Highlights1:
- Reported revenue of $576.7m, down 1.6% from the prior year
quarter largely due to timing of Wholesale shipments and lower
revenue in Mainland China related to COVID-19 disruptions
- Increased gross margin to 72.2%, up 160 basis points with
gross margin improvement in all product categories
- Generated net income of $137.5m, adjusted net income of
$134.5m2 and adjusted EBIT of $197.1m2
Canada Goose Holdings Inc. (“Canada Goose” or the “Company”)
(NYSE:GOOS, TSX:GOOS) today announced financial results for the
third quarter ended January 1, 2023 (“Q3 2023” or “Q3 ended January
1, 2023”). All amounts are in Canadian dollars unless
indicated.
"We were pleased with accelerating growth in Mainland China
toward the end of the quarter and continue to see promising signs
of a strong local rebound to date,” said Dani Reiss, Chairman and
CEO. “However, for most of the third quarter which includes
December, our busiest month of the year, our performance was
impacted by worse than expected COVID-19 related disruptions in
Mainland China. This, combined with recent slowing momentum in
North America set against a tough macro-economic backdrop, has led
us to revise annual guidance. We believe these challenges are
temporary and our brand strength and strategy position us well to
drive profitable growth – which we look forward to discussing at
our upcoming Investor Day.”
Key Third Quarter Fiscal 2023 Results
CAD $ millions
(except share and per share
data)
Third quarter ended
$ Change
% Change
January 1, 2023
January 2,
20224
Revenue
576.7
586.1
(9.4
)
(1.6
)%
Gross profit
416.4
413.8
2.6
0.6
%
Gross margin
72.2
%
70.6
%
160
bps
Operating income
194.3
205.0
(10.7
)
(5.2
)%
Operating margin
33.7
%
35.0
%
(130
)bps
Net income attributable to shareholders
of the Company
134.9
151.3
(16.4
)
(10.8
)%
Earnings per share attributable to
shareholders of the Company
Basic
$
1.28
$
1.42
(0.14
)
(9.9
)%
Diluted
$
1.28
$
1.40
(0.12
)
(8.6
)%
Weighted average number of shares
outstanding
Basic
105,146,788
106,915,147
Diluted
105,668,608
107,840,995
Non-IFRS Financial Measures3:
Adjusted EBIT*
197.1
205.0
(7.9
)
(3.9
)%
Adjusted EBIT margin
34.2
%
35.0
%
(80
)bps
Adjusted net income attributable to
shareholders of the Company*
134.5
151.2
(16.7
)
(11.0
)%
Adjusted net income per basic share
attributable to shareholders of the Company
$
1.28
$
1.41
(0.13
)
(9.2
)%
Adjusted net income per diluted share
attributable to shareholders of the Company
$
1.27
$
1.40
(0.13
)
(9.3
)%
*Information for the comparative fiscal
quarter has been recast to reflect a revision in the Company’s
calculation of adjusted EBIT and adjusted net income. See
“Reconciliation of Non-IFRS Measures”.
Revenue
Q3 2023 revenue declined 1.6% on a reported basis and 2.2% on a
constant currency revenue basis3.
DTC revenue grew 1.5% largely due to continued retail store
expansion, with 51 permanent stores at the end of Q3 2023 compared
to 41 permanent stores at the end of the comparative quarter. DTC
comparable sales5 declined 6.0%, which included positive comparable
sales growth in all geographies excluding Mainland China. We were
negatively impacted by COVID-19 related restrictions in the Asia
Pacific region, particularly in Mainland China, which resulted in
temporary store closures, reduced hours, and significantly lower
retail traffic.
Wholesale revenue declined 17.3%. The decline was attributable
to earlier shipments in Q2 2023.
Revenue By Segment
Third quarter ended
$ Change
% Change
CAD $ millions
January 1, 2023
January 2, 2022
As reported
Foreign exchange
impact
In constant currency6
As reported
In constant currency6
DTC
450.2
443.7
6.5
(2.7
)
3.8
1.5
%
0.9
%
Wholesale
114.4
138.4
(24.0
)
(0.8
)
(24.8
)
(17.3
)%
(17.9
)%
Other
12.1
4.0
8.1
—
8.1
202.5
%
202.5
%
Total revenue
576.7
586.1
(9.4
)
(3.5
)
(12.9
)
(1.6
)%
(2.2
)%
Fiscal 2023 is a 52-week fiscal year. Fiscal 2022, which ended
April 3, 2022, was the first 53-week fiscal year, and the
additional week was added to the third quarter ended January 2,
2022, which was during our peak season. In order to explain the
impact of the additional week in fiscal 2022, and to facilitate
comparison with the results for the third quarter ended January 1,
2023 over a similar calendar period, the below presents revenue
excluding the first week at the beginning of the third quarter
ended January 2, 2022 (“Incremental Week”) to more closely align
calendar periods and the numbers of trading days.
Using the same trading weeks as the comparative quarter in both
periods, total revenue and DTC revenue grew 2.5% and 4.6%
respectively. Wholesale revenue declined 11.0% using the same
trading weeks as the comparative quarter.
Impact of Incremental Week on Fiscal 2022 Revenue
Third quarter ended
$ Change
% Change
CAD $ millions
January 1, 2023
January 2, 2022
Incremental Week
January 2, 2022 (Excluding
Incremental Week)
Excluding Incremental
Week
Foreign exchange
impact
In constant currency6
Excluding Incremental
Week
In constant currency6
DTC
450.2
443.7
(13.4
)
430.3
19.9
(2.6
)
17.3
4.6
%
4.0
%
Wholesale
114.4
138.4
(9.8
)
128.6
(14.2
)
(1.1
)
(15.3
)
(11.0
)%
(11.9
)%
Other
12.1
4.0
—
4.0
8.1
—
8.1
202.5
%
202.5
%
Total revenue
576.7
586.1
(23.2
)
562.9
13.8
(3.7
)
10.1
2.5
%
1.8
%
Revenue by Geography
Revenue in the United States grew 11.3% primarily driven by
higher revenues from existing stores as well as continued retail
expansion. Revenue decreased in Canada and EMEA due to earlier
timing for Wholesale shipments and lower e-Commerce performance,
partially offset by increased sales within existing stores. APAC
declined due to Mainland China COVID-19 related disruptions, partly
offset by increased revenue as a result of the Japan Joint
Venture.
Third quarter ended
$ Change
% Change
CAD $ millions
January 1, 2023
January 2, 2022
As reported
Foreign exchange
impact
In constant currency6
As reported
In constant currency6
Canada
109.2
117.2
(8.0
)
—
(8.0
)
(6.8
)%
(6.8
)%
United States
182.8
164.2
18.6
(8.2
)
10.4
11.3
%
6.3
%
Asia Pacific
167.6
176.8
(9.2
)
3.2
(6.0
)
(5.2
)%
(3.4
)%
EMEA7
117.1
127.9
(10.8
)
1.5
(9.3
)
(8.4
)%
(7.3
)%
Total revenue
576.7
586.1
(9.4
)
(3.5
)
(12.9
)
(1.6
)%
(2.2
)%
Impact of Incremental Week on Fiscal 2022 Revenue
Third quarter ended
$ Change
% Change
CAD $ millions
January 1, 2023
January 2, 2022
Incremental Week
January 2, 2022 (Excluding
Incremental Week)
Excluding Incremental
Week
Foreign exchange
impact
In constant currency9
Excluding Incremental
Week
In constant currency9
Canada
109.2
117.2
(5.7
)
111.5
(2.3
)
—
(2.3
)
(2.1
) %
(2.1
) %
United States
182.8
164.2
(8.5
)
155.7
27.1
(9.0
)
18.1
17.4
%
11.6
%
Asia Pacific
167.6
176.8
(4.1
)
172.7
(5.1
)
3.1
(2.0
)
(3.0
) %
(1.2
) %
EMEA8
117.1
127.9
(4.9
)
123.0
(5.9
)
2.2
(3.7
)
(4.8
) %
(3.0
) %
Total revenue
576.7
586.1
(23.2
)
562.9
13.8
(3.7
)
10.1
2.5
%
1.8
%
Gross profit and gross margin
Gross profit increased $2.6m primarily due to gross margin
expansion. Gross margin was favourably impacted by pricing,
partially offset by higher duty costs, product mix from a lower
proportion of parka sales and the unfavourable impact of the fair
value inventory acquisition adjustment on sales related to the
Japan Joint Venture.
Operating income and adjusted EBIT
Operating income declined largely due to unfavourable foreign
exchange fluctuations related to the Company’s senior secured term
loan facility (the “Term Loan Facility”) and working capital, net
of hedge impacts, investment in information technology for business
growth, higher costs related to opening new stores and running
stores at full capacity except Mainland China, and higher fees in
support of strategic activities and costs associated with the Japan
Joint Venture. The decrease was partially offset from the higher
gross profit and the timing of investment in marketing to assist
with brand awareness and support our growth, which occurred earlier
in the year compared to fiscal 2022. Adjusted EBIT decreased
primarily due to higher costs related to investment in technology,
opening new stores and running stores at full capacity except
Mainland China, foreign exchange fluctuations net of hedge impacts
related to working capital partially offset by higher gross profit
and the timing of marketing spend which occurred earlier in the
year compared to fiscal 2022.
Net income and adjusted net income
Net income and adjusted net income was lower as compared to Q3
2022 primarily as a result of the factors described above impacting
operating income and adjusted EBIT as well as higher income tax
expense.
Balance Sheet Highlights
Cash was $344.2m as at Q3 ended January 1, 2023, compared to
$407.6m as at Q3 ended January 2, 2022, largely due to a greater
investment in working capital. During the third quarter of fiscal
2023, the Company repurchased 745,381 subordinate voting shares for
a total cash consideration of $17.9m.
Inventory was $482.0m as at Q3 ended January 1, 2023, compared
to $368.1m as at Q3 ended January 2, 2022. Higher inventory levels
are attributable to lower-than-expected sales in the Asia Pacific
region due to ongoing COVID-19 disruptions for most of fiscal 2023
year to date and inventory planning. Inventory of $27.3m was
acquired through the Japan Joint Venture, and the inventory level
is $25.2m as at January 1, 2023. We monitor the levels of inventory
in each of our sales channels and across geographic regions and aim
to align with demand that we forecast in each region.
Full Year Fiscal 2023 Outlook10
For fiscal 2023, the Company has lowered its overall guidance
ranges from the previous outlook due to worse than expected
COVID-19 related disruptions for most of Q3 2023 in Mainland China
and slowing momentum in North America against a challenging
macro-economic environment. The Company remains relentlessly
focused on capitalizing on its growth opportunities and driving
further brand heat while also tightly controlling all non-strategic
spend in an effort to maximize profitable growth.
The Company currently expects:
- Total revenue $1.175Bn to $1.195Bn compared to previous
guidance of $1.200Bn to $1.300Bn provided in Q2 2023 earnings
release.
- Non-IFRS adjusted EBIT $167m to $182m, representing a margin of
14.2% to 15.3% compared to previous guidance of non-IFRS adjusted
EBIT $215m to $255m, representing a margin of 17.9% to 19.6%.
- Non-IFRS adjusted net income per diluted share $0.92 to $1.03
compared to previous guidance of non-IFRS adjusted net income per
diluted share $1.31 to $1.62.
For the fourth quarter of fiscal 2023, the Company currently
expects:
- Total revenue $251m to $271m.
- Non-IFRS adjusted EBIT $19m to $35m.
- Non-IFRS adjusted net income per diluted share $0.00 to
$0.12.
This outlook is based on a number of assumptions, including the
following:
- Improved traffic and lower levels of operating disruptions
globally, including mandatory closures, in both Company and partner
operated retail stores, relative to fiscal 2022.
- There will be improved strength in Mainland China across the
Company’s DTC channels and the macro-economic environment will not
materially worsen in any of the Company’s geographies.
- The Company expects approximately $45m to $50m in total revenue
in fiscal 2023 from the Japan Joint Venture compared to previous
assumption of $60m to $65m in light of a slower than expected
revenue build in new stores.
- DTC revenue is expected to be in high 60s as a percentage of
total revenue, compared to previous assumption of 70% to 73% of
total revenue with a DTC comparable sales decline in the low single
digits compared to the previous assumption of a decline in the
low-single digits at the lower end of the range to growth of
high-single digits at the top end of the range.
- Wholesale revenue growth of 6%.
- Gross margin in the high 60s as a percentage of total
revenue.
- Q4 fiscal 2023 selling, general and administrative (“SG&A”)
expenses used in the calculation of adjusted EBIT in the low 50s as
a percentage of revenue.
- Effective tax rate in the mid 20s as a percentage of income
before taxes for fiscal 2023 compared to the previous assumption in
the low 20s.
- Weighted average diluted shares outstanding of 104.8m for
fiscal 2023 compared to the previous assumption of 105.8m as the
new assumption incorporates share buyback activity.
Within the meaning of applicable securities laws, this outlook
constitutes forward-looking information. The purpose of this
outlook is to provide a description of management's expectations
regarding the Company's annual financial performance and may not be
appropriate for other purposes. Actual results could vary
materially as a result of numerous factors, including the extent
and duration of operational disruptions that may affect our
business as a result of the COVID-19 pandemic and other risk
factors, many of which are beyond the Company’s control. See
“Cautionary Note Regarding Forward-Looking Statements”.
Conference Call Information
The Company will host the conference call at 9:00 a.m. Eastern
Standard Time on February 2, 2023. The conference call can be
accessed by using the following link:
https://register.vevent.com/register/BI18083b8c9aa54b4ab7176f00a6065d9b.
After registering, an email will be sent including dial-in details
and a unique conference call pin required to join the live call. A
live webcast of the conference call will also be available on the
investor relations page of the Company's website at
http://investor.canadagoose.com.
About Canada Goose
Founded in 1957 in a small warehouse in Toronto, Canada, Canada
Goose (NYSE:GOOS, TSX:GOOS) is a lifestyle brand and a leading
manufacturer of performance luxury apparel. Every collection is
informed by the rugged demands of the Arctic, ensuring a legacy of
functionality is embedded in every product from parkas and rainwear
to apparel and accessories. Canada Goose is inspired by relentless
innovation and uncompromised craftsmanship, recognized as a leader
for its Made in Canada commitment. In 2020, Canada Goose announced
HUMANATURE, its purpose platform that unites its sustainability and
values-based initiatives, reinforcing its commitment to keep the
planet cold and the people on it warm. Canada Goose also owns
Baffin, a Canadian designer and manufacturer of performance outdoor
and industrial footwear. Visit www.canadagoose.com for more
information.
Condensed Consolidated Interim Statements of Income
(unaudited) (in millions of Canadian dollars, except share
and per share amounts)
Third quarter ended
Three quarters ended
January 1, 2023
January 2, 2022
January 1, 2023
January 2, 2022
Restated
Restated
$
$
$
$
Revenue
576.7
586.1
923.8
875.3
Cost of sales
160.3
172.3
298.9
295.8
Gross profit
416.4
413.8
624.9
579.5
Gross margin
72.2
%
70.6
%
67.6
%
66.2
%
SG&A expenses
222.1
208.8
506.6
423.7
SG&A expenses as % of revenue
38.5
%
35.6
%
54.8
%
48.4
%
Operating income
194.3
205.0
118.3
155.8
Operating margin
33.7
%
35.0
%
12.8
%
17.8
%
Net interest, finance and other costs
6.0
7.6
20.2
32.0
Income before income taxes
188.3
197.4
98.1
123.8
Income tax expense
50.8
46.1
19.2
20.1
Effective tax rate
27.0
%
23.4
%
19.6
%
16.2
%
Net income
137.5
151.3
78.9
103.7
Net income attributable to non-controlling
interest
2.6
—
3.1
—
Net income attributable to shareholders of
the Company
134.9
151.3
75.8
103.7
Weighted average number of shares
outstanding
Basic
105,146,788
106,915,147
105,238,509
108,999,722
Diluted
105,668,608
107,840,995
105,778,351
109,969,956
Earnings per share attributable to
shareholders of the Company
Basic
$
1.28
$
1.42
$
0.72
$
0.95
Diluted
$
1.28
$
1.40
$
0.72
$
0.94
Non-IFRS Financial Measures:11
Adjusted EBIT
197.1
205.0
147.5
158.9
Adjusted EBIT margin
34.2
%
35.0
%
16.0
%
18.2
%
Adjusted net income attributable to
shareholders of the Company
134.5
151.2
96.0
112.7
Adjusted net income per basic share
attributable to shareholders of the Company
$
1.28
$
1.41
$
0.91
$
1.03
Adjusted net income per diluted share
attributable to shareholders of the Company
$
1.27
$
1.40
$
0.91
$
1.02
11 See “Non-IFRS Financial Measures and
Other Specified Financial Measures”.
Condensed Consolidated Interim Statements of Comprehensive
Income (Loss) (unaudited) (in millions of Canadian
dollars, except per share amounts)
Third quarter ended
Three quarters ended
January 1, 2023
January 2, 2022
January 1, 2023
January 2, 2022
Restated
Restated
$
$
$
$
Net income
137.5
151.3
78.9
103.7
Other comprehensive income
(loss)
Items that will not be reclassified to
earnings, net of tax:
Actuarial gain on post-employment
obligation
—
—
1.0
0.2
Items that may be reclassified to
earnings, net of tax:
Cumulative translation adjustment gain
(loss)
22.5
(9.9
)
10.7
(10.1
)
Net (loss) gain on derivatives designated
as cash flow hedges
(4.6
)
(0.7
)
4.5
(2.6
)
Reclassification of net loss on cash flow
hedges to income
3.4
2.3
4.9
2.8
Other comprehensive income (loss)
21.3
(8.3
)
21.1
(9.7
)
Comprehensive income
158.8
143.0
100.0
94.0
Attributable to:
Shareholders of the Company
156.6
143.0
96.9
94.0
Non-controlling interest
2.2
—
3.1
—
Comprehensive income
158.8
143.0
100.0
94.0
Condensed Consolidated Statements of Financial Position
(unaudited) (in millions of Canadian dollars)
January 1, 2023
January 2, 2022
April 3, 2022
Restated
Assets
$
$
$
Current assets
Cash
344.2
407.6
287.7
Trade receivables
120.9
108.0
42.7
Inventories
482.0
368.1
393.3
Income taxes receivable
5.7
0.5
1.1
Other current assets
58.3
38.1
37.5
Total current assets
1,011.1
922.3
762.3
Deferred income taxes
67.7
65.8
53.2
Property, plant and equipment
128.5
123.1
114.2
Intangible assets
132.9
123.8
122.2
Right-of-use assets
275.6
241.2
215.2
Goodwill
65.0
53.1
53.1
Other long-term assets
22.2
8.2
20.4
Total assets
1,703.0
1,537.5
1,340.6
Liabilities
Current liabilities
Accounts payable and accrued
liabilities
262.0
244.5
176.2
Provisions
46.6
43.2
18.5
Income taxes payable
31.8
36.9
24.5
Short-term borrowings
52.4
3.8
3.8
Current portion of lease liabilities
66.6
61.7
58.5
Total current liabilities
459.4
390.1
281.5
Provisions
36.7
30.5
31.3
Deferred income taxes
22.2
13.2
15.8
Term loan
393.4
370.8
366.2
Lease liabilities
250.3
208.5
192.2
Other long-term liabilities
42.9
22.5
25.7
Total liabilities
1,204.9
1,035.6
912.7
Equity
Equity attributable to shareholders of the
Company
484.1
501.9
427.9
Non-controlling interests
14.0
—
—
Total equity
498.1
501.9
427.9
Total liabilities and equity
1,703.0
1,537.5
1,340.6
Non-IFRS Financial Measures and Other Specified Financial
Measures
This press release includes references to certain non-IFRS
financial measures such as adjusted EBIT, adjusted net income and
constant currency revenue and certain non-IFRS ratios such as,
adjusted EBIT margin, adjusted net income attributable to
shareholders of the Company and adjusted net income per basic and
diluted share attributable to the shareholders of the Company.
These financial measures are employed by the Company to measure its
operating and economic performance and to assist in business
decision-making, as well as providing key performance information
to senior management. The Company believes that, in addition to
conventional measures prepared in accordance with IFRS, certain
investors and analysts use this information to evaluate the
Company’s operating and financial performance. These financial
measures are not defined under IFRS nor do they replace or
supersede any standardized measure under IFRS. Other companies in
our industry may calculate these measures differently than we do,
limiting their usefulness as comparative measures. Definitions and
reconciliations of non-IFRS measures to the nearest IFRS measure
can be found in our MD&A. Such reconciliations can also be
found in this press release under “Reconciliation of Non-IFRS
Measures” and, in the case of constant currency revenue, under
“Revenue”.
This press release also includes DTC comparable sales growth
which is a supplementary financial measure defined as sales on a
constant currency basis from e-Commerce sites and stores which have
been operating for one full year (12 successive fiscal months). The
measure excludes store sales from both periods for the specific
trading days when the stores were closed, whether those closures
occurred in the current period or the comparative period.
Reconciliation of Non-IFRS Measures
The tables below reconcile net income to adjusted EBIT and
adjusted net income attributable to shareholders of the Company for
the periods indicated. Adjusted EBIT margin is equal to adjusted
EBIT for the period presented as a percentage of revenue for the
same period.
Beginning with the third quarter of fiscal 2023, we no longer
include pre-store opening costs in the reconciliation of net income
to adjusted EBIT and adjusted net income attributable to
shareholders of the Company, as we believe these costs are a part
of our operating base as we accelerate new store openings.
Comparable periods have been restated to reflect this change.
Third quarter ended
Three quarters ended
CAD $ millions
January 1, 2023
January 2,
202212
January 1, 2023
January 2,
202212
Net income
137.5
151.3
78.9
103.7
Add (deduct) the impact of:
Income tax expense
50.8
46.1
19.2
20.1
Net interest, finance and other costs
6.0
7.6
20.2
32.0
Operating income
194.3
205.0
118.3
155.8
Unrealized foreign exchange loss (gain) on
Term Loan Facility (a)
(3.6
)
(0.5
)
11.7
1.6
Share-based compensation (b)
—
0.1
—
0.2
Net temporary store closure costs (c)
0.8
—
3.2
0.2
Transition of logistics agencies (e)
—
—
—
0.1
Japan joint venture costs (f)
4.1
—
8.3
—
Head office transition costs (g)
1.5
—
4.7
—
Other (i)
—
0.4
1.3
1.0
Total adjustments
2.8
—
29.2
3.1
Adjusted EBIT
197.1
205.0
147.5
158.9
Adjusted EBIT margin
34.2
%
35.0
%
16.0
%
18.2
%
For the third quarter ended January 1, 2023, adjusted EBIT was
$197.1m representing a margin of 34.2% which was below our previous
outlook of $220.0m to $250.0m and an adjusted EBIT margin of 37.9%
to 38.6%. This was primarily due to lower than expected sales,
revenue channel mix whereby wholesale and DTC revenue were replaced
by other revenue, the donation to assist refugees from the War in
Ukraine, higher than anticipated investment in strategic projects,
and the negative impacts of foreign exchange.
Third quarter ended
Three quarters ended
CAD $ millions
January 1, 2023
January 2,
202212
January 1, 2023
January 2,
202212
Net income
137.5
151.3
78.9
103.7
Add (deduct) the impact of:
Unrealized foreign exchange (gain) loss on
Term Loan Facility (a)
(3.6
)
(0.5
)
11.7
1.6
Share-based compensation (b)
—
0.1
—
0.2
Net temporary store closure costs (c)
(d)
0.8
—
3.3
0.2
Transition of logistics agencies (e)
—
—
—
0.1
Japan Joint Venture costs (f)
4.1
—
8.3
—
Head office transition costs (g) (h)
2.0
—
5.9
—
Acceleration of unamortized costs on Term
Loan Facility Repricing (j)
—
—
—
9.5
Japan Joint Venture remeasurement gain on
contingent consideration and put option (k)
(2.7
)
—
(4.7
)
—
Other (i)
—
0.4
1.3
1.0
Total adjustments
0.6
0.0
25.8
12.6
Tax effect of adjustments
(0.3
)
(0.1
)
(4.3
)
(3.6
)
Adjusted net income
137.8
151.2
100.4
112.7
Adjusted net income attributable to
non-controlling interest (l)
(3.3
)
—
(4.4
)
—
Adjusted net income attributable to
shareholders of the Company
134.5
151.2
96.0
112.7
Weighted average number of diluted shares
outstanding
105,668,608
107,840,995
105,778,351
109,969,956
Adjusted net income per diluted share
attributable to shareholders of the Company
$
1.27
$
1.40
$
0.91
$
1.02
12 The Company adopted a change in
accounting policy for the year ended April 3, 2022, on the
treatment of implementation costs related to Software as a Service
(“SaaS”) arrangements. See “Changes in Accounting Policies” for a
description of the impact from adopting the agenda decision and the
impact of retrospective application on the comparative period.
For the third quarter ended January 1, 2023, adjusted net income
per diluted share attributable to the shareholders of the Company
was $1.27 which was below our previous outlook of $1.47 to $1.72.
This is primarily due to lower adjusted EBIT as noted above.
- Unrealized gains and losses on the translation of the Term Loan
Facility from USD to CAD, net of the effect of derivative
transactions entered into to hedge a portion of the exposure to
foreign currency exchange risk all of which are included in
SG&A expenses.
- Non-cash based compensation expense on stock options issued
prior to the Company’s initial public offering under the Legacy
Plan and cash payroll taxes paid of less than $0.1m and less than
$0.1m in the third and three quarters ended January 1, 2023,
respectively (third and three quarters ended January 2, 2022 -
$0.1m and $0.1m, respectively) on gains earned by option holders
(compensation) when stock options are exercised.
- Net temporary store closure costs of $0.8m and $3.2m were
incurred in the third and three quarters ended January 1, 2023,
respectively (third and three quarters ended January 2, 2022 - $nil
and $0.2m, respectively).
- Includes less than $0.1m and $0.1m of interest expense on lease
liabilities for temporary store closures for the third and three
quarters ended January 1, 2023, respectively (third and three
quarters ended January 2, 2022 - $nil and less than $0.1m,
respectively).
- Costs incurred for the transition of logistics, warehousing,
and freight forwarding agencies to enhance our global distribution
structure.
- Costs in connection with the establishment of the Japan Joint
Venture including the impact of gross margin that would otherwise
have been recognized on the sale of inventory recorded at net
realizable value less costs to sell.
- Costs incurred for the corporate head office transition,
including depreciation on right-of-use assets.
- Corporate head office transition costs incurred in (g) as well
as $0.5m and $1.2m of interest expense on lease liabilities for the
third and three quarters ended January 1, 2023, respectively (third
and three quarters ended January 2, 2022 - $nil and $nil,
respectively).
- Costs for legal proceeding fees including for the defence of
class action lawsuits and rent abatements received.
- Non-cash unamortized costs accelerated in connection with the
repricing amendment for the Term Loan Facility entered into on
April 9, 2021.
- The Company recorded a gain of $(2.2)m and $(5.9)m during the
third and three quarters ended January 1, 2023, respectively, on
the fair value remeasurement of the contingent consideration
related to the Japan Joint Venture. A fair value (gain) loss on
remeasurement of the Japan Joint Venture put option liability of
$(0.5)m and $1.2m has been recorded during the third and three
quarters ended January 1, 2023, respectively. These gains and
losses are included in net interest, finance and other costs within
the interim statements of income.
- Calculated as net income attributable to non-controlling
interest less $0.7m and $1.3m of gross margin adjustment, put
option liability and contingent consideration revaluation related
to the Japan Joint Venture, and tax expense attributable to the
non-controlling interest for the third and three quarters ended
January 1, 2023, respectively.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements,
including statements relating to the execution of our proposed
strategy, early leading indicators and impacts for the fourth
quarter of fiscal 2023, our operating performance and prospects,
and the general impact of the COVID-19 pandemic on the business.
These forward-looking statements generally can be identified by the
use of words such as “believe,” “could,” “continue,” “expect,”
“estimate,” “may,” “potential,” “would,” “will,” and other words of
similar meaning. Each forward-looking statement contained in this
press release, including, without limitation, our fiscal 2023
revised full year and the related assumptions included herein is
subject to risks and uncertainties that could cause actual results
to differ materially from those expressed or implied by such
statement. Our business is subject to substantial risks and
uncertainties. Applicable risks and uncertainties include, among
others, the impact of the ongoing COVID-19 pandemic and the extent
and duration of related disruptions to our operations, as well as
the evolution of the global economic conditions, are discussed
under the headings “Cautionary Note regarding Forward-Looking
Statements” and “Factors Affecting our Performance” in our MD&A
as well as in our “Risk Factors” in our Annual Report on Form 20-F
for the year ended April 3, 2022. You are also encouraged to read
our filings with the SEC, available at www.sec.gov, and our filings
with Canadian securities regulatory authorities available at
www.sedar.com for a discussion of these and other risks and
uncertainties. Investors, potential investors, and others should
give careful consideration to these risks and uncertainties. We
caution investors not to rely on the forward-looking statements
contained in this press release when making an investment decision
in our securities. The forward-looking statements in this press
release speak only as of the date of this release, and we undertake
no obligation to update or revise any of these statements.
________________________ 1 Comparisons to prior year quarter
ended January 2, 2022 (“Q3 2022” or “Q3 ended January 2, 2022”). 2
See “Non-IFRS Financial Measures and Other Specified Financial
Measures”. 3 See “Non-IFRS Financial Measures and Other Specified
Financial Measures”. 4 The Company adopted a change in accounting
policy related to Software as a Service arrangements. See “Changes
in Accounting Policies” in the Q3 2023 Management’s Discussion and
Analysis (“MD&A”). 5 DTC comparable sales is a supplementary
financial measure. See “Non-IFRS Financial Measures and Other
Specified Financial Measures”. 6 See “Non-IFRS Financial Measures
and Other Specified Financial Measures”. 7 EMEA comprises Europe,
the Middle East, Africa, and Latin America. 8 EMEA comprises
Europe, the Middle East, Africa, and Latin America. 9 See “Non-IFRS
Financial Measures and Other Specified Financial Measures”. 10 The
Company is not able to provide, without unreasonable effort, a
reconciliation of the guidance for non-IFRS adjusted EBIT and
non-IFRS adjusted net income per diluted share to the most directly
comparable IFRS measure because the Company does not currently have
sufficient data to accurately estimate the variables and individual
adjustments included in the most directly comparable IFRS measure
that would be necessary for such reconciliations, including (a)
income tax related accruals in respect of certain one-time items
(b) the impact of foreign currency exchange and (c) non-recurring
expenses that cannot reasonably be estimated in advance. These
adjustments are inherently variable and uncertain and depend on
various factors that are beyond the Company's control and as a
result it is also unable to predict their probable significance.
Therefore, because management cannot estimate on a forward-looking
basis without unreasonable effort the impact these variables and
individual adjustments will have on its reported results in
accordance with IFRS, it is unable to provide a reconciliation of
the non-IFRS measures included in its fiscal 2023 guidance.
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Investors: ir@canadagoose.com
Media: media@canadagoose.com
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