No surprise GOOS Q2 ’19 results continue t

For the previous First Quarter 2019, Dani Reiss, President & Chief Executive Officer of Canada Goose Holdings Inc (GOOS), stated: “Our strong start to the year, in our smallest fiscal quarter, is a great leading indicator. Our products and our brand continue to resonate with people around the world, and our direct-to-consumer channel was a standout performer in the quarter. Productivity across our retail store network in this off-peak period was exceptional, reducing the loss impact of our strategic growth investments and giving us a favorable tailwind for the rest of the year.” [my emphasis in bold]

Well, the tailwind is for real as follows.

Second Quarter Fiscal 2019 Results (in Canadian dollars, compared to Second Quarter Fiscal 2018)…

I really appreciate the way GOOS corporate management ties in growth in margins with its reported financials; I wish all companies would do the same.

• Total revenue increased by 33.7% to $230.3m from $172.3m, or 31.5% on a constant currency basis (1).

• Wholesale revenue increased to $179.9m from $152.1m. The increase was attributable to higher order values from existing partners, earlier shipment timing relative to last year and favorable foreign exchange rate fluctuations.

• DTC revenue increased to $50.4m from $20.2m. The strong performance of well-established retail stores and e-commerce sites, and incremental revenue from four new retail stores opened in the third quarter of fiscal 2018, were both significant contributors.

• Gross profit increased to $128.5m, a gross margin of 55.8%, compared to $87.1m, a gross margin of 50.6%. The increase in gross margin was driven by a greater proportion of DTC revenue, as well as underlying gross margin expansion at the respective channel levels.

• Wholesale gross profit was $90.6m, a gross margin of 50.4%, compared to $72.2m, a gross margin of 47.5%. The increase in gross margin was due to production efficiencies from manufacturing scale and a reduction of import duties on goods sold due to the Canada-European Union Comprehensive Economic and Trade Agreement.

• DTC gross profit was $37.9m, a gross margin of 75.2%, compared to $14.9m, a gross margin of 73.8%. The increase in gross margin was primarily due to the same production efficiencies which benefited wholesale gross margin.

• Operating income was $65.0m, compared to $48.2m. The increase in operating income was driven by revenue growth and gross margin expansion, partially offset by SG&A growth investments.

• Unallocated corporate expenses were $34.2m, compared to $16.2m. The increase was due to investments to support growth including marketing, corporate headcount and IT, as well as higher professional fees and other costs relating to public company compliance.

• Unallocated depreciation and amortization was $3.6m, compared to $2.3m, driven by the retail store opening program and upgrades to our manufacturing capacity.

• Wholesale operating income was $80.1m, an operating margin of 44.5%, compared to $60.1m, an operating margin of 39.5%. On a significantly larger quarterly revenue base, wholesale SG&A as a percentage of sales was lower.

• DTC operating income was $22.7m, an operating margin of 45.0%, compared to $6.6m, an operating margin of 32.4%. The increase in operating margin was driven by strong off-peak retail store productivity and lower channel SG&A as a percentage of sales.

• Net income was $49.9m, or $0.45 per diluted share, compared to $37.1m, or $0.33 per diluted share. The increase in operating income was partially offset by increased net interest and finance costs, and a higher effective tax rate due to differences in the timing of taxable income in foreign jurisdictions.

• Adjusted EBITDA(1) was $70.9m compared to $46.3m.

• Adjusted net income(1) was $51.0m, or $0.46 per diluted share, compared to adjusted net income of $32.8m, or $0.29 per diluted share.

(1) See “Note Regarding Non-IFRS Financial Measures”.


Based on the strength of performance across the business, with a particularly significant contribution from the DTC channel, the Company now expects fiscal 2019 results to exceed the outlook which was originally provided with the release of fourth quarter and fiscal year 2018 results on June 15, 2018.
For fiscal 2019, the Company currently expects:

• Annual revenue growth of at least 30%
• Adjusted EBITDA margin(1) expansion of at least 150 basis points compared to full year fiscal 2018
• Annual growth in adjusted net income per diluted share(1) of at least 40%

Key assumptions underlying the fiscal 2019 outlook above are as follows:
• Wholesale revenue growth in the high-single-digits on a percentage basis
• Five new retail stores in operation by the onset of the peak winter selling season
• SG&A growth investments in infrastructure and people including IT and the establishment of a country office in Greater China to lead market development efforts
• SG&A fees to operating partners on DTC sales in Greater China
• Capital expenditures of approximately $70 million including investments in new retail stores, IT and manufacturing capacity
• Weighted average diluted shares outstanding of 112.1 million
• Effective annual tax rate approximately in-line with fiscal 2018

My comment: Finally, after realizing YoY annual revenue growth of 33%, 39% and 46% for FY 2016, 2017 and 2018, respectively, GOOS management raised its revenue growth from a very conservative “at least 20% guidance” to a more realistic “annual revenue growth of at least 30%.”


MARKET CAP	      $ 7.1 B
Employees	      2,700
52-WK HIGH	      72.27
PRICE 8/9/18	      64.45
52-WK LOW	      23.46
52-Wk Price Change   167.3%
Y-T-D Price Change   104.2%
EV/EBITDA (mrq)	      59.33
P/E	              85.23
EV/Sales (ttm)	      14.81
P/S (ttm)	      13.61

Today, after releasing excellent results for Q2 2019, the GOOS share price exploded upward over 23%, when it reached $72.27/share, a 52-week high and Y-T-D high.

Over the recent 52-week period, the GOOS share price has substantially increased by 167%. The following Big Chart shows Canda Goose (GOOS) superbly outperforming favorites held by many investors here, i.e., MDB,NTNX SQ and WIX, except for TWLO which is in a league of its own.

GOOS share price is up 104% Y-T-D. Here’s the Y-T-D performance where GOOS is performing well among the aforementioned board favorites:

Explosive growth in stock price, in turn, has caused increases in EV/EBITDA, P/E, EV/Revenue and P/S.

In October 2018, I added to my GOOS holdings when its stock price pulled back and fell below $50/share.

For those interested, here are my past GOOS posts.……