Canada Goose Holdings Inc

Good morning. My name is Ashley, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Canada Goose second quarter 2021 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Thank you. I would now like to turn the call over to Patrick Burke, Vice President, Investor Relations. You may begin your conference.

Thank you and good morning, everyone. With me are Danny Reese, President and CEO, and Jonathan Sinclair, EVP and CFO. After prepared remarks from Danny and Jonathan, we will take your questions. We ask that these are limited to one each to allow as many as possible to participate within the allotted time. This call, including the Q&A portion, includes forward-looking statements. Each forward-looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Certain material factors and assumptions were considered and applied in making these forward-looking statements. Additional information regarding these forward-looking statements, factors, and assumptions is available in our earnings release issued this morning, as well as in the risk factors section of our most recent annual report. These documents are also available on the investor relations section of our website. The forward-looking statements made on this call speak only as of today, and we undertake no obligation to update or revise any of these statements. Our commentary today will include certain non-IFRS financial measures, which are reconciled in the table at the end of our earnings press release issued this morning and available on our investor relations website. With that, I will turn the call over to Danny.

Thank you, Patrick, and good morning, everyone. Thank you for joining us on the call today. I'm really pleased to be here to provide you with an update on our performance for the second quarter to reiterate our strategic approach to navigating the COVID-19 environment and highlight trends that we see across our business going into our peak selling season this winter. Like everyone, we continue to navigate the ongoing complexities of today's world and witness how the pandemic is reshaping the global economic landscape. As I said before, I believe that adversity, when viewed as an opportunity, drives success. Building on that, I believe that the uncertainties that we have faced this year have sharpened our focus and made us even more disciplined and flexible. Our performance in this environment has reinforced my confidence in our business and our brand in this fiscal year and beyond. On our last earnings call, I spoke to you about our approach to navigating the global pandemic, namely where we see opportunity, we've accelerated our strategic plans to capture it. This approach is working and we're seeing acceleration across our business heading into our busiest season. And so here's an update on the progress that we have made on this front. First, our e-commerce business is accelerating. Second, our business in mainland China has grown by over 30% this quarter. And third, our continued operational discipline has driven a return to profitability. I am proud of the way our team has executed, particularly in light of such uncertainty and in such a challenging global environment. We have demonstrated the flexibility to execute against the strategic priorities we saw for our business, and our deliberate and decisive action has driven strong results. Not only have we navigated the current environment, we have reaffirmed our confidence in our ability to manage through uncertainty and come out stronger. This is a competency we expect will continue to serve us well going forward. Regarding our global e-commerce business, we are pleased with the positive traction we've seen this quarter, which resulted in revenue growing more than 10%. Within that growth, we realized an increase in momentum in September, Moving past Q2, we have seen further acceleration and continued improvement across our business. Digital will obviously play an important role in the future of retail, and we will continue to invest in expanding both wholly owned international e-commerce and our omnichannel solutions. The strength of our e-commerce business will remain an important asset and business driver as digital adoption continues to grow among consumers globally. Next. Next. Onto our continued expansion in China, where we continue to successfully execute against our strategic growth plans for our business. I am very pleased to report that our business in mainland China has recovered to pre-COVID levels, with revenue growing this quarter by more than 30% compared to the same quarter last year. As we set out to do, we concentrated our new store expansion efforts for the year in this market, more than doubling our footprint so far. We've continued to make significant investments in this important luxury market to drive a long-term and sustainable business in the region for years to come. With this foundation in place and against the backdrop of the continued acceleration of sales that we have seen beyond Q2, I'm very optimistic about the strategic approach that we have taken to market. Another highlight this past quarter was our profitability. While still delivering on our long-term growth strategy early in the pandemic, we took a rigorous approach to assessing our SG&A, which, as it relates to this quarter, resulted in a decline of 15%. As well, despite a lower revenue base due to disruptions, we have already returned to showing an operating profit, and our free operating cash flow was the same as it was this time last year. Our high-margin model combined with our savings initiatives are paying off. While we have taken a flexible approach to managing our expenses where opportunity exists, we have approached incremental investment opportunities with decisiveness. In our current environment, we see opportunity in building our brand through strategic marketing to grow demand and to reach new audiences. In particular, we focus these investments on our digital businesses globally and mainland China bricks and mortar businesses. As I noted earlier, we see these businesses as key performance drivers going forward, and so we believe these moves to drive and capture demand where it exists will continue to be important. Now, I'd also like to touch on how we're thinking about consumer behavior as it relates to trends we're seeing across markets heading into the winter season. We strongly believe these trends will build on foundational strengths, which we consider to be a tailwind tailwind as we head into goose season. First, this year, we've seen the word protection take on a new meaning in the world, and by extension, across our business. Today's consumers' needs are changing. Consumers are looking to spend more time outside, not just for normal day-to-day purposes, but also for necessity. For decades, we have helped to protect explorers, scientists, and everyday consumers from the elements in some of the harshest environments in the world. We are known for protection. We are the reference parka. With consumers spending more time outdoors this winter, both recreationally and professionally, we believe that this will create an elevated demand for functional, authentic, and protective apparel. As a brand, we have never been more relevant and more universally needed. Beyond our core products, we've continued to explore new ways to protect people. In September, we launched our first line of face masks for consumers, designed for comfort as well as protection. This product extension was a natural evolution of the foundation we built through our Canada Youth Response Program, which created over 2 million units of personal protective equipment for frontline healthcare workers. Consumers' response to our masks has been remarkable. The collection is one of our most visited pages on our website with a strong sell-through globally. As a result, and thanks to our very flexible manufacturing capabilities, we are actively producing more masks to meet the demand. Second, we continue to see strong demand across our new categories and products. In August, we introduced our first fleet collection across our DTC channels. Focused and purposeful, the collection is built on the foundations and experience that we gained through knitwear. The reaction from consumers was exceptional, with the collection nearing sell-out in many regions. Again, our extension into a new product category has been validated. As we expand authentically into a variety of new offerings, our promise to consumers has always been that we will only make best-in-class products. Delivering on that promise has proven to be the foundation of our success. product and category expansions have become a core competency for us at Kennedy Goose as we purposefully and methodically expand our consumer relevance as a lifestyle brand. And we believe that this core competency is a solid foundation for our business ahead of our footwear launch next fall. Third, doing good is good for business. Last month, we learned that the students of the New Jack School in Arctic Bay, Nunavut, needed winter clothing. Inbound shipments to the village had been impacted by the pandemic. So, in partnership with Ryan Reynolds, we announced the donation of more than 300 Canada-used parkas as well as bathroom boots to help keep the students warm this winter. At the same time, we also announced the expansion of our resource center program. Until now, we have donated over 1 million meters of fabric and other materials to communities in the north through our resource center program. Now the program will also see thousands of repurposed parkas donated to Inuit communities across the Arctic. These refurbished parkas will not only deliver warmth and protection to communities in the north, but they will also deliver against our commitment to operate more sustainably. We are building a more circular business model. reducing waste while strengthening our commitment to communities in the north. Finally, Brooks and Mortar remains an important connection to consumers long term. I've already spoken about our investments in mainland China and the growth we've realized through our expansions there. I'm also pleased to give an update about our Yorkdale store here in Toronto. During the last quarter, we completed an important expansion to Yorkdale, nearly doubling its footprint. Yorkdale has consistently proven itself to be one of our most productive locations since opening in 2016, and I look forward to its continued success, especially heading into our peace-selling season. Moving beyond North America, our stores in Europe have been impacted by non-essential business closures. London and Milan both begin a four-week closure today and tomorrow, respectively, and Paris is closed for at least two more weeks. I am proud of our retail team and the strength and leadership that they continue to display as we navigate this current climate. In closing, I believe our performance this quarter reflects our discipline, flexibility, and our strong financial position. We've shown that the strategic approach we've taken to navigating the current environment is driving results, and we have confidence in our accelerating trajectory. Now that we're heading into our most productive season in a fiscal year that began with so many unknowns, and it's still not without uncertainty, I remain very optimistic about this year and beyond. I look forward to updating you on that in the months to come. With that, I will turn it over to Jonathan, who will go over our financial results with you in more detail.