, we will be looking for colour on the Wholesale order book including the potential shift in Wholesale orders to Q3. We will also be looking for management to provide further details around the success of recent store openings, particularly in Asia as it aims to capture local demand in the region given the prolonged absence of tourist traffic. We will update our view following the call and our detailed review of the MD&A/financial statements.