Canada Goose Holdings Inc

Good day and thank you for standing by. Welcome to the Canada Goose fourth quarter and full year 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Amy Schwamm.

Thank you, operator, and good morning, everyone. With me are Danny Reese, Chairman and CEO, Jonathan Sinclair, EVP and CFO, and Carrie Baker, President. Our call today, including the Q&A portion, includes forward-looking statements. Each forward-looking statement, including without limitation, discussion of our financial outlook, is subject to risks and uncertainties that could cause actual results to differ materially from those projected. Certain material factors and assumptions were considered and applied in making these forward-looking statements. Additional information regarding these statements, factors, and assumptions is available in our earnings press release issued this morning. Our updated strategic growth plan and five-year financial outlook press release issued on February 7th, 2023. as well as in the risk factor section of our most recent annual report filed with the securities regulators. 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. Lastly, our commentary today will also include certain non-IFRS financial measures, which are reconciled at the end of our earnings press release. With that, I'll turn the call over to Danny.

Thank you, Amy, and good morning, everyone. We had a strong fourth quarter at Canada Goose. Our stores were busy, and the familiar lineups have returned. Our stores in every market performed well, with traffic rebounding, especially in EMEA and APAC. Our business in China made a strong recovery from our third quarter in fiscal 2023 and has continued its momentum into fiscal year to date. We've seen the same momentum continue across all of our key geographies beyond the fourth quarter, which is a clear indication of the strength of our brand and the demand for our performance luxury products. This is a great position for us to be in as we execute against our strategic growth levers, which are accelerating our consumer-focused growth, building our direct-to-consumer network, and expanding categories. As I look back at our fiscal 2023, we closed the year having grown top line revenue to more than $1.2 billion. We've made important progress against our growth plan, including investments in CRM, digital, people, and DTC expansion. Store traffic continues to improve as consumers seek out our award-winning in-store experience. We've also seen a return to a more normalized operating environment, especially in China with the lifting of COVID restrictions late in our third quarter. We grew our store footprint, opening 10 permanent stores in fiscal 2023, increasing our global store fleet by almost one quarter. Consumer trends are beginning to normalize. This includes encouraging initial international travel data that we're seeing across many of our key markets. Holsa ended the year well and remains an important channel for us as our GCC network expands. As we conclude fiscal 2023, we have a strong foundation in place execute against our strategic growth levers going forward. And looking ahead, we are confident that the momentum we've built in our business will continue to build. At our investor day in February, we outlined our longer-term plan. We are committed to our strategy to accelerate our growth, targeting $3 billion in revenue with an adjusted EBIT margin of 30%. In the fiscal 2024, we plan to accelerate our revenue and profitability, leveraging the investments we've made over the past year. We plan to generate revenue growth of 15 to 23%. We're targeting our adjusted EBIT margins to be between 15 to 16%. Fiscal year 2024 will be another year of investment in our business, and we expect to realize margin of benefit progressively as we drive towards our long-term target. Later, you will hear more from Jonathan as he provides a deeper dive into our outlook for this fiscal year. The path ahead is clear and driven by three strategic pillars. First, we are accelerating our consumer-focused growth. We have a tremendous opportunity to further build loyalty with our current and new customers. We've seen growth in our repeat customer cohort. We ended fiscal year 2023 with repeat customers making up almost a third of our base. We plan to continue our focus on growing this metric through shifting marketing investments to drive greater ROI conversion and ultimately lifetime value. And in fiscal year 24, we will begin to further unlock our CRM opportunities, leveraging our customer data platform to segment and personalize engagement with our clients through all touch boards much more meaningfully. Lastly, this year, we plan to launch Travel Retail. We know travel is important to our customer and meeting them at a wholly new stage of their journey is a part of our commitment to consumer-focused growth. This year, we plan to open two to three locations, and I look forward to updating you on our progress as it evolves. Second is building our DTC network. Over the next five years, we plan to more than double our retail footprint from our current base of 51 permanent stores. In the next year, we plan to open 16 permanent stores with new store locations in the United States, China, Japan, and Australia. We expect the vast majority of these stores to be fully operational before our peak season starting in fall. When it comes to our store network, we're laser focused on enhancing store performance through our digital platforms and in-store experience. We see a significant opportunity in our digital roadmap to support our goals by driving more traffic to stores, helping our stores really know and connect with their high-value clients, and optimizing our inventory across our entire network. Having an omnichannel approach is critical to our success, and we are making the necessary investments, both in our people and systems. We're also excited to fully roll out omnichannel capabilities across Europe in fiscal 2024. Just last month, we announced the hiring of Matt Laundrie, our first ever chief digital officer. I'm very excited for Matt to lead the growth of our digital presence globally. Our third pillar is expanding product categories. By the end of fiscal 2023, we made important progress against this pillar. We continue to expand our product mix and grow our non-heavyweight down offering, including categories of apparel, footwear, and sleeves. Non-heavyweight down now makes up almost 43% of our product mix, up from 38.5% in fiscal 2022 and 19% in 2019. And this summer, we will launch our first performance maker collection. a huge opportunity for our company. The collection is style forward wearable year round with a performance credential to suit any adventure. And early this fall, we plan to continue to expand our women's focus outerwear collections, following the successful expansion of a women's collection last fiscal year. The new styles were incredibly well received with several SKUs landing our top 10 styles for the season. As you can hear, We are full speed ahead in executing our three pillars, and we are clearly on a path to achieving our long-term goals. In the fourth quarter, we kicked off our multi-phase transformation program. This is an evolution of our business to support both the strategic pillars and to take our business to the next level. Our work will focus on increasing operational efficiencies by optimizing production and procurement, developing people and resources, and focusing even more on our consumers, to drive sustainable growth, profitability, and long-term value. We've already begun this work, and it will roll out over a number of years. Now, let's turn to our fourth quarter financial results. As I mentioned earlier, we saw strength across our business, both on the top line and in our profitability. Our revenue grew 31%, with strength in Asia Pacific up 65%, EMEA up 27%, and Canada up 41%. Our adjusted earnings per share were better than our expectations, up 250% versus the comparative quarter last year, growing from $0.04 to $0.14 per share. Now, turning to regional updates across the globe. Last quarter, we discussed the disruptions in greater China following a wave of infections seen on the heels of a sudden lifting of COVID restrictions in our busiest season. Since then, we have seen a noticeable pickup in sales. Mainland China reported a record growth rate of approximately 40% versus last year, and APAC DTC comp growth was up 23.5% versus last year. Our payroll collections saw notable growth in APAC in the quarter, more than doubling compared to the same quarter last year, approaching $10 million in revenue. We also saw strength in our EMEA business. Over the last two years, we have seen EMEA gradually stabilize with a steady growth in tourism, still below the benchmarks we saw in 2019, with a lot of potential offset. As well, almost all of our European stores were open during COVID and are now benefiting from a more normalized operating environment. Lightweight down was a standout performer across EMEA in the quarter, with category revenue growing more than 30% in the prior year quarter. Lastly is North America. where we saw mixed results across the region. As we expected, we saw softer sales in the U.S. in our fourth quarter, where the overall growth we saw across our stores was offset by the lower e-commerce results. We attribute this to the macro environment in the quarter, where economic uncertainty affected consumer behavior. The U.S. saw an acceleration at the end of the quarter through to the current quarter today, which provides us confidence that the business is recovering. Canada performed well in the quarter, up 41%, I'm pleased to see one of our most mature markets driving such strong results. Our apparel collection was the fastest growing category in North America. In Canada, growing more than 170% compared to the same quarter last year. As I look back at 2023, it was a year of measured growth through uncertainty. We ended fiscal 2023 in a strong position, and I'd like to thank all of our teams who always put our customers first. And I'm looking forward to the years ahead. We have seen some early and encouraging signs and strong momentum across our markets. I'm also looking forward to the expertise that our new leaders will bring to our business, especially at such an exciting time of transformation and investment. And finally, I'm really looking forward to seeing your business in Greater China in the year ahead. And with that, I'll turn it over to Jonathan.