Canada Goose Holdings Inc

Good morning. My name is Andrea, and I will be your conference operator today. At this time, I would like to welcome everyone to the Canada Deuce third quarter fiscal 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. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to turn the call over to Patrick Burke, Senior Director, Investor Relations. Please 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. 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 press release issued this morning. as well as in the risk factor 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 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. I am pleased to speak with you today about our performance in our third quarter, which has exceeded our expectations. We began this fiscal year with many unknowns, so we leaned into what we knew to be true. We advanced our long-term plans to best capture and serve demand while at the same time placing our business in the best position for continued growth. This approach has delivered strong results when it matters the most. Today, I will provide an overview of our third quarter results and share an update on three areas. One, our strategic areas of focus. Two, our purpose-based commitments. And three, our outlook for the rest of the fiscal year. In the third quarter of the fiscal year, our business showed remarkable resilience and we have outperformed our own expectations. Total revenue increased by 4.8% to $474 million, despite extensive closures and operating restrictions. This marks a return to growth for Canada Goose in our biggest quarter, and we did it with strong profitability and cash flow. Adjusted EBIT margin in the quarter was 33.3%. and free operating cash flow increased by $75.1 million to $309.6 million. Our third quarter results reflect the impact of our strategic long-term initiatives, our flexibility, and key investments. To give you further context, here are a few highlights. First, I'd like to give an update on our digital business, which we believe to be a foundational component of the future of retail. We have invested heavily in our e-commerce business for years with a long-term view. This year, we successfully executed against that long-term strategy and at the same time strategically deployed additional resources to better capture and serve demand around the world in our peak season. As a result, our global e-commerce revenue increased by 39.3%, And we are encouraged by the strong momentum and acceleration that we continue to see across our e-commerce business in the fourth quarter. This quarter, I feel it's important to give deeper geographical insight into our e-commerce business. Across each of our major markets, we saw strong double-digit growth. Europe was particularly strong. And this includes France, Germany, and Ireland, and a nearly doubling of our digital business in the UK. In mainland China, Tmall continues to be a bright spot and a powerful channel for our brand. And in our well-established sites in Canada and the United States, we saw a strong increase in revenue from a contribution perspective. Now, to our next strategic priority, mainland China. our last earnings call i spoke about the growth plans that we put in place for our business in the region we have continued to execute on these plans in the past year we have more than doubled the number of stores we operate in the market this quarter we saw that our investment has delivered strong results and our mainland china dtc revenue has increased by 41.7 percent we're still very early in our journey in mainland china and we see significant opportunity to continue to grow our network in the region. In a year that began with so much uncertainty, throughout it all, we've learned more about shifts in our customers' behavior, which has shaped our strategic approach moving forward. On our last call, I discussed in-store omni-channel shopping, which had just gone live. We believe that it would be a needle mover for customer experience and conversion, and I am pleased to say that it has been. As the path to purchase continues to evolve, this quarter we truly saw the power of the endless aisle. We consider this a validation of our approach and commitment to enable Canada Goose fans to shop with us wherever they are, whenever they want, and with access to our complete assortment. Today, I also want to highlight the continued importance of sustainability across our business. We are steadfast in our commitment to strengthening our communities, protecting our planet, and working towards a better future for generations to come. In this quarter, we introduced Human Nature, a purpose-based platform that unites our sustainability into values-based initiatives. It is the driving force of our enduring commitment embedded across every aspect of our operations. The role of business has evolved in today's world and driving meaningful change has become fundamental to today's consumer. We are focused on keeping the planet cold and the people on it warm through our sustainable impact strategy, continued product innovation, invigorating global communities, and building culture through the arts. We've been trusted to protect people from the elements, and now, through human nature, we are taking warmth to an even deeper level. Building on that, this past January, we launched our most sustainable parka to date, the Standard Expedition Parka. This brand-new style, inspired by the iconic Expedition Parka, encapsulates our heritage, renowned functionality, and epitomizes sustainable innovation. This product is a significant leap forward for our brand, helping to set the standard for the future of outdoor at Canada Goose. We have kept sustainability at the forefront throughout the past six decades, driven by constant innovation for the betterment of both our consumers and the planet. And I'm proud to say that this is only the beginning of a sustainable apparel journey and that the consumer response has matched our own excitement as the style has nearly sold out. Further to the topic of brand momentum and consumer relevance, last month we partnered with Shanghai based Angel Chen, our first ever guest designer. We challenged her to take her heritage pieces and co-create a capsule based on her innovative design direction. The collection is a relevant new perspective and another important hype moment for the brand. And lastly, I would like to take this opportunity to welcome Michael Armstrong, who joined our board of directors in January A 22-year industry veteran, he is currently EVP worldwide television licensing and operations for ViacomCBS Global Distribution Group. I'm confident that his vast popular culture, entertainment, and media exposure and experience will provide a valuable perspective as we continue to execute on our long-term growth strategy. And with that, I'll turn it over to Jonathan to go over the details of our final financial results and outlook.

Good morning, everyone. Thanks, Danny, and thank you all for joining us. Looking at our Q3 performance and our current trends, there are three key themes that stand out. Canada Goose has returned to growth. The resilience of our earnings and cash model has delivered. And we're entering the final quarter of the fiscal year with strong momentum. Starting with the top line, total revenue increased by 4.8% to $474 million, with significant sequential improvement across our business. This reflects global demand strength, as well as our ability to pivot our distribution to where the consumer is shopping today. Coming out of the first COVID wave in the summer, we were in the midst of a massive digital shift in consumer behavior. We knew that e-commerce was as close as we could get to an always open channel. Against this, we were proactive in our investments to prepare for the forward selling season, from logistics to inventory, marketing, and experience. The result is a strong acceleration in performance in our biggest quarter. E-commerce grew by 39.3%. driven by meaningful increases to both traffic and conversion. Operationally, we're pleased with how smoothly our 3PL network handled and shipped record online volumes during peak. The transition we completed in the summer to enhance scalability and service levels was central to achieving this. Geographically, there was well-balanced double-digit growth in all of our major e-commerce markets. In North America, we saw strong contributions from our well-established sites in Canada and the US. In mainland China, our shop in Tmall's luxury pavilion continues to be a powerful engine for growth. And last but not least, our momentum in Europe was exceptional. This includes very strong results in Germany, France and the Republic of Ireland, and a near doubling of our digital business in the UK. Alongside e-commerce, our other big strategic bet this year was store expansion in Asia. With a total shut-off of international shopping, we knew that serving the world's largest luxury consumer base at home was critical. DTC revenue in mainland China increased by 41.7%, with existing stores near pre-pandemic levels and the completion of our two remaining openings in Changchun Charter and Shanghai IAPM. This strengthens our conviction in runway as we further expand in Tier 1 and Tier 2 cities, complemented by the reach of Tmall. At our stores in North America and Europe, we faced outsized headwinds from capacity restrictions and mandatory closures, compounded by a lack of international traffic. In Q3, we lost 35 trading days for each of our three locations in Toronto, with Ottawa and Montreal also shutting at the end of the quarter. In London, we lost 36 trading days, with Paris and Milan each closed for 30, as well as Berlin for 12 days. These closures include some of our most productive stores globally in their biggest and busiest days of the year. Against this, to achieve total DTC revenue of 299.4 million, only 2.4 million less than last year, is a great result. Relative to Q2, we offset a much greater proportion of retail declines through e-commerce, and when open, the stores delivered strong productivity. Wholesale increased by 2.7% to $160.8 million. This was driven by later shipment timing, based on requests for more of an in-season fulfillment model. We're pleased with the performance of our partners this fall winter, and we will continue to take a controlled, brand-first approach to managing this channel. Moving to earnings and cash flow, adjusted EBIT margin was 33.3% in the quarter. This is a level of profitability most brands never come near, let alone in times like these. Our resilience is grounded in full-price economics, and highly productive distribution. The consolidated gross margin was 66.8%, with DTC at 77.9% and wholesale at 51.5%. Both channels were above typical levels due to temporary tailwinds. Gross margins in the mid-70s for DTC and mid-to-high 40s for wholesale remained the right level for our business over the long term. That said, these increases also reflect the durability of our gross margin fundamentals. Going down the P&L, DTC operating margin was 55%. Retail profitability was impacted by operating disruptions, but was still very strong, and the uplift from e-commerce growth was a positive partial offset. Wholesale operating margin came in at 42.9%. While aggressively managing costs and cutting discretionary spending, we are well equipped to play offense when we see the opportunity. We accelerated SG&A investments in brand and demand building while still delivering a strong profit this quarter. Adjusted EPS per diluted share was $1.01 compared to $1.08 last year. Moving to cash, free operating cash flow was $309.6 million, an increase of $75.1 million, driven by reduced working capital. As a vertical manufacturer with an evergreen offering, we are executing against our planned drawdown of staged goods. Inventory decreased by 2.6% relative to QE last year and 17.8% relative to the end of fiscal 2020. We remain on track to deliver a significant year-over-year decline as we close out fiscal 2021. In terms of liquidity, we are in a strong position with low leverage and a high degree of flexibility. Cash was at $469 million at the quarter end, alongside an additional $256 million of available borrowing capacity in our underworn revolver. Finishing with current trends, we are encouraged by the continued acceleration that we have seen in e-commerce growth since December. On the retail side, however, Store closures and mobility restrictions have intensified. 25% of our own retail stores globally are currently closed. Globally, we've also seen a slowdown in foot traffic in certain markets in response to new movement restrictions. Recognizing this is a dynamic situation, we believe we are well positioned to continue moderating these headwinds through our digital business. In wholesale, the vast majority of our shipments have been completed for the year. Q4 is seasonally a very small quarter for the channel, and we currently expect a low double-digit year-over-year revenue decline. We concluded our contractual obligations for PPE manufacturing in Q3, and as a result, we do not expect further revenue from these activities in the other segment in Q4. In terms of gross margin, we do not expect the DTC and wholesale gross margins in Q4 to repeat the large year-over-year increase we had in Q3. This is due to seasonal spring product and a reduction in wage subsidies and manufacturing. Lastly, we expect total SG&A in Q4 to grow at a similar rate year-over-year to the rate we saw in Q3, driven by our continued investments in brand and demand buildings. At the start of this year, we moved aggressively to protect the downside while investing with conviction where we saw opportunity. Our success this quarter shows that that strategy is working. We can grow and we can be highly profitable in a challenged operating environment. We believe that this underscores our potential when the world comes out of this pandemic. We know that the path there won't be a straight line, but we're on the right track. And I look forward to updating you on our progress on our next call. And with that, I will pass it over to our operator to begin Q&A.

At this time, if you would like to ask a question, please press star, then the number one on your telephone keypad. Please limit your questions to one question and one follow-up. Your first question comes from the line of Omar Saad of Evercore. Omar, your line is open.

Thank you for taking my question. I'm wondering about, you know, I appreciate the information around the tourist impact. It sounds like it was a pretty big drag. But maybe you could dive in a little bit deeper, you know, especially in North America and Europe where there has historically been a strong tourist customer. And maybe you could also shed some light on the mix of your business between locals and tourists in your key market. And then also, you know, the Chinese tourist is such an important tourist. Do you have the footprint? and presence you need in China to recapture some of those lost tourists there yet? Thanks, guys.

Hey, Omar. Thanks for your question. Good question. You know, we're certainly in an environment with essentially no international traffic in North America and Europe. Not the type of tourism that has been closed. And this has been the case since last spring. So I'm really pleased with the strength of the demand and look that we've seen from local markets from all of our consumers in these markets. Actually, it's been strong in and of itself. And, you know, for example, our revenue in Europe and the rest of the world increased by 30%. That's a reason which has been particularly hard hit by tourism declines recently, and we're up there. So, you know, I'm very encouraged by what we've been seeing in our local markets from our local consumers.

And if I can add a couple of points to that. I mean, I think in a pre-COVID world, you'll have heard us say many times that our retail traffic had roughly a split of 50-50 between local and international consumers. And strategically, our focus this year has been on serving those travelling international consumers at home and driving demand in the local markets. And the fact that we were able to grow our business in Q3 with all of these headwinds um is uh is is really really encouraging when it comes to china you know we we've um we've had a great um Capacorn has performed in China this year, and this most recent one up 41.7%. We are seeing great progress both in our existing stores and in the new stores. We've got a very clearly established strategy of Tier 1 and Tier 2 complemented by REACH, and we are able to take great advantage of that market by executing on that strategy. We're very pleased with how it's going.

Your next question comes from the line of Jay Sol with UBS.

Hi, good morning. This is Mauricio Serna on behalf of Jay Sol. A couple of questions. I know the fourth quarter you mentioned is not that relevant on the wholesale channel, but what are you seeing in terms of wholesale book orders? I don't know if it's too early to ask maybe on the fall season or If you could comment also a little bit about how the e-commerce channel grew like throughout the quarter, throughout this last quarter. And lastly, as you were mentioning your focus in China and Tier 1 and Tier 2 cities, how does that translate into like potential store openings as we move into the next couple of years? Thank you.

So I think our wholesale order book is something we typically talk about in the next call. But, you know, we run a process, which we're running this year, and, you know, we're very pleased with how it's going. I think that I can give you some assurance about that. We talked a little bit of color on the e-commerce performance aspect. geographically speaking, but I think we talked in our last call about how we've seen acceleration toward the end of the second quarter in our e-commerce performance year over year. That's an acceleration that continued to build through the third quarter just as the numbers got bigger and just as it really mattered. And that acceleration is something that I'm pleased to say has continued beyond the third quarter and into the fourth quarter. And when we think about the future and where we're going with stores, we're continuing to execute on our strategy. There's no change to that, and that's something we'll comment on further in due course, but Suffice to say, there is no change to our strategy. We see DTC as an important and key avenue for growth in this business, both online and physically.

And I agree with all of that that's been said. I think that, you know, I'm particularly proud this year of this quarter of our of the team and our ability to have our biggest quarter ever under these circumstances during the whole pandemic. We've seen the global consumer from all over the world drive growth and acceleration and really cement us as a lifestyle brand that they are gravitating towards. And that makes me very optimistic and hopeful for the future.

Your next question comes from the line of Kate Fitzsimmons of RBC Capital Markets.

Yes, hi, good morning. Congratulations on the return to growth. I guess I wanted to add two quick ones for me. You guys have noted a couple times on the acceleration in the e-commerce business here in Q4. It is interesting because it seems that the demand for your brand, you know, tends to maybe happen earlier in the winter season. So curious what you think is driving the acceleration there. You know, any comments on regional performance or response to early spring selling, that would be helpful. And then secondly, Jonathan, you noted some brand building investments on the SG&A in Q3. You know, what was the nature of some of these kind of investments? And as we look out to Q4, you know, what are some of the strategic expense priorities there? in Q4 and beyond, you know, when we look at the channels, wholesale, DTC, and also that unallocated expense bucket, that would be helpful. Thank you.

Thank you for your question. I will start off by giving some commentary about that. I think that, you know, as... As we saw in the previous quarters and throughout this year, the consumer mentality is much more of a buy now, wear now mentality. I think that's important given the shift to the right. And I think also, you know, with regards to our brand specifically, we're a very relevant brand at a time like this. We're a survival brand. We make products that last. We make products that last. that are functional. And I think that consumers these days are certainly, in times like this, that people are driven to products like ours. And I think, in general, people these days are looking for real things that have real functional attributes and authenticity behind them. And I think that that's part of the reason for the acceleration and continued acceleration.

Okay. On the question of cost, I think the key investments that we've been making, as I sort of referred to a little bit in my prepared remarks, are around brand and demand building. And we deliberately weren't investing as much. But if you think about the business being a much more of the buy now and wear now model that Tammy's just talked about, I think what's key is that you jump on the investment as the market becomes interseason. And that's what we were doing. And, you know, whether it was around the markets that we were opening up or, online or whether it was about the existing markets or in support of the markets where we're opening stores, we have been investing to build brand awareness, to build brand salience and to capitalize. on the demand and convert it into the business that we're reporting today. And that's something that because it's a buy now, wear now model, and because this is now, you know, we've got the peak continuing into Q4, that's why we're continuing to invest in it, and that's why you'll see the cost continues to go up. But we're very comfortable with that because we see the payback.

Your next question comes from the line of Ike Boraccio with Wells Fargo.

Hey, good morning, everyone. Just two quick ones from me. Jonathan, you guys have great cash flow. It's a lot of cash you guys have on the balance sheet relative to years past. Any thoughts on use of cash or capital allocation? And then we appreciate the wholesale commentary for 4Q. Is there any commentary? There's a lot of noise with the store closures and whatnot. But any help on the BTC revenues that are embedded in your plan for 4Q as well?

Okay. So I think when it comes to capital allocation, you know, our top priority is investing in the growth of this business. We see it, and we've said so many times, but it remains true, huge untapped potential. And therefore, from our point of view, top priority, top return on capital is always going to be investing in the future of this business. And, you know, we said before we're going to invest $45 million this year in capital expenditure. That's very much on track. And, you know, that will rise and fall as the needs of the business demand. But that remains our top priority. We're not looking at other uses. So then thinking about Q4, we've had obviously the good momentum and accelerating momentum in online offset by the fact that some of the stores are closed. But, you know, as we move through the quarter, you've got to think last year also was pretty heavily impaired from about this point in the quarter on. So, you know, I think there's a strong case to say this business has got very good DTC momentum.

Your next question comes from the line of Megan Annette with TD Securities.

Thanks. Good morning. So, Danny, you touched on this in your remarks, but wondering if you could talk a bit more about the success of the various collaborations that were launched during the quarter and also early into Q4. So what kind of response are you seeing there from the consumer? And is there any color you can provide on the pipeline of collaborations that you're working on in the upcoming year? And just lastly, any update on the plans for the footwear launch that you can touch on? Thank you.

Yeah, thank you for your question. And, yeah, collaborations are a very important part of our business, and they have been successful for us this year. We had our first-ever guest designer this year, Shanghai-based Angel Chen. She designed a capsule collection for us, and it's been received very well by our consumers. And, you know, these are opportunities that provide – they really provide hype moments for our brand and ways for our brand to be reinterpreted by different designers for different markets. And this has been a collaboration which has been received well generally. And we do intend to do more guest designer collaborations in the future. It's definitely been something which works for us, as we do with our collaborations, which we've been doing for many years. In terms of footwear, we're still on track to launch that at the end of next year, next fall. I'm very excited about it. I think footwear is going to be a very important category for us in the long term. I think we're doing it the right way. I think our strategy was very carefully planned. thought through, and we're executing against that strategy well, and I believe that execution is one of our strong points, and I think that I'm very excited for the market to see what our footwork looks like and what we can do with it.

Our next question comes from the line of Oliver Chen of Cohen.

Hi. Regarding innovation and product, Danny, how are you thinking about focuses on the lighter weight product and non-evergreen you have a really a strong core and then as we look ahead inventory relative to sales growth i would love your thoughts on how you're planning that given the the performance here and how your production availability or utilization looks thank you thanks oliver um so with regards to innovation and product um

First of all, our core product and our core business model is still very important, that we have a strong core, and we've seen that this year as well. Consumers have gravitated towards that. But at the same time, there has been a lot of product diversification, a lot of diversification into lightweight down. Our knitwear has been well-received. Our fleece has been well-received. And we've certainly seen that we have, let's say, proportionally, permission from our consumers to get into new categories that make sense for us. And, you know, of course, it's very important for us that we do that in a best-in-class way, and then we put a best-in-class product into the market, regardless of what category it is. But, you know, I'm very encouraged to see the diversification globally, and, you know, I think that that just speaks to the relevance of Canada's use as a global lifestyle, and

I think when it comes to inventory, clearly we're reporting a modest decline this quarter. It's exactly where we want it to be. We've always said that we're going to draw down on the inventory levels at the start of the year. That's exactly how this is playing out. And it generated a huge amount of our cash flow in Q3. As a vertical manufacturer with an evergreen offering, The beauty is that we can do this without constraining our commercial flexibility. So we've got a really strong position with already staged inventory, and we can adjust that at speed. But frankly, if we were an outsourced model, we couldn't. And so we remain on track to deliver a significant year-over-year decline without compromising the commercial potential of the business.

Your next question comes from the line of Mark Petrie with CIBC.

Good morning. You touched on this earlier, but I just want to follow up specifically with regards to China and sort of the evolution in shopping behavior there and recognizing that, you know, parkas obviously do drive the business, particularly for Q3. I'm interested to hear about the adoption beyond parkas and how the sales mix in China compares to other regions, you know, where you've had, a direct consumer presence longer, you know, specifically sort of, you know, parkas versus accessories or knitwear. And then, you know, what that tells you about how the brand is building in that market.

I think the way to think about that is that we, you know, obviously we've seen great headway with parkas in China, but we've also seen good, strong headway with the other categories. And that's what's really pleasing. is that we're able to see this building out and getting a much more rounded presence with the consumer, which is important for the full breadth and depth of the brand and our presence in that market. I guess what you probably see is the highest bid country. If you think about it from a north versus south point of view, the southern part of China is much warmer. It's less frigid in the winter, and therefore you get more of a mix in favor of the lighter weight products there, whereas you go further north, and particularly in the depths of winter, it's a more heavy part of the penetration.

Yeah, and I think to add to that, I just think, you know, back to previous comments a little bit, I think that this just speaks to the growth of Canada Goose as a lifestyle brand and our products being accepted across multiple categories that make sense for us. And, you know, it's very encouraging. I see a lot more of it in the future, and I believe that there's a lot of opportunity ahead of us.

Your next question comes from the line of Adrian Yee with Barclays.

Good morning. My question is actually on kind of the re-installation or re-engagement of the manufacturing process starting for this year for winter 2021. What level of innovation are you planning for winter 2021? And then secondarily, on the wholesale guidance for fourth quarter, is that largely due to current bookings? What's the opportunity for upside to that number? And upon full recovery, do you think you will reengage with the same number of and sort of inventory depth in these channel partners. Thank you very much.

Thank you for your question. If I understand your question correctly with regards to factory innovation, we are constantly innovating and finding more official ways to manufacture our products. We're really proud that we are able to. We do have eight facilities here in Canada and that we're always – we're always innovating and making them more efficient. And, you know, we have the largest manufacturing infrastructure of its kind in this country, employing approximately 20% of the cut in Silver Force Canada. And, you know, in terms of our wholesale business, I mean, we're really happy with it. And, you know, as always, wholesale is a very important part of our business. Our wholesale partners are like-minded partners who – you know, who add value to our brand. And Jonathan will add some more color to the numbers of that.

Yeah, I mean, the one thing I'd say is this is a tiny quarter for Wholesale. And so, you know, and that's normal. This is a highly seasonal business. Pretty much all of the whole stuff is done before we get into this quarter. This year is no different. And we're going to be down year over year. It's very small numbers. And that's also important to keep in perspective. Notwithstanding the closures and the restrictions, we're positive about the wholesale channel, but at the same time, as I said earlier, we are very disciplined. We're very controlled about what we do. We see it as a strong complementary brand accretive channel when it's managed well, and that's what we intend to do.

Your next question comes from the line of Brian McNamara with Brennenberg Capital.

Hi, good morning. Thanks for taking the question. Just a follow-up on wholesale. So the results came in much better than your guidance of a low double-digit decline. Could you provide more color on what drove that large delta? And also, is it reasonable to assume you've combed a significant amount of wholesale partner just given the after effects of COVID? And if so, have your stronger partners been getting better allocations as a result? Thank you.

Our wholesale performance in the quarter was something we were very pleased with. Obviously, the primary source of revenue in the quarter is that we are fulfilling our order book. That's what we did. To the extent that customers want more, it's something that we consider in our allocation model after we consider the priorities of BTC. Notwithstanding that, we were able to meet those requests, and so that produced some positive growth. We were very pleased with how that piece turned out. We're also, you know, I think the other thing to think about as we look at the size of our wholesale business Now, we've been on a continual edit or continuous edit of our wholesale distribution for the last several years. We don't see that changing anytime soon. For us, what matters is quality of distribution over quantity of distribution, and that's what's so important. And so we should expect to continue to focus on that as we move forward, but equally with an important part of our business in this channel.

Your next question comes from the line of Robbie Owens with Bank of America Securities.

Oh, hey, guys. Thanks for taking my question. I wanted to just ask about the U.S. market in particular. You know, the U.S. revenues I think were down a little bit for the quarter, but digitally you pointed out was strong double-digit. Was wholesale weaker in the U.S. than other regions, or were the stores weaker? you know, much weaker, you know, versus, you know, what you're seeing in China? Maybe a little more color on kind of how the U.S. market played out through the quarter.

Yeah, I mean, so what I'd say to give a bit more color on that, I mean, first of all, online performed extremely well. We were very happy with it, and it's a big business, and it grew nicely, thank you. So it was a very strong business. Stores were a little bit... I think some noise around the election and traffic generally has been disrupted. Our wholesale business was very good. As I said before, we fulfilled the wholesale order book. We were able to deal with requests for the product. So from our point of view, we were very happy with the U.S. market. We see it as having a lot more potential for us, but at the same time, we enjoyed good performance this quarter.

Yeah, I'd like to echo that sentiment in that, you know, I think that given that, as we all know, there was no tourism this year and there were major disruptions, many stores, wholesale and retail, were closed at different points in time throughout the year. I think that the strength that wholesale and retail showed during the time that they were open as it relates to local consumers was extremely robust and was strong. certainly demonstrated the underlying demand for our product, which was very encouraging.

I would now like to hand the call back to Mr. Danny Reese for any closing remarks.

Well, thank you. Thank you very much. Thanks to everybody for joining the call. Before we leave, I would like to close by acknowledging how challenging a year it has been and continues to be for so many people. COVID-19 has impacted the lives of millions, and our hearts go out to all of those that have been affected. I'd also like to sincerely thank our team members around the world for their continued efforts, resilience, and strength, and for showing such strong embodiment of our values throughout this very difficult year. Thank you, everybody, again, for joining us on this call, and I certainly look forward to talking to you guys again soon.

Thank you for your participation. This concludes today's call. You may disconnect.