Canada Goose Holdings, Inc. Stock

Good morning, and welcome to this next session of our 33rd Annual Global Consumer & Retailing Conference. My name is Brooke Roach, and I cover the apparel, accessories and brand sector here at GS. And I'm thrilled to welcome Neil Bowden, CFO of Canada Goose, as our next speaker. Welcome, Neil.

Thanks, Brooke. We've been here several years in a row. It's good to be back in New York in the fall, and good to see you as well.

Excellent. Neil, would you like to kick it off with some opening remarks?

I'll make just a short opening remarks. We don't have any slides prepared today. We're obviously a well-known brand. We just had our quarter not too many weeks ago now, although we did have some vacation in between. So, it does feel like quite a ways. We're off to a good start this year.

And the brand obviously has been focused over the last few years on a few core areas, which I'm sure we'll touch on. The first is really reinvigorating the brand and building out a year-round product playbook, which is the core of those two things has been the introduction of a Creative Director, Haider Ackermann, who has served as our Creative Director now for about 2 years and emphasis on having amazing luxury product available 365 days a year in all of our stores, websites and increasingly among our wholesale consumers.

And so, that's where we've been spending our time as a business over these last few years really on product and on brand and then on how do we deliver that through our channels and how do we deliver the profitability that this brand has and the potential that it certainly has.

As we think about those three core priorities that you have this year to strengthen brand relevance and drive sustainable growth and profitability, where has Canada Goose made the most meaningful progress so far? And what do you see as the biggest opportunity?

Yes. So, I would say that -- and I'll go back now a few years, we've spent time in considering both the brand and the product as obviously closely related. And so, as we've gotten into the Snow Goose collection with Haider and as we've started to elevate the product beyond where it was, we focused our attention in terms of marketing dollars on upper funnel.

How do we expand our reach across consumers? How do we deliver the brand? How do we increase the buzz around the brand? Obviously, the historic sort of iconic logo, the parkas are what we're closely associated with. And yet today, the products are approximately 50% of the unit sales are not down product.

They're things like what I'm wearing today, knitwear, they're tees, T-shirts, they're polos. And so, the quality of the products in some of those other areas has really, really increased as we've started to expand the line and consumers are adopting them at a really exciting rate.

That's great to hear. There's a lot to pull on there, but maybe we can talk a little bit about marketing for a moment. As you continue to look and build the brand, you're increasing marketing this quarter and next in particular. What should we expect from the upcoming campaigns? Where are you driving incremental spend by region? And are you seeing any indicators that tell you that this is driving improvement in customer traffic and acquisition?

They don't let, unfortunately, the finance guys break any of the hot news around exactly what the campaigns look like. So, I'll just -- I'll let the marketing work for itself. But I will talk a little bit about where we're going to spend some time. So, we're just in -- our fall/winter collection is in our channels now. And so, we've just started to -- a little -- a couple of weeks ago, we started to get into some of the marketing around that. We're going to quickly move into Snow Goose. We've got holiday coming after that. And we've got some exciting partnerships, which will be very interesting, I think, really on brand for us.

And so, the team is working hard at that. Much of that work is really focused on that top of the funnel. How do we increase the awareness in every market? Clearly, we've had a lot of success here over the last several years in both China and in North America. And so, we're going to put some time and energy into those markets, particular brand activations in each market that are local and relevant to the consumer.

Our global brand ambassador, Greg Hsu, who's a Taiwanese actor, very, very relevant in Asia and increasingly relevant here in North America. We just started -- we just had a little bit of a teaser for the fall/winter campaign for him over the last few weeks. And so, that's an area where we expect to -- and he's been in the brand now for about 12 months. And so, we expect to continue to drive some relevance in that way.

Talk to me a little bit more about the product assortment and how it's evolving and where it's going next. You've now had Haider Ackermann in the brand for a couple of years now. Alongside his creative contribution, you've done a lot with lighter weight products, similar to what you said earlier. What do you see as the largest product and category opportunities from here?

I mean, certainly, we feel confident about all categories. So, I'll just make that kind of blanket statement to start. The brand obviously is really well known for our down product, whether that's sort of the parkas and there are many iconic styles, but also some newness that we've seen come into the brand here under Haider's direction. And alongside that, obviously, lightweight down, very popular and a large piece of our portfolio. Increasingly, the growth has come from knitwear, fleece, and accessories are sort of to round that out.

As we've been thinking about what the merchandise and what the merchandising and what the assortment looks like, we've really been focused on having a luxury product available all around the world for your need state. And so, the consumers, regardless of where you are in the world, we want you to be thinking about Canada Goose, whether you're on your way to a soccer game or having brunch with your friends or outside at a park in the spring or yesterday, I was walking around Manhattan in the heavy rain with my wife in our really amazing raincoats. And so, there is an opportunity for Canada Goose product 365 days of the year.

That's really great to hear. Are these category extensions driving increased purchasing frequency and spend among existing customers? Or do you think that it's primarily bringing new customers into the brand?

So, in your last question, you sort of asked about Haider. And so, Haider has been with us for about 2 years. He started with our pinnacle product collection called Snow Goose, and his influence has now extended into our mainline collections. So, the spring collection that's just -- that we sort of have just finished was the first mainline collection that Haider touched and now the fall/winter is in place.

We're seeing consumers that are new to the brand as well as repeat consumers gravitating towards those products. And really, that's such a great story and a powerful part of our opportunity, we think, where we've now got products that perhaps you weren't looking at Canada Goose for one reason or another that Haider has really influenced.

You've got a new color that you maybe weren't looking at or you have something that's just the right style that perhaps a few years ago wasn't exactly what you were looking for. You've now got a reason to come in and Haider has really brought that. If you are an existing consumer and you've got your parka and for a period of time, you decided, I'm not sure you need to go back to Canada Goose.

We now see a lot more excitement around things like polos. And so, you're there in the summer to acquire 1 or 2 colors of a polo or a T-shirt or something else that is at the standard that you expect from the brand. And so, we're really -- we're seeing both that growth in repeat as well as new.

That's great to hear. As you scale some of these warmer weather categories or non-heavyweight down categories, what's the current margin profile of those lighter weight versus heavyweight categories? And what levers do you have to offset mix pressure?

So, it's a question we have seen -- we've heard a number of times given that, not surprisingly, parkas are the highest -- have the highest gross margin on a per unit basis. I think early on, as we were getting into some of these other categories, there was a much wider -- and not a major, but there was a wider difference between lower-margin products and higher-margin products.

As we've started to evolve our sourcing function, as we've matured our merchandising function, we have really been focused on ensuring that the gap between highest margin and lowest margin products tightens. There's good reasons sometimes to accept maybe a slightly lower margin, let's just say, lightweight down product, for instance, if it's the right spot in the assortment. And we've made those -- I'd say those decisions over the last few years in a much more scientific way. But generally speaking, the margins on a -- at a category level have really, really tightened.

And you can see that it's been one of the reasons that we've been able to expand gross margin over the last 10 years very meaningfully as we've started to mix out of core parkas. And obviously, we're getting some benefit on a channel basis, but because of the channel mix. But inside the channels, you can see that gross margin expanding over a long period of time, and we believe that there's still opportunity to do that as the volumes get larger even as we move into some of those other categories. And naturally, you're going to see some AUR compression, but we should be able to continue the pace that we're at.

That's really great to hear. Let's dive into another area of strategic opportunity, which is the DTC store productivity. Retail execution has been such a major area of investment for Canada Goose the last 2 years. What's driving some of the improvements that you're seeing in store today? And how should investors assess current store productivity? If you have any metrics you can share on per square foot, 4-wall profitability or returns on the stores, that would be great.

Yes. I mean, I'll start with the 2 that we obviously look at most frequently. So, one is sales per square foot. We have said lots of times over our time, and those who are familiar with the story will have heard this. And if you're not, hear this for the first time. Our expectation is that our stores deliver CAD 4,000 a square foot and at least. And that has not always been the case. We closed -- we report this on an annual basis. And so, when we closed fiscal '26 in March, that was the first year in a few years that we had ticked above that number across the fleet. We had strong comps through fiscal '26, the back half or the last quarter for sure of fiscal '25. And so, getting back to that level is important. We believe there's plenty of opportunity beyond that as we start to build out more concentration in some of these periods of time that isn't necessarily what we treat as our peak period. And so, there is opportunity to continue to drive that. But that is not every store, and that means that there's opportunity in those stores specifically.

Second area of focus is really around per store profitability. And so, having our EBIT margin at 40% is sort of our minimum gating threshold at the moment. That is, of course, not always the case across a fleet of 90 stores. And where we're not where we expect to be, we focus on things like, which just gets to the core of the question here, how do we drive the right level of labor necessary to meet the traffic? What are we doing to incent our brand ambassadors to ensure that they're delivering whatever it is that's necessary in that period of time, whether that's a heavyweight down steam or whether it's something about T-shirts or whatever the sort of the program is at for that particular week or month.

And really absolutely drilling into core behavior consistency across the store network. We've got a Head of Retail now and 3 presidents absolutely focused on consistency and meeting the standards everywhere in the world. It's not a perfectly straight line. We didn't have, I would say, quite the performance in the first quarter that we would like. And so, that obviously gears us up to continue to focus on that. But we think that store comps, and we report comps, but store comps, in particular, are absolutely tied to long-term value creation and lots of us are spending a ton of time focused on getting better at that every day.

Let's talk a little bit more about what opportunities you have within that -- within this initiative for the holiday season. What should we be expecting as you gear up into your peak selling season?

We're certainly focused on a few things. So, selling behavior when you're in the store, are you feeling that Canadian warmth, is that consistent? Are we showing you multiple products? Are we trying to push a UPT above 1, so units per transaction above 1? If you're going to buy a polo, can we get you to buy 2 or 3 instead of 1 to drive that average basket size up? So, that's sort of the kind of the core focus. Do we have the right labor in place? Do we have the right labor to match the traffic?

Over the last 12 or 15 months, we've talked a lot about labor investment and ensuring that we've got good kind of analytics around what the traffic forecast looks like and then how do we match manager and brand ambassador availability and the number of staff on hand in order to meet the demand. And obviously, peak for us is a big period, and there's lineup at the stores in lots of places, including on Fifth Avenue, I'm sure soon. And then do we have the inventory in the right place? And so, we talked a little bit already about making this phenomenal product. Is it there? Is it available to you? If it's not, what can we do to have that shipped to you quickly so that you've got that in your hand. And so, all of those kind of 3 areas are places where we know we've got opportunity, and I think we feel like we've got a good plan entering our peak.

Let's shift to your other major channel, which is wholesale. How are you thinking about wholesale growth on a multiyear basis? And then on a near-term basis, how is sell-in and sell-through developed? And what are you hearing from your partners regarding the health of the brand, forward orders, reorders and cancellations?

Yes. I mean, I'll start in the back at the last part of that question. We have just come through over the last few months, our spring summer -- spring/summer sell-in for next year. We're delivering now this fall/winter. Most of it's now delivered, although there's still usually a few weeks to go. Really, really happy with the interest in the product in particular. I think, by and large, there's been a desire from wholesalers as well as consumers. And obviously, the wholesalers are speaking on behalf of the consumers for Canada Goose product that extends beyond just the core season, and we're seeing a lot of interest in the buyers for that product. So, I think that's a great indicator of brand health.

And frankly, long overdue, we've talked a lot, Brooke, you and I, about where the wholesale business has come. It was the core of the business many years ago. We had a couple of challenging years there through fiscal '24 and '25, stabilized over last year with a little bit of growth, and we feel like there's growth to come in wholesale this year as well. And so, we really like where that's headed. I think it's probably too early really to talk a little bit about sell-in or sellout. We -- I think anecdotally, it looks okay, but it's not perfect everywhere.

Europe is a market that continues to be under some pressure, although I was in London and Paris over the last few weeks on vacation, but in some of those major retailers, and I liked what I saw in terms of the interest in -- broadly speaking, this is a 1 day, 1 hour, but it was of interest to me that there was people in places like Galeries Lafayette or La Samaritaine or Harrods. So, it does seem to be that there are people willing to shop, but I don't want to draw any conclusions on that. We're too early in our season so far to really draw any strong conclusions about sellout. But I think we like where we're positioned. We like the product. We know the wholesalers like the product. So, our job is just to make sure it's in their hands on time.

You mentioned the macro. So, maybe we can dive a little bit deeper there. One of the bigger debates coming out of last quarter on Canada Goose was the traffic that you were seeing by region. You reported double-digit e-com growth, healthy customer acquisition and better conversion, but that weaker traffic really was a bit of an offset. What's your latest assessment of the macro operating environment by region? And are you seeing any signs of improvement or stabilization?

Yes. So, we're -- as you can appreciate, getting a little bit deep into our quarter. So, I'm going to just comment more generally rather than any specifics. I will say we -- as we exited Q1, we're not really happy with where the traffic is. I think it's probably true that we're experiencing -- it's certainly true, we're experiencing some declines. We saw some declines in traffic in retail in particular. We saw lots of improvement in e-commerce. And so, understanding that relationship has been interesting. Clearly, there's interest that folks are attracted to the website and they're spending some time on our -- across our digital platforms regardless of where we're in the world. And so, we take that as a positive.

Our wholesale traffic seemed to be pretty good as well through the first quarter. And so, there was a little bit of head scratching around retail. I think as we look at the macro now, it continues to be tough in Europe, no surprise by what I said about what I saw on the streets of Paris and London. North America is okay. There are pockets where there's good, strong kind of repeatable traffic. Obviously, we had some experience here through kind of back-to-school season, but it's not perfect everywhere. And China remains a market that's a little bit mixed.

Regardless of what the traffic environment is, our job is to convert. And so, we're focused on, obviously, top of the funnel brand work, how does that translate to traffic over a period of time, as you indicated. We were a little bit lighter on marketing in the first half of the first quarter. We're expecting to ramp that up in the second quarter and have done so, and we'll continue to do that over the balance of the year. We know that's going to translate to some traffic improvement, but our core focus is on what are we doing when you arrive in our stores. What does our website look like? How well merchandised are we? Is the product available for you? The things that we know will translate to success.

One question that we're asking every company at our conference today is on the health of the consumer. What are your expectations for the environment over the balance of '26 relative to your recent results? Do you expect things to be the same, better or worse? And then for 2027, do you expect the health of the consumer to be better, the same or worse in '27 versus '26?

Yes. I mean, on that last point, I mean, if I sat here, I don't know what we could look at the transcript, what I said 12 months ago, but I think we felt pretty good 12 months ago about the health of the consumer. And we've had, obviously, an escalation in tariffs, which I'm sure we're going to get to and a war in Iran that wasn't on the horizon. So, I'm not sure I'm in a situation where fiscal calendar 2027, fiscal '28 for us, it's way too early to comment. I'm hopeful that some of those things will be less of -- will have deescalated, but you just never know.

I think for the balance of the year and what we said when we got into our plan for the year and what we based our guidance on was a consumer environment that was probably a little bit worse than calendar '25 or fiscal '26. Nothing has through the first quarter, nothing changed my view of that. I think there's clearly some buying. There are markets where stock markets are performing very well and affluence seems to be leading to sort of spending in an unmitigated way. And so, we're happy with what we see in some places, but it's mixed. And I'm expecting some of that challenge to continue.

That's helpful. One other very topical question that's related to traffic is that of weather. And there are some forecasters out there calling for a super El Niño pattern, which could change cold weather temps into the back half of the year. How are you planning the business for this possibility? And how does your business typically perform during these periods?

Yes. If tariffs isn't the most popular word in the last couple of months, then super El Niño has got to be on that list. It's been -- I've learned a lot about those weather patterns. Listen, like, it appears to me to be transitory. If it is, in fact, something that will happen this year, then it happens. Our view is today, we are in many, many markets that are sort of nontraditional cold weather markets. We've got product that is available for all year round. Consumers, as we've seen sort of in our nonpeak season, consumers love that product. We've seen tons of growth in apparel. Our job is when you come into the store to make sure that you've got the right product for you, and we know we have that inventory. The quality of it is exceptional. And so, listen, it is not factored into our business plan this year, and our job is really to continue to attract interest based on the products that we have, and we're excited about that.

Very clear. You mentioned tariffs multiple times now, and I know that it is very much on investors' minds. So, maybe we can move there. You had indicated on the last call that higher U.S. tariffs on Canadian imports could represent less than 200 basis points of pressure on this fiscal year before mitigation. What would the impact look like on an annualized basis? And how much of the current year effect is limited by inventory already in the United States? Can you walk us through how you're thinking about current tariffs?

Sure. Yes, I didn't mean to indicate tariffs, but that's just a reality, and I didn't think we would get away without having a chat about it. So, that's no surprise. Listen, yes, our view of this year is less than 200 basis points of impact. I'm not prepared to give an annualized number. I think that depends on size of the business in the U.S., how much product that we have in the market, a number of other factors. And so, as we get into -- and obviously, we're planning ahead for next year at this point, when the time is right, we'll talk about what the annualization would look like and specifically to the extent that it matters to fiscal '27, what that looks like. So, fiscal '28 rather. So, I'm going to punt on that.

Mitigation strategies, we make inventory all year round. We've got an active network in -- an active retail network and e-commerce network in the U.S. We've got wholesalers in the U.S. We have inventory staged earlier or throughout the year. And so, some of the mitigation had already happened regardless of the sort of the impact of tariffs. The -- yes. And so, our main mitigation prior to was to ensure that we had whatever we could in the market at the time. And we've continued to ship, obviously, because we've got stores to replenish and that sort of thing. And so, that's all factored into our calculation of what the impact is in the current year.

What about future mitigation levers? Can you talk through how we might think about the future mitigation once the product that's in the U.S. is already exhausted?

Yes. I mean, I think the obvious one, which we're not going there yet, is what does pricing look like? And our -- it's way too early to make any comment or any decision on that. We've got a tremendous relationship with U.S. consumers. And I think our objective is to continue to maintain that and the loyalty that they've shown us with that to the brand. And so, we're not, at this time, considering any significant change in pricing and then certainly not in the year.

Our -- I think our long-term view of where manufacturing is continues to be -- it should be in Canada for down product. And we will -- as we talked about, we make lots of things in Europe and tariffs is a part of product made in Europe being imported in the U.S. and has been for a long time. So, that's just part of our business as it is elsewhere. Driving retail economics and some cost savings to offset what might be some gross margin compression is another way that we can help mitigate. And so, we're not -- because this is obviously so kind of topical, we're not interested in any sort of rash reaction, and we're monitoring the situation as we often are, and we're hopeful there's a good resolution.

One question that we're asking all companies at this conference is on prices and AUR. Do you expect your prices and AUR to be higher, lower or the same in the back half of calendar '26? Versus the level of AUR growth that you delivered in the first half? And then maybe associated with that, do you believe that the brand is in a strong position to be able to continue to increase prices now that you've gotten back to your normal cadence this year?

Yes. I mean, I certainly think we do have some pricing power. I think that goes very closely with what are we doing around the brand and what does that brand mean to consumers, how amazing are these products? Maybe there's a little more opportunity on newness than core, but that remains to be seen. And obviously, we take data on how we perform throughout the year and what the things like indicators from wholesale order books and that sort of thing to inform future pricing decisions and what's the health of the market more generally and that sort of thing. So, I think those factors are all considered when we make pricing decisions. First part of your question.

AUR and pricing are lower, the same in the back half of the year?

Yes. I mean, not surprisingly for us, we expect higher AUR growth in the back half of the year because we start to shift away from some of those lower AUR products and into more core seasonal. We took price growth this year as opposed to last year. So, that's a natural evolution. But we certainly are seeing some pressure, let's just say, on AUR in terms of the math by having lower AUR product more available at this time of the year. And so, there'll be a little bit of that pressure, I suspect, as people are starting to buy things like knitwear and fleece and apparel, lower AUR product at -- even during our core season. And so, that certainly puts some pressure on it, but that's pressure that we're okay with.

The other big debate in the stock is on SG&A leverage. And I was hoping you could dive a little bit deeper into the principal drivers of expected SG&A leverage in the back half. How much of that leverage depends on an improvement in traffic? And how much is in your control? And how should we be thinking about that ahead?

Yes. So, I think the good news is that we expect to get SG&A leverage out of a couple of spots. So, one of them, for sure, is to maintain a level of spending that's appropriate, and that spending has to be lower than the -- the growth in that spending has to be lower than the growth in overall revenue. We planned for revenue growth of low single digits this year. We're expecting SG&A to be less than in order for us to have some leverage even in a -- what is a somewhat pressured top line growth scenario.

The primary way that we maintain or contain growth there -- growth in SG&A spend there is headcount related. And so, we've been very tight on headcount addition really over the last few years, and that's translated nicely to some SG&A leverage. The other area is we need to see, obviously, revenue growth in the channels. And naturally, that comes best from comp growth, but revenue growth just more generally in the channels, which we absolutely expect to deliver, will also translate to some SG&A leverage. And so, we're looking at both those things.

Clearly, we're going to invest in stores. We've got a marketing plan that will be increase in dollars, a little bit of a lowering of spend as a percentage of revenue. So, there's a tiny bit of leverage there, but mainly it's maintaining a level of cost or growing the level of cost at a rate that's slower than overall revenue growth.

And from a cost perspective, one other margin question that we're asking every company at the conference this year is on margin headwinds and tailwinds into calendar '27. Do you expect to see more margin headwinds or tailwinds in calendar '27 versus 2026? And can you elaborate on the drivers?

Yes. I mean, again, we're not quite into -- calendar '27 for us is a big chunk of our fiscal '28. So, we're not in a position to comment about our plans for fiscal '28 quite yet. But I would say that we believe absolutely that there are margin tailwinds in this business. And when we get to our -- we've got to get through our big season here in Q3 for fiscal 2027. When we get into that '28 -- fiscal '28 planning, we'll talk a little bit more about it. But I think you've heard us say a number of times, and we believe strongly that there is a lot of opportunity in this business to grow margin.

Let's dive a little bit deeper into that long-term opportunity to grow margin. Beyond fiscal '27, what are the key milestones required to move EBIT margin meaningfully higher to where you used to be? And how should investors think about the relative contribution opportunity from gross margin expansion relative to SG&A leverage?

So, I think gross margin has -- is probably a -- gross margin is an absolutely fundamental part of the plan, but the growth in gross margin is probably less than the SG&A leverage story, just if I think about the way the math works. We're running gross margins around 70%. I think there's opportunity beyond that. But growing the absolute dollars of gross profit and obviously growing revenue dollars helps provide leverage without doing anything in SG&A.

And so, clearly, revenue growth translating to gross profit dollar growth regardless of sort of how much gross margin you get helps leverage that total SG&A pool. But keeping a handle on SG&A corporate cost spend is critical. We will absolutely invest in marketing because we know that, that is a direct translation to performance in the channels as well as the overall brand metrics that we know that we need to drive. But having SG&A leverage -- sorry, having SG&A corporate costs under control is key to providing overall leverage.

And then inside the channels, ensuring that we've got the right kind of mix of investment in new stores, the stores are delivering productivity at and above the levels that we talked about earlier, 40% at a per store basis. Those are all part of the story, and we're focused on each of those individually.

Is AI a contributor to the long-term growth? Do you expect AI to drive a significant increase in efficiency in '27 versus '26? And what part of the business do you expect AI to change most meaningfully?

Yes. I'd hesitate to overstate the benefit of it at the moment. I mean, we are certainly spending -- we're certainly utilizing it in a number of different areas. But I'm not -- I don't think we're quite at the stage yet where we're seeing a massive amount of cost efficiency, let's say. It's also not a major level of -- it's an area of, I'd say, human capital investment. And so, where we're experimenting with the tools that we have available to us, it's -- we're spending some human time on that. And there are certain pockets of the business where I see future opportunity.

Customer-facing stuff is one of the most interesting areas. Things like warranty, live agent, that sort of thing, where you can -- clearly, there's a translation to -- this is not a -- we're not breaking new ground here. And so, that's an area where naturally, we can see some leverage and potentially some operating leverage. But I wouldn't want to overstate the opportunity around AI. I think it's -- there's still a lot to do, but we've got plenty to do in kind of the core operating areas first.

Neil, we're about out of time. Any closing thoughts or comments that you'd like to leave with the audience?

No. I think we -- as we enter our peak, we're pretty excited about what plans are in front of us. We've got a lot of work to do. We'll be in the market with our second quarter here in the early part of November. And so, we'll be excited to update the broader investor and analysts and other stakeholder group at that time, and we've got plenty in front of us for fiscal '27. So, we're going to head back to work.

Great. Thanks so much for joining us, Neil.

Great. Thank you, Brooke.

Good morning. This is Dani Reiss, Chairman and Chief Executive Officer of Canada Goose. On behalf of our management team, Board of Directors and employees around the world, welcome to our Annual Meeting of Shareholders. Fiscal 2026 was an important year for Canada Goose. We delivered strong results, and what matters most to me is that we made progress in the areas that will continue defining our success for years to come.

First, our brand continued to gain momentum. Through great storytelling, product innovation and impactful campaigns, we created new ways for customers to engage with Canada Goose and saw that reflected in stronger demand across our markets. Second, we continued expanding our product offering. With outerwear remaining at the heart of who we are, customers are increasingly embracing us across more categories, more occasions and more of the year.

Third, we improved the quality of our execution. Our retail business delivered stronger results. Our wholesale business returned to growth, and we continued operating with greater discipline across the organization. I am incredibly proud of what our teams accomplished this year and grateful for the passion and commitment they bring to Canada Goose every day. I'd also like to thank our shareholders for your continued support and belief in Canada Goose. We enter fiscal 2027 with momentum, a stronger foundation and a clear focus on creating long-term value.

I will now turn it over to David Forrest, General Counsel, who will chair the remainder of the meeting.

Good morning, everyone. My name is David Forrest, General Counsel of Canada Goose. And with consent of the meeting, I will also chair today's meeting. On behalf of our management, directors and employees worldwide, it's my pleasure to welcome you to our Annual and Special Meeting of Shareholders. I'd also like to take this opportunity to thank you on behalf of the whole company for your continued support and belief in our vision.

I'd like to introduce you to the people with me today. You've already heard from Dani Reiss, our Chairman and Chief Executive Officer. Also with me is Neil Bowden, our Chief Financial Officer; [ Alana Reich ] our in-house legal counsel; and a representative from Computershare, the company's transfer agent and this meeting's scrutineer.

Please note that only registered holders of subordinate voting shares and multiple voting shares of record as of June 22, 2026, or their duly appointed proxy holders are permitted to participate and vote at this meeting. Following the formal portion of the meeting and time permitting, the members of management with me here today will be available to take a few questions. Shareholders who wish to communicate with members of management team with me here today or who wish to present or ask a question in respect of a motion may do so using the messaging function on the Lumi virtual interface.

Please note that questions or comments submitted using the messaging function of the Lumi virtual interface will be read out loud and addressed during the question period at the end of the meeting in accordance with the rules of the orderly conduct of the meeting that I will describe now. As this meeting is held virtually via live webcast, we think it is necessary to set out a few rules for the orderly conduct for the meeting. Questions can be submitted by any registered shareholder or duly appointed proxy holder using the messaging function of the Lumi virtual interface. When asking a question, please indicate your name, which entity you represent, if any, and confirm whether you are a registered shareholder or duly appointed proxy holder.

Questions will generally be read out loud and addressed during the question period at the end of the meeting, provided that questions regarding procedural matters or directly related to the motions before the meeting may be addressed during the meeting if relevant. Questions or comments containing inappropriate language, profanities, hostilities or that are otherwise disruptive to the orderly conduct of the meeting for all shareholders will not be read out loud nor answered. Questions which are already answered or that are redundant or repetitive will not be read out loud nor answered. Questions that are excessively long or partially redundant or repetitive may be summarized.

For the purposes of the meeting today, voting on all matters will be conducted by a single electronic ballot. Registered shareholders or duly appointed proxy holders will be asked to vote on each business item at the same time. This will allow you to choose to vote on each resolution as soon as voting opens or wait until the conclusion of the discussion on each resolution prior to casting your votes. After you've registered your votes for all business items of today's meeting, the scrutineer will compile the votes in respect of each business item. All dollar amounts referenced in today's meeting are in Canadian dollars.

Any forward-looking statements made today, including any forward-looking statements made in the Q&A portion of the meeting, are subject to the 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. Please refer to our fiscal 2026 annual earnings release and our Q1 fiscal 2027 earnings release filed on SEDAR+ and EDGAR on May 19, 2026, and July 30, 2026, respectively, as well as the Risk Factors section of our most recent annual report filed on SEDAR+ and EDGAR. The forward-looking statements made today speak only as of today, and we undertake no obligation to update or revise any of these statements.

I call to order the Annual and Special Meeting of the company's shareholders. With the consent of the meeting, I appoint Alana Reich, Senior Legal Counsel of Canada Goose, to act as the Secretary of the meeting. In addition, I appoint our transfer agent, Computershare Investor Services, Inc., through its representatives as scrutineer. The scrutineer will report on the number of subordinate voting shares and multiple voting shares represented in person and by proxy at this meeting and report the voting results.

The purposes of today's meeting are set out in the management information circular of the company dated June 26, 2026. Consistent with previous years, the company is using the notice and access regime enabled by Canadian securities laws to make its meeting materials available in that regard, sent a notice with all relevant information to all shareholders on or about July 2, 2026. As mentioned in such notice, the shareholders have had access to the circular and notice of meeting on the company's Investor Relations website and on the SEDAR+ website since July 2, 2026.

Accordingly, I will dispense with the reading of the notice of meeting. Copies of the circular and other meeting materials may be downloaded at any time from the company's Investor Relations website or on the SEDAR+ website under the company's profile. Our transfer agent, Computershare, has attested to the proper mailing of the notice calling this meeting. I direct that copies of the notice of meeting, the notice relating to the availability of the meeting materials and the form of proxy with proof of mailing be kept by the secretary with the records of the meeting.

The scrutineer's report indicates that shareholders holding in aggregate more than 25% of the issued shares plus a majority of multiple voting shares entitled to be voted at the meeting are present in person or represented by proxy. This meets the quorum requirements in the company's articles, and as such, we are permitted to proceed with the meeting. A copy of the final report on attendance will be filed with the records of the meeting.

As previously mentioned, for the purpose of the meeting today, voting on all matters will be conducted by a single electronic ballot. At the beginning of the formal part of the meeting, registered shareholders and duly appointed proxy holders will receive a message on the Lumi virtual interface, inviting you to register your votes as soon as the polls are open. You may cast your votes as soon as the polls are open or wait until the conclusion of the discussion on each resolution prior to casting your vote.

You should know that proxies lodged before this meeting allow management of the company to cast a significant number of votes. Based on the number of shares represented at this meeting, the members of management with me here today will be able to determine the outcome of all motions that go to a vote today. I may, therefore, declare the motions which go to a vote today as carried, even though all the votes may not yet have been counted or a final report may not yet be available. I shall do this to keep up the pace of the meeting. To further expedite the formal part of the meeting, I will move on all motions. In accordance with the articles of the company, no such motion will need to be seconded.

I now declare that this meeting is properly called and duly constituted for the transaction of business. Please note that the minutes of the last Annual Meeting of the shareholders held on August 8, 2025, are available for review on demand. I will dispense with the reading of the minutes of the last annual meeting, and I direct that a copy of such minutes be inserted and kept in the minute books of the company.

I will now continue with the first item of business of today's meeting. The first item of business is the presentation of the company's consolidated financial statements for the year ended March 29, 2026, as well as the auditor's report thereon. These financial statements and the auditor's report were included in the company's annual report on Form 20-F and were made available under the company's profile on the SEDAR+ and EDGAR websites on May 19, 2026. With the consent of the meeting, I will dispense with the reading of the auditor's report. Please note that we will answer any questions with respect to the financial statements in the general question period only.

We now move to the next item on today's agenda. The first matter to be acted upon is the election of the 10 individuals to the Board of Directors. The term of office of the directors is from today until the next Annual Meeting of Shareholders or until such time as their successors have been duly elected or appointed, whichever is sooner. The management information circular of the company dated June 26, 2026, contains information on each of the 10 nominees recommended for election as directors. Registered shareholders and duly appointed proxy holders may vote on each proposed director nominee individually.

I nominate each of the following persons for election as a director of the company to hold office until the close of the next Annual Meeting of the shareholders or until his or her successors are duly elected or appointed. They are Michael D. Armstrong, Jodi Butts, Maureen Chiquet, Ryan Cotton, Jennifer Davis, John Davison, Massimo Piombini, Dani Reiss, Gary Saage and Belinda Wong. Each of the persons nominated has confirmed that he or she is prepared to serve as a director, and each of them qualifies as a director under the provisions of the British Columbia Business Corporations Act. The motion is now on the floor. You may therefore cast your votes now, if not already done. We remind you that if you previously voted by proxy, you do not need to vote again on the platform.

We will now continue with the next item of business, which is the appointment of the company's auditors. The second matter to be acted upon at today's meeting is the appointment of the auditors of the company for the ensuing year and the authorizing of the directors of the company to fix the remuneration of the auditors. The Audit Committee of the company and the Board of Directors recommend the appointment of our existing auditors, Deloitte LLP, as the auditors of the company for the ensuing year. I move that Deloitte LLP be appointed auditors of the company until the next Annual Meeting of Shareholders and that the Board of Directors be authorized to fix their remuneration. The motion is now on the floor.

The third matter to be acted upon and the last item of business of today's meeting pertains to the amendment of the Omnibus Incentive Plan of Canada Goose. As more fully described in the management information circular dated June 26, 2026, the company is proposing to amend the Omnibus Incentive Plan by replenishing and increasing the number of shares reserved for issuance under the plan such that the fixed maximum number of subordinate voting shares reserved for issuance as of the effective date of the amendment to the Omnibus Incentive Plan would be equal to 15,141,031 subordinate voting shares, representing approximately 15.50% of the subordinate voting shares and multiple voting shares issued and outstanding as of June 26, 2026.

The company intends to amend and restate the Omnibus Incentive Plan in order to clarify that the settlement of awards under the Omnibus Incentive Plan by way of previously issued shares acquired on the open market will not affect the share reserve under the Omnibus Incentive Plan. The full text of the resolution approving the amendment of the company's Omnibus Incentive Plan is set out on Pages 25 and 26 of the management information circular of the company dated June 26, 2026.

In order for this resolution to be passed, it must be approved by the affirmative vote of not less than a majority of the votes cast in respect thereof by the shareholders of the company present at the meeting in person or represented by proxy. I now move that the resolution of the shareholders of the company the full text of which is reproduced in the management information circular of the company dated June 26, 2026, authorizing and approving the amendment to the company's Omnibus Incentive Plan, be approved. The motion is now on the floor. Unless there are any questions or comments on the motion, I will move on to the voting.

As previously mentioned, voting today is being conducted by a single electronic ballot. Voting opened at the beginning of the formal part of today's meeting. If you have not yet cast your vote for the motions, please do so now. Please register your votes by accessing the voting tab and pressing on the for or withheld buttons next to the name of each proposed director and next to the resolution with respect to the appointment of Deloitte LLP as the company's auditors and pressing the for or withheld -- for or against buttons next to the resolution with respect to the amendment of the company's Omnibus Incentive Plan.

Once the electronic balloting closes, the voting page will disappear, and your votes will be automatically submitted. We'll wait a few minutes for the completion of the electronic ballots and then move on with the remainder of the meeting. We will provide registered shareholders and duly appointed proxy holders approximately 30 seconds to complete the electronic ballots.

[Voting]

Voting is now closed. Thank you all for submitting your votes. Now that the voting is completed, I would ask that the scrutineer compile the report regarding the final voting results on all business matters. I direct that the results of the poll for the election of the directors be included in the minutes of the meeting. Detailed voting results for each motion put forth in front of the meeting will be available on SEDAR+ and EDGAR in the next 24 hours.

Based on the proxies received to date, as evidenced by the preliminary scrutineer's report provided at the beginning of today's meeting, I confirm the following. Each of the 10 nominees have been elected as directors of the company to serve until the next Annual Meeting of Shareholders or until their successors are elected or appointed. The appointment of Deloitte LLP as the auditors of the company has been approved, and the Board of Directors has been authorized to fix their remuneration. The amendment of the company's Omnibus Incentive Plan in order to replenish and increase the fixed number of subordinate voting shares reserved for issuance under the Omnibus Incentive Plan has been approved.

The formal items of business set out in the notice of meeting have now been dealt with. As there is no further business to come before the meeting, I declare the formal part of the meeting concluded. Since there are no registered shareholders or duly appointed proxy holders other than Dani Reiss attending this meeting on the Lumi virtual interface, at this time, I will forgo the Q&A portion of the meeting.

On behalf of management, our Board of Directors and our employees, I would like to take this opportunity to thank everyone for attending our meeting today. I'd also like to thank all of our shareholders for their commitment and continued support. We look forward to your attendance again next year.

Thank you. Hello everyone. Thank you for joining us and welcome to the Canada Goose First Quarter 2027 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Ana Raman. Ana, please go ahead. Thank you.

Good morning, everyone, and thank you for joining us today on the Canada Goose Q1 fiscal 2027 earnings call. you'll hear from danny reese our chairman and ceo neil bowden chief financial officer carrie baker president of brand and commercial and beth kleimer president chief operating officer We'll start with prepared remarks from Danny and Neil, and then open up the call for questions. Today's presentation will contain forward-looking statements that are based on assumptions and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected. We undertake no obligation to update these statements except as required by law. Further information regarding these assumptions, risks, and uncertainties is included in our press release issued earlier today and available on the Investor Relations section of our website. We report in Canadian dollars, so the amounts discussed today are in Canadian dollars unless otherwise indicated. Please note the financial results described on today's call will compare first quarter results ended June 28th, 2026, with the same period ended June 29, 2025, and stated percentage changes are in constant currency, unless otherwise noted. 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.

Good morning everyone and thank you for joining us. Last quarter, I shared our commitment to developing profit margin expansion in fiscal 2027. We were pleased to be off to a strong start. In the first quarter, we expanded adjusted EBIT margin over 10 percentage points year over year, our strongest first quarter adjusted EBIT margin since fiscal 2020. This performance reflects meaningful progress across the business. We delivered revenue growth of 9% driven by strong demand for our expanding lifestyle product offering, including apparel, rainwear, and windwear. We also achieved healthy gross margin expansion in the season with a greater mix of spring-summer categories, while higher channel margins and disciplined cost management further supported profitability.

Together, these results demonstrate that the strategic investments we have made over the past several years are translating into stronger financial performance as planned. We've identified three key priorities for fiscal 27 to continue strengthening our year-round relevance with consumers while driving sustainable growth and profitability. Our first quarter performance continues to show these priorities are working. Our first priority is to deepen brand desire through more effective marketing and translate that into increased demand. In Q1, we continued to see the investments we set in motion last year contribute to stronger consumer engagement. brand desire strengthened in mainland China and continental Europe. This highlights the positive response to the way we are bringing the brand to life through both compelling campaigns and elevated retail experiences. While traffic across parts of our store network remained lower than we would have liked, largely reflecting a soft macro environment, we continue to see encouraging indicators of consumer interest, including strong e-commerce traffic growth and healthy customer acquisitions.

We also continue to see desirability and awareness outperform competitive benchmarks in key markets. Together, these key indicators reinforce the strength of the brand and its ability to connect with both existing and with new consumers. Our focus remains on deepening consumer engagement within the brand and expanding our relevance across more C events and occasions. As we continue to build demand in our spring-summer categories alongside strong engagement across established categories, we believe our planned increase in marketing investment through the second and third quarters positions us well to convert that growing interest into sales. Our second priority is to scale a repeatable product playbook across seasons and drive greater year-round relevance. We are thrilled by the response to our spring-summer collection, the largest in our history. The assortment was met with exceptional customer demand across direct-to-consumer and wholesale, with apparel, which includes fleece knitwear, shirts, and bottoms, as well as rainwear and windwear, leading category growth and expanding their share of first quarter revenue.

Parallel rainwear and windwear accounted for nearly 40% of our first quarter revenue. Put that in perspective, these categories generated as much revenue this quarter as our entire company did in the first quarter eight years ago. That is a remarkable illustration of how Canada Goose has evolved. In fiscal 2022, these categories represented just 5% of our business. By fiscal 2026, they had grown to 15% of our total revenue, and we continue to see significant opportunity ahead. What is notable is that this growth is additive. Downfield Outerwear also grew in the quarter, in addition to strong customer response to both newer and established categories.

This demonstrates our ability to build a more balanced business throughout the year while remaining true to what makes Canada Goose distinctive, which we believe is the right way to operate. Our third priority is to improve channel productivity and capital efficiency. made meaningful progress against this priority in the first quarter. Customers increasingly engaged through direct-to-consumer and wholesale channels, contributing to strong growth in both parts of the business. Direct-to-consumer and wholesale channel segment margins also expanded, demonstrating that we are improving both the sales productivity and profitability of our business. wholesale delivered an outstanding quarter and was one of the clearest proof points of the momentum we are seeing across the business. Revenue increased 65% year over year, driven by a strong order book and customer reorders through the quarter, as well as some shipping time. We view this as an important validation of our strategy, reflecting strong partner confidence in the brand and growing demand for our expanded product assortment. That confidence is reinforced by the strength of our spring-summer 2027 order book, which positions us well as we look ahead.

Direct-to-consumer revenue increased 7% year-over-year in the first quarter, led by strong e-commerce performance across all regions. DTC comparable sales declined 3% year-over-year, driven by the traffic pressures I previously mentioned. While these pressures were seen across the luxury retail industry, our teams responded with strong in-store execution. Conversion and units per transaction increased year over year, benefiting from actions we took to better align labor investments with customer demand, ongoing staff training, product availability, and continuing to enhance the in-store experience. We also continue to strengthen our retail network, opening four new stores during the quarter, bringing our permanent store count to 92. This included our new Vancouver location, which showcases our latest design concept and further elevates the Canada Goose experience. In closing, the first quarter reflects the progress we are making to build a stronger, more diversified, and more profitable Canada Goose.

We are expanding the reach of the brand, building a more balanced product portfolio, and creating new opportunities for growth across channels and occasions. The strong response to newer categories alongside continued demand for our iconic core offerings is helping drive both top-line growth and margin expansion, demonstrating that we can expand the reach of the brand while strengthening the profitability of the business. We are excited about the progress we are seeing and we will remain focused on building on that momentum through continued execution. And with that, I will turn it over to Neil.

Thanks, Danny, and good morning, everyone. As Danny noted, in a year where we expect to deliver operating margin expansion, Q1 was a solid start. growth in our D2C and wholesale channels, gross margin expansion, and an appropriate mix of investment and cost control delivered meaningful adjusted EBIT margin expansion as we navigate a mixed consumer environment. Let's get into the details. Revenue in the first quarter was 119 million, up 9% year over year with growth in both D to C and wholesale, while revenue in our other channel saw a planned decline. Excluding the impact of other revenue in both periods, total revenue increased 16% year over year. DTC was up 7% year-over-year with double-digit growth in Asia Pacific and North America. Within D2C, both our retail and digital channels grew, including double-digit growth in e-commerce. DTC comparable sales declined 3% year over year due to lower comparable store sales, partially offset by strong e-commerce growth.

Store performance was impacted by softer traffic trends, particularly in EMEA, reflecting a more challenging macro environment and lower international travel. Looking ahead, we plan to increase marketing investment and continue refining the balance between upper and lower funnel activity to drive traffic, strengthen conversion, and support growth across both our store and e-commerce channels. In wholesale, revenue grew 65% year over year, driven by higher in-season demand, an increase in order book shipments, and timing of shipments in the quarter. Our momentum in wholesale serves as a meaningful indicator of our brand health and partner demand for our expanded assortment. Other revenue was down 64% year over year due to minimal activity during the quarter as planned. Starting now to regional performance. In Asia Pacific, revenue increased 35% led by strong D2C and wholesale performance. Mainland China led the region's growth with continued strength in e-commerce and improved conversion across several key stores.

Wholesale revenue was also strong in the region, benefiting from shipment timing in the quarter and strength from our wholesale presence on Hainan Island and in Korea. Demand was supported by both local consumers and regional travel flows, with Chinese consumers continuing to shop in nearby destinations across Asia. In North America, revenue declined 6% year-over-year, but increased when excluding other revenue. We achieved double digit growth in each of our critical channels, D2C and wholesale. Positive performance in Canada did not offset softer store traffic in the U.S., resulting in D2C comparable sales decline of 1%. EMEA revenue declined 7% year-over-year as strengthened wholesale and e-commerce was offset by softer store sales. D2C comparable sales declined as challenging macro conditions continued to weigh in the region, consistent with the broader industry trends.

Now turning to the income statement. Gross margin expanded by 100 basis points year over year to 62.4%, favorably impacted by channel and regional mix. Pricing was positive and offset modest cost inflation. SG&A expense decreased 21% year over year. In Q1 of last year, we had two items that materially increased our SG&A expense and did not recur. In Q1 of this year, we benefited from the collection of receivables from customers that we had previously determined would not occur. Normalizing for these items, SG&A expense increased 6% year-over-year, translating to which reflects progress across three areas.

First, marketing is a tool Marketing spend as a percentage of revenue decreased 490 basis points year over year. This reflects both improving marketing efficiency and our deliberate approach to pacing investments throughout the year. Aligning spend with periods where we expect the strongest customer demand and return on investment. Second, higher revenue across our wholesale and D2C channels drove meaningful operating leverage, allowing us to absorb fixed costs across a larger revenue base. And finally, we manage corporate spending as planned to support our key growth initiatives. We recorded an adjusted EBIT loss in our first quarter of 104 million versus a loss of 106 million in Q1 of last year, resulting in a loss resulting in an adjusted EBIT margin of negative 87%, an improvement from negative 99% in the same period last year. This improvement was achieved despite softer D2C comparable sales, continued progress in channeled productivity, and more effective store labor management, help drive operating leverage and support margin expansion during the quarter.

Critically, we've made investments in our business over the first quarter, including several stores that will open either later this year or in fiscal 28, and in our logistics network in EMEA. Balancing these investments while expanding margin remains our key focus. Adjusted net loss attributable to shareholders was $87 million or $0.89 per share, which improved from a loss of $88 million or $0.91 per share in Q1 of fiscal 26. Turning to the balance sheet. Inventory was $490 million, up 11% year-over-year, reflecting our expanded product assortment, a larger wholesale order book, and the building of a stronger stock position to support anticipated demand for fall-winter 27. Inventory turns was one-time sales up 11% over Q1 of last year and 25% over two years ago. We feel very good about the quality and composition of our inventory, which positions us well to support expected wholesale demand, maintain flexibility across channels, and execute the planned upgrade of our EMEA logistics network while continuing to serve customers and partners effectively. Net debt at quarter end was $628 million compared to $542 million at Q1 last year, reflecting an increase in store lease liabilities.

We took advantage of favorable market conditions late in the quarter to reprice our term loan, delivering a 50 basis point reduction to our credit spread. Before closing, I'll briefly touch on our early view of the second quarter. Following a stronger than expected start to the year. expect first half growth to moderate somewhat from the pace delivered in Q1. The consumer environment remains mixed in the early weeks of Q2. Store traffic trends are consistent with Q1, while e-commerce remains strong. Improving store productivity continues to be an important area of focus. Against that backdrop, wholesale demand continues to track in line with our expectations.

As a reminder, the first quarter benefited from executing a stronger wholesale order book than the prior year. While consumer demand remains uneven across markets, we are encouraged by the underlying strength of the brand, continued product momentum, and the progress we are making across our strategic priorities. As we told you in our fourth quarter, we are making upgrades to our logistics network in EMEA. and our e-commerce capabilities, with most of these investments expected to be completed in the first half of the year. We believe these investments will strengthen the customer experience and improve operational efficiency. This, in addition to the ramp up in marketing investments in our second quarter, is expected to modestly pressure margins in the first half of fiscal 27, consistent with what we told you in May. A brief comment on the current trade and tariff environment. Our outlook assumes the tariff environment remains consistent with fiscal 26.

The announcement from the U.S. government on July 20th indicates that a portion of our products would be affected if the proposed measures were implemented. The situation remains fluid and we continue to monitor developments between Canada and the US and assess potential implications for our business. As a global business, we have successfully managed tariff and trade related changes across our supply chain and cost structure over time while materially expanding gross margin. If the announced duties were implemented as proposed and assuming no mitigating actions were taken, we estimate that the impact to our fiscal 27 operating margin would be less than 200 basis points. We are actively evaluating mitigation measures and believe we have a range of options available to help minimize potential impact. Our first quarter revenue growth, margin expansion, and the progress we made across our strategic priorities reinforce our confidence in the year ahead. we remain on track to deliver our Fiscal 27 guidance. and are focused on investing behind our brand, driving product innovation, and strengthening D2C execution as we continue to build sustainable, profitable growth. With that operator, please open the line for questions.

Thank you.

We will now begin the question and answer session. Please limit yourself to one question and one follow up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. And if you're muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster.

Your first question comes from the line of Brooke Roach from Goldman Sachs. Please go ahead.

Good morning and thank you for taking our question. Neil, Danny, I was hoping that you could help us identify the initiatives that you have in place to improve the store comps that you're seeing across geographies and narrow the gap between the traffic trends that you're seeing in your business versus the improved e-comm and conversion results that you're seeing in the rest of your DTC business. How should we be thinking about bridging those gaps? And can you give us a little bit more detail on what you're seeing quarter to date across geographies and how that bridges into your expectations for DTC growth for the rest of the year? Thank you.

Hi, Brooke. It's Carrie. I'll take that first one. So in store, let me start actually with e-comm. So as you heard us talk in the remarks, so e-comm was extremely strong this quarter, and that reflects deliberate work and not just in the quarter, but over the last few years. So there's a few things driving that. You heard Danny talk about our expanded lifestyle assortment apparel, rainwear, windwear. That's really giving consumers a new chance to come in and shop us this season. Second, the brand building and customer acquisitions investments we've made.

Those are showing up with more traffic, more engagement, and third, we've just made the digital experience better and easier to shop. some of that is also translating in store. So you've heard us talk about the training that we've that we've launched in store. We've launched clienteling and really boosted that and so that is driving significant amount and a different behavior with the way we're engaging our consumers and again there when they're coming through the stores, even though we're seeing a little bit of softer traffic when they come through it's working, they're converting, they're responding to the products. They're loving what we have to shop now, where now, and that is driving meaningful difference in terms of just how people think about Canada Goose as a relevant brand in the season. So there's a lot of things coming together, both a product is working well, the marketing is driving people to discover a different Canada Goose, and then when they come in, they're loving what they're seeing. So all of those coming together are working quite well for us. The second question on bridging traffic and conversion trends.

So that's our job, right? Our job is to make sure that the underlying demand what we're driving is healthy that we are seeing. We're we're acquiring more customers. We're engaging with customers in a different way for different products. and in store they are converting. So we're not worried at all about a demand issue. This is really a softer traffic and we can do something about that. We have levers, clienteling, as we said, you heard Neil talk about how we are going to step up marketing in Q2 and Q3. That makes sense. It's aligning activity against the highest demand season.

That's that's what we're focused on, and that's what we believe will deliver. Just as it as it relates to the performance across the regions, Brooke, I'll just put some context around. First of all, around the first quarter and then sort of echo the comment that some of the comments that we made in the in Asia, negative one in the US, and you know, much more significant decline in Europe, which is probably not unexpected. that's pretty consistent with what we're looking at in the very early days of Q2 and as a reminder, we're at the build phase and so July relative to August, August relative to September are just it's just much, much smaller and so I'm not drawing any conclusions from that. Aside from the actions that carry outlined and and you know, I think we're really trying to focus on where we see definite positives. And so what were those in the first quarter? First, Increase in basket size, people buying more stuff from us. Second, the pricing that we implemented at the beginning of the year flowing through. And so we're getting more dollars on a per consumer basis.

We love the acquisition rates of new customers, whether that's e-commerce or in stores. And so while we're kind of navigating lower traffic, we love what we're seeing in terms of conversion up everywhere. And in the early days here of the second quarter, those trends continue.

Great. Thanks so much. I'll pass it on. Your next question comes from the line of Rick Patel from Raymond James. Please go ahead.

Hi, this is Josh Reis on for Rick. Thanks so much for taking the questions. Is there any way that we can parse out the shift in timing of wholesale orders for Q1? Just trying to understand what that contributed to Q1 growth and what, if you will, we should expect, like, should we expect to give that back in Q2 or later in the year?.

Thank you. Yes, sure. So. Q1 was 65% growth in wholesale. A lot of that is real order book increase year over year. certainly early adoption of or broad adoption of spring. We got some of that in kind of in the early part of our quarter. And then we started as given the inventory position. the real quality work done by the supply chain team here, Canada Goose, we got product in the hands of wholesale consumers earlier than expected. And so that's good. I think our view is less than half the growth is really timing related, and that will balance out over the year. But our you know our we are really encouraged about about what the. about the response to the product. Obviously we knew what the order book was coming in, but in season reordering demanded in some pockets, as we heard, Heiden Island, Korea, really some nice underlying growth that is obviously more than just timing.

THANK YOU. IF I COULD ONE MORE. CAN YOU TALK ABOUT HOW MUCH OF THE GROWTH IN Q1 WAS DRIVEN BY PRICING VERSUS UNITS AND WHAT WAS THE PRICE pricing and was that pricing benefit more uniform across geographies or was it more centered in certain regions?.

Yes, I mean, we implemented the pricing at the beginning of the quarter. I think the assumption and the effect was about a mid single digits increase. Obviously, there's a lot of newness difference year over year, and so it's not quite a pure mid single digits, you know, growth coming from product. We had, you know, good unit, good healthy unit sales, some benefit from pricing, but.

not a meaningful mover on the revenue. I can just chime in, just not from a consumer response perspective. So to me, it's like when a brand is desired, there isn't price resistance, and we're not seeing that. Customers see the value, they see the newness, they see the style that's much cooler. It's a different Canada goose, and so we're just not seeing any resistance to that, which is a great sign from a consumer experience.

Yes, so much for the comment. I'll pass it on. Your next question comes from the line of Oliver Chen from TD Cohen. Please go ahead.

Hi, thank you. Regarding China, what are you seeing with traffic relative to conversion? You had some nice momentum there and brand desirability looks solid. Then as you think about traffic, would love your thoughts on the traffic trends in Europe relative to the US. as you look forward with the marketing spend and marketing techniques, can those be catalysts to help traffic? How are you thinking about regionally, perhaps marketing spend and or top of funnel versus more transactional marketing? Thank you.

Hey, all over. Okay, I'm going to take them one at a time. Traffic in China. So we're feeling really good about the Chinese consumer, both at home and when they travel. So inside mainland China, momentum stayed encouraging, obviously supported by improving brand awareness and desirability against some of our competitive set, which is great. We'd love to see that. And a lot of that demand obviously travels with the customer. And you heard Neil talk about markets like Korea, Hong Kong, healthy driven travel demand across APAC, as well as really strong wholesale order books. So whether they're shopping at home, whether they're shopping abroad, the through line is the same, that it's resonating with the consumer. They love the product and that gives us a lot of confidence in our trajectory. outside of APAC, I would say tourism levels continue to be a little softer at the macro level.

So of course we're monitoring, but as I said earlier, the brand signals are strong and so we feel really encouraged by that. When you look at EMEA, It's different than North America, right? Each region is quite distinct picture that we saw in Q2 or Q1 North America a little traffic issue in EMEA, the operating environment itself is just more challenging. I think that's pretty consistent with what you're hearing from other companies across the industry. So it's a cautious consumer store dynamic store traffic dynamic is still there. But again, the underlying brand signals to us feel strong. The conversion is improving, clienteling, the progress that we've made with that, they improved brand desirability against our competitive set in continental Europe. Those are all reasons that we feel very good that this is not a brand issue, this is just a traffic.

You heard us talk about all the mitigating effects that we will put into place Q2. When you think about marketing, can it be a catalyst for traffic? Sorry, I'm just going to address marketing specifically. Of course. So, you know, we did have a deliberate... lower spend in Q1 that's aligning just, you know, making sure every dollar works for us. And it did. We saw improved ROAS this quarter. So to me that says we can spend more efficiently while still driving a you know customer acquisition and really strong brand engagement. So yes, it will be looking. It will be a factor in how do we drive And as we step up that marketing in Q2 and Q3, we think they will have positive results.

Thank you for that. Follow up on the non-heavyweight down progress. What are your latest thoughts or parameters around pricing because there have been moments calibrating are priced too low in some cases in the past. And finally, as we look at model AI's impact across the industry, just highlights on where AI will have the earlier impact in what you're testing. Thanks a lot.

So pricing on, I mean, we look at pricing. kind of the same way, whether it's newness, whether it's carryover in our icons, whether whatever category it is, it's making sure that we're having them, it's the right price for the right product. And I know that sounds, it could sound a little trite, but it's looking at the value that it offers. So I love that you think maybe our prices are too low. We monitor it carefully. We monitor our consumer risk And that's not just globally, but it's also by category. So we know exactly where we want to be positioned in against the competitive set and what the value that we are offering and so we're looking at It's something we continue to monitor. We as I said, we have not seen any price resistance in those categories, which we feel really good about.

And Oliver, it's Beth. I'll take your question on AI. We are experimenting with AI in a number of different places across the business. I'll share a few highlights. Certainly there's a lot of opportunity in customer facing ways. So the way we engage with consumers through our call center, through warranty, the way we analyze consumer data, to identify opportunities, to speak to consumers differently in a more relevant way, there's a tremendous amount of opportunity in those customer facing ways that we're, experimenting with seeing really great traction scaling. And we're really excited about the momentum they're continuing. We're also seeing plenty of ways it's enabling our business behind the scenes. So the way we create products, finding moments to accelerate the workflow as we're really focused on bringing product to market with greater speed, we can use AI to help speed up aspects of the development process or the merchandising data analysis, et cetera.

So there's a lot of opportunities. in that product creation ecosystem. And then of course, operational efficiency, the way we, you know, at our daily weekly reporting, the way we look at our daily weekly decision-making across the business, using AI to kind of speed up those, those and allow our team to spend more time on the SOA and actions and less time on the brute force analysis. So we're seeing great AI action across multiple parts of our business and really building it into the muscle we have as a business. And we're excited to see how that continues to drive impact in the orders and here's to come.

Thanks a lot. Best regards. Thanks, Albert.

Your next question comes from the line of Ike Borachow from Wells Fargo. Please go ahead.

Hey, morning everyone. Neil, I think this question is for you. It's on the expense line. So first quarter expenses in dollars seem kind of flattish. It's a big step down in growth from last year, showed scale. It's great to see. Implied margin in 2Q based on the 1H comment seems to to imply margins are going to deliver a few hundred basis points year over year. I know there's seasonality and everything, but I guess the main question is, what spending levers are being pulled harder in the second quarter versus the first quarter? And then can you help frame the 2H profit plan and how your planning flow through in margin in the back half of the year?.

as well that kind of ties to your full year plan please sure thing yes so um I'll start with just sort of a reiteration of where we're trying to get to. We fully expect to deliver margin expansion this year. As we said in the guide, 11 to 12% is the range that we're looking at. So first quarter started off nice. That's the job to do for us in the first quarter. It's in a year where we intend to deliver margin expansion, getting gross margin, and getting gross margin expansion, getting operating leverage out of the channels through the corporate costs, that's the job. So checkmark there for the way we started.

Your read on the second quarter, as we said, it is reasonably accurate. We've got probably three areas where we're going to pull some expense, so for sure marketing step up will happen. And you know, we're just starting to scale into peak, and so that's exactly the right time for us to start to lean into that, people that we can to address either traffic or draft some of the desirability and awareness metrics up. But we've got a great plan there for the second quarter on marketing, and obviously that will continue over the balance of the year. We expect to spend more dollars in that in the marketing line over the year. perhaps harvest a little bit of leverage there. Other second quarter sort of one-timers, you heard us talk a little bit about logistics network upgrade in the second quarter. That was a little more muted in the first quarter.

The activities is ramping up here. And so there's a little bit more spend there as a reminder that is expected to deliver some meaningful cost savings. One's up and running, probably not. the full year of fiscal 27, but overtime and there's some meaningful investment in. in our e-commerce business, which in the e-commerce platform, which, you know, with there's some more spending to go here in the second quarter. So those are, those are the key areas of investment as it relates to sort of normal running costs on things like, things like corporate headcount and other forms of investment. We're keeping the lid pretty tight on those things, which we expect to give us some leverage over the balance of the year. And so our view is unchanged of where we want to get to, and we think we're started well along that path.

Thank you, Neil. Your next question comes from the line of Michael Bonetti from Evercore.

Hey guys, thanks for taking our question here. Maybe would you mind unpacking a little bit your comments on the industry trends in Europe? I think, you know, how much do you think logistics changes there are causing some impact, maybe some self-inflicted versus comments you made on tough operating environment. And I thought it was also interesting, your comment that you're not seeing store traffic pressure in EMEA? So I'm assuming the pressure is on conversion there. And again, do you think that's self-inflicted around logistics upgrade that can improve in second half? Or is it consumer coming in, you've got inventory in store, they're just converting at a lower rate for something macro related or different than you're seeing in other markets?.

Michael, this is Beth. I'll take that one and I'll just clarify a few things in case we didn't share it clearly. So we are definitely seeing traffic pressure in EMEA. That is the primary driver of the negative comps. Okay. We believe as we look at the peer data we have that what we're seeing is more or less in line with others. We are also seeing more pressure on conversion in EMEA than we are in other markets. So your conversion generally is a bright spot for the business but I think the macro pressure we're seeing in EMEA particularly in in markets like the UK, we are just seeing it more in our stores. A lot of consumer interest in the product, a lot of excitement, but just getting them to convert to that we're seeing more pressure there than we are are in other markets so there is it we are seeing the effect of the.

The kind of macro pressure whether it be from oil prices you know. et cetera, that we are seeing that manifest. We do not believe that there is any disruption from the EMEA network. That's the nature of the way that transition is happening and actually had very minimal impact in the quarter. Most of the quarter we were operating under our old logistics facility and so we are not saying that we are obviously monitoring very closely what that looks like in Q2 because as we as we um share a tremendous amount of wholesale volume in Q2, et cetera. We need to stay very, very close to that. You're right to raise that transitions like this can always create operational complexity, but no impact to speak up in the quarter. So we're pretty confident that this is more just related to the kind of the way the consumer is engaging due to macro factors.

And then we're focused on things that are within our control, executing incredibly strong at the store and the way Kerry described before, continuing to market to European consumers, to engage clienteling, to operate as well as we can, albeit in a challenging macro environment.

Okay. And then you said in the, you know, you mentioned a couple of times that the, the pressure in the US is with traffic. And you, if you look at that, think about how to put the marketing plan to work to make some improvements there. Is that a customer dropping out of the channel? Is it slower new customer acquisition or is it maybe slower frequency from recurring customers? What are you seeing in the demo work that helps inform you on how to attack the marketing to improve that?.

Yes, that's a great question. So we don't see it as a customer issue. Really, when you look at the industry trends, it's, you know, customer traffic is down everywhere. In certain markets, we're maybe more impacted, and maybe the choices that we made deliberately had a slight amplification of that. So nothing that we're concerned about. It's our choice to how we allocate the marketing dollars in the funnel. We chose to stick to our strategy of driving spending in the upper funnel to drive that brand heat, brand awareness, making sure that we're acquiring customers as we build into our biggest season and in Q2 and Q3. So those are choices that we have made, We saw good results in terms of efficiency and effectiveness of those choices.

But as we move towards Q2 and Q3, we'll be looking at what other choices can we make in terms of where we spend in the funnel. Still want to maintain that discipline and every dollar returning for us well. to drive that customer acquisition, but how do we drive some more of that traffic into our stores? If it was if we weren't seeing the great results that we're seeing in Ecom, we would have a different story, but the customer acquisition is strong. The conversion is strong. engagement is strong across the channel. So a little lighter store traffic in a few markets doesn't concern us.

Okay. Thanks a lot for the help. Appreciate that. Michael.

Your next question comes from the line of Adrian Yee from Barclays. Please go ahead.

Hi, this is Angus Kelleher on for Adrian Yee. Congrats on the solid wholesale quarter. You noted a greater mix of down-filled outerwear, so I kind of wanted to ask a longer-term question about product mix and wholesale's role in de-seasonalizing the business. How are your partners embracing new categories like rain, wind, and apparel, and how do you expect that mix to evolve over the next few years? Thank you.

Yes, thanks for your question. Wholesale is really important to our business and historically has always been important to us and over the last few years it reset a little bit. We're really happy to see it grow again and be a leading indicator of the strength of our brand. Our wholesale partners, they're adopting a full range of our products. And it's really demonstrating how our consumers are leading into our new diverse product offering, which is a much higher percentage of customers. non-for product much higher percentage of lifestyle apparel and of um of all the way down. So we think we see wholesale growing and continuing to grow. And it's.

It's additive to our business. I can just jump in. So we just were in market for spring next year. And so again, the response to the growing, we had good response this year, but they've seen what we're going to bring to market next year. And the response has been very strong. Customers are loving the, whether it's the color palette, the actual style, the innovation that we're bringing to the table, they're really on board. and that results not only in bigger order books but just changing the way we show up in their store so that's what we like to see the right adjacencies the right marketing support they're really on that journey with us so it's been a it's been a really healthy response.

Excellent. Thank you. And just to follow up, you opened four stores in Q1 and are investing behind additional openings, though comparable store traffic remains a bit pressured. I guess, how are new store productivity and returns tracking? And has the current environment changed your appetite for further expansion in the out years?.

I think for sure the answer to the second question is absolutely not. We know there's a lot of white space for the brand in a number of the markets that we operate in today and in places where we're probably less penetrated. we keep a pretty tight view of capital allocation and evaluate store performance, both against our own high benchmarks, as well as the rest of the industry. little bit of short-term, our view short-term traffic pressure does not give us any pause for what we view to be a significant opportunity to drive growth and profitability over the long term.

Great. Thank you. Thank you. At this time, there are no further questions. I will now turn the call back to Ana Rahman, Vice President of Investor Relations, for closing remarks.

Yes, thanks everybody for your questions and as always feel free to follow up directly with us should you have further questions. Thanks so much.

This concludes today's call. Thank you all for attending. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Hello, everyone. Thank you for joining us, and welcome to the Canada Goose Q4 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Ana Raman.

Good morning, everyone, and thank you for joining us today on the Canada Goose Q4 Fiscal 2026 Earnings Call. Today, you'll hear from Dani Reiss, our Chairman and CEO; Neil Bowden, Chief Financial Officer; Carrie Baker, President of Brand and Commercial; and Beth Clymer, President and Chief Operating Officer. We'll start with prepared remarks from Dani and Neil and then open up the call for questions.

Today's presentation will contain forward-looking statements that are based on assumptions and therefore, subject to risks and uncertainties that could cause actual results to differ materially from those projected. We undertake no obligation to update these statements, except as required by law. Further information regarding these assumptions, risks and uncertainties is included in our press release issued earlier today and available on the Investor Relations section of our website.

We report in Canadian dollars, so the amounts discussed today are in Canadian dollars unless otherwise indicated. Please note the financial results described on today's call will compare fourth quarter and fiscal 2026 results ended March 29, 2026, with the same period ended March 30, 2025, and stated revenue percent changes are in constant currency, unless otherwise noted.

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 Dani.

Good morning, and thank you for joining us. Fiscal 2026 was the year of focused execution across our key priorities in product, brand and channel execution. We made deliberate investments to strengthen the foundation of the business and the results are encouraging. Revenue grew 12% for the year and 18% in the fourth quarter. Direct-to-consumer comparable sales rose 8% for the year and 10% in Q4, our fifth straight quarter of positive comp growth, driven by stronger conversion and broader customer engagement. And wholesale returned to growth, up 9% for the year with a strong finish in Q4 as demand and sell-through improved.

Just as important, our evolved marketing strategy drove accelerating brand momentum through the year. By extending our core strengths of performance and craftsmanship, we're expanding how and when people wear the brand. In fiscal '26, we expanded our customer base through both new acquisition and stronger reengagement, broadening relevance, increasing purchase frequency and deepening connection and desire with our customers. We backed that momentum with the right investments and the right execution, which translated into meaningful progress across each of our operating imperatives in the fourth quarter.

First, we expanded our product offering to enhance year-round relevance. In the fourth quarter, our expanded assortment continued to resonate with customers across seasons and occasions. Demand was supported by a balanced mix of heritage outerwear, lighter weight styles and new design expressions that broadened how and when customers wear the brand.

We launched our Spring/Summer 2026 collection, our largest assortment to date for the season and brought it to market earlier than in prior years, increasing visibility into our versatile offer. This strengthened our presence through the shoulder season and supported more consistent engagement beyond peak winter. And customers are responding. Apparel led growth in Q4 and for the year, while down-filled outerwear, remained the majority of our revenue and meaningful contributor to growth. That dynamic is exactly what we've been building towards.

Second, we continue to build brand heat through focused marketing investments that supported revenue growth and improved brand health. We saw gains in desire and momentum with stronger performance versus key competitive benchmarks in several core markets. That brand momentum was clearly reflected in our fourth quarter performance. Marketing drove higher traffic and conversion across DTC around key product launches, supporting full price sell-through and reinforcing our luxury positioning of the brand. At the same time, we became more efficient using better data and measurement to focus spend on what's working and where it can build the brand over the long term.

Third, we drove business expansion through strategic channel development. Our approach remains consistent, elevate the DTC consumer experience while nurturing strategic wholesale partnerships that extend our reach, support the brand and preserve the right level of control.

In direct-to-consumer, in the fourth quarter, we've improved execution through stronger merchandising, healthier inventory and better conversion while also tightening how we run the retail business. We are applying greater rigor to improve productivity across our network and actively reviewing the retail portfolio, so that each location meets our return expectations.

Our digital channel delivered strong growth in the fourth quarter. Enhancements to product discovery, content and personalization made it easier for customers to find what they were looking for, creating a smoother path from browsing to checkout, further supporting conversion. We continue to improve this channel and are creating a more connected online to in-store shopping experience.

In wholesale, the reset we started 3 years ago is complete, and the channel has returned to growth. This reflects better product flow, healthier inventory and stronger sell-through with encouraging reorders for our Fall/Winter 25 assortment and continued momentum into Spring 2026. Bringing Spring/Summer to market earlier only strengthened that demand, and we're pleased with how the channel is progressing.

Our fourth imperative is operating efficiently with pace and accountability. In fiscal 2026, we strengthened the organization through targeted investments in people and technology with a clear focus on speeding up productivity and decision-making. That progress supported growth and drove underlying operating leverage in the year. The work that we've done positions us to take the next step, converting our momentum into greater profitability in fiscal 2027. Our focus is to leverage our brand strength and operating foundation to drive sustainable growth, expand margins and improve returns.

Our priorities for this year are clear, and we're executing against them with increasing consistency. First, we are deepening brand desire and increasingly translating that into demand through more effective marketing. Second, we're scaling a repeatable product playbook across seasons to drive greater year-round relevance. And third, we're improving channel productivity and capital efficiency to increase conversion and customer value.

Fiscal 2026 marked a step change for Canada Goose, and I'm very pleased with how the year has played out. We delivered against our objectives and built real momentum across the business. I want to thank our teams around the world for their creativity and commitment that you've all brought to executing our strategy this year. As we look ahead to fiscal '27, we expect to deliver meaningful profit margin expansion. Canada Goose has always been a strong brand. And now at a larger scale, we're seeing that strength translate into deeper cultural relevance and commercial impact.

With the investments we've made and the progress we're delivering, we have a clear path to becoming a more profitable business.

And with that, I will turn it over to Neil.

Thanks, Dani, and good morning, everyone. The fourth quarter was a strong finish to fiscal 2026, reflecting solid top line growth and improved execution across the business. I'll walk through our results and how we're translating them into a more profitable profile as we move into fiscal '27. Revenue in the fourth quarter increased 18% year-over-year to $453 million with all channels and regions growing. Full year revenue grew 12%, reaching $1.5 billion for the first time.

Turning to channel performance. Q4 DTC revenue increased 16% year-over-year with growth across all regions. Comparable sales growth was 10%, led by strength in e-commerce and was complemented by store performance. Demand was supported by continued resonance of our Fall/Winter 25 collection and early response to our Spring/Summer 26 assortment. For the full year, DTC comparable sales growth was 8%, reflecting more consistent execution across our product, brand and channel initiatives.

Wholesale revenue increased 52% year-over-year in the fourth quarter and 9% for the full year, reflecting the continued benefit of the channel reset toward brand-aligned partners and healthier inventory positions. In the quarter, growth was led by EMEA and Asia Pacific, supported by shipments related to our Spring/Summer 26 order book and in-season demand for our Fall/Winter 25 assortment. As we look ahead, our outlook for Fall/Winter 26 wholesale order book continues to reinforce interest in newness across the assortment, which we see as a leading indicator of the improving health and momentum of the channel.

Moving to regional trends. In North America, Q4 revenue increased 11% year-over-year, supported by growth in DTC. Comparable sales declined a modest 1% as improved conversion across channels was offset by store traffic pressure, which was concentrated in a small number of high-volume, high tourism, urban locations. Underlying demand and better conversion in our e-commerce channel led to sales growth.

Asia Pacific revenue increased 23% year-over-year, driven by growth across DTC and wholesale. Comparable sales grew double digits, led by Mainland China. DTC performance reflected strong traffic, improved store and online conversion and positive response to our Lunar New Year product capsule and associated marketing campaign. Wholesale growth was primarily driven by strong travel retail demand in the region.

In EMEA, revenue increased 25%, driven by wholesale growth and continued strength in DTC. DTC comparable sales growth was in the double digits, led by e-commerce. Store performance in the quarter delivered growth with most markets up against continued softness in the U.K. amid uneven traffic trends. We did see some softening in performance towards the end of the quarter, reflecting a more cautious consumer environment as geopolitical tensions increased, particularly impacting inbound travel-related spend and discretionary demand.

Let's turn to gross profit. Fourth quarter gross profit increased 15% year-over-year, while gross margin declined 170 basis points to 69.6%. Central to our long-term strategy is expanding our year-round product relevance. In Q4, our Spring/Summer 26 collection was delivered to our channels much earlier than last year, which supported overall growth. Channel mix with a higher proportion of wholesale revenue and higher freight and duty costs given our regional sales mix were further pressure points on gross margin.

For the full year, gross margin was relatively flat despite limited pricing benefit, higher freight and duties and the deliberate push into product newness. We offset these pressures through ongoing value chain improvements and strong channel execution, particularly improved comp sales performance. It has been our long-standing track record to balance these headwinds and tailwinds across a number of years, and we are satisfied with the outcome of fiscal '26 with a view to opportunities moving forward.

Moving to our expense profile. Total SG&A expenses increased 14% year-over-year to $251 million in the fourth quarter, slower than the 18% growth we experienced in revenue and delivering approximately 50 basis points of operating leverage, adjusting for the impact of the earn-out expense in the prior year, which was excluded from adjusted EBIT. This reflects continued progress on cost discipline and improved efficiency as the business scaled. As part of our ongoing efforts to strengthen our store network, we recorded an $8 million impairment charge this quarter related to select underperforming locations. While this was dilutive in Q4, it reflects a more rigorous approach to assessing store performance.

From a channel perspective, DTC operating margin declined 230 basis points year-over-year, largely reflecting the impairment recorded in the fourth quarter. Excluding that charge, underlying DTC operating margin was consistent with Q4 in the prior year, reflecting stable underlying profitability alongside cost efficiency and labor productivity. Wholesale operating margins improved year-over-year, supported by healthier inventory positions and a more focused partner mix.

Corporate expenses increased 15% over the same prior year period, driven primarily by an increase in annual incentive compensation, reflecting strong performance against our targets. Excluding this impact, underlying costs remained well controlled, demonstrating discipline in discretionary spend. Marketing costs, which are included in corporate expenses, declined 8% in Q4 versus the same period last year, another source of operating leverage. Earlier and more consistent investment throughout fiscal '26 allowed brand momentum to carry into Q4, leading to strong sales performance despite lower spend year-over-year. Together, this resulted in adjusted EBIT increasing by $5 million year-over-year to $65 million in the fourth quarter, while adjusted EBIT margin declined by 120 basis points to 14.3%.

We exited the year with a strong balance sheet. Inventory of $386 million remained relatively flat year-over-year, reflecting strong demand and tighter inventory management with turns improving to 1.2x, up 20% versus last year and 33% versus 2 years ago. Our inventory position continues to get healthier, supported by better planning and a structured approach to managing product life cycle and brand appropriate ways. We are proud of our progress here and believe we can continue to improve this metric. Net debt declined to $383 million from $409 million a year ago, with the net debt leverage ratio remaining flat at 1.3x EBITDA.

Overall, we exited fiscal '26 with a robust top line performance, greater operating rigor, healthier inventory and a more efficient cost structure, strengthening the foundation of the business and positioning us to more consistently convert growth into profitability and returns. This gives us confidence in our fiscal '27 plan and our ability to grow revenue and expand margins through focused execution of the product, brand and channel priorities Dani outlined.

Let me now walk you through our outlook. For fiscal '27, we expect total revenue to grow approximately low single digits year-over-year. Growth will be driven by improved conversion, pricing actions implemented in April, and more effective execution across product, marketing and channels. We expect growth to be led by DTC across both our stores and e-commerce channels with wholesale also contributing, partially offset by lower other revenue, reflecting healthier inventory in our channels leading to fewer planned friends and family events. At the same time, we are planning for a more challenging macro environment, reflecting softer demand trends exiting fiscal '26 and into April, which we expect will continue to weigh on consumer confidence and travel.

On profitability, we expect adjusted EBIT margin to be in the range of 11% to 12% for fiscal '27, reflecting 130 to 230 basis points of margin expansion year-over-year. This improvement is expected to be driven by strong execution across multiple levers in the business with contributions from both gross margin and SG&A.

At the gross margin level, we expect improvement driven by favorable channel mix, pricing flow-through and manufacturing and operational efficiencies already embedded in our inventory position. Based on what we see today, this assumes that the tariff environment in fiscal '27 is consistent with fiscal '26.

Within SG&A, we expect to deliver operating leverage, balancing investments in our strategic channels with more efficient marketing and tight control of corporate costs. In addition, we expect to benefit from lapping nonrecurring items from fiscal '26, including the bad debt provision related to a U.S. wholesale partner and store impairment charges taken in the fourth quarter.

Our strategic channel investments in fiscal '27 include flagship openings in key markets scheduled for fiscal '28 with associated costs flowing through depreciation and amortization. We are also making upgrades to our logistics network in EMEA and e-commerce capabilities with the bulk of the investment expected to be completed in the first half of the fiscal year. Both programs have clearly defined measurable returns with expected benefit this year.

As a reminder, approximately 3/4 of our revenue has historically been generated in the second half of the fiscal year, while much of our fixed cost base is incurred more evenly throughout the year. As a result, we expect modest margin pressure in the first half, followed by expansion in the back half as revenue scales into and through our peak selling season in line with historical trends. Taken together, our fiscal '27 outlook reflects a balance of confidence and prudence. We remain focused on driving margin expansion and improving profitability despite a more complex operating environment.

In closing, we're proud of what the entire Canada Goose team accomplished in fiscal '26, both in the execution of our strategy and in laying the foundation for durable margin expansion beginning in fiscal '27. We are collectively excited about our plans for this upcoming year and look forward to updating you on our progress.

Now operator, you can open up the call for questions.

[Operator Instructions] Your first question comes from the line of Rick Patel with Raymond James.

I wanted to better understand the assumption for guidance that demand will soften in fiscal '27. Does this reflect trends that you're seeing early in the year? Or is there something about the order book that gives you a little bit less confidence? Just trying to understand if it's something currently being felt, or whether it's a conservative view given the volatile macro?

Rick, thanks for your question. It's Neil. I'll start, and then if Carrie wants to jump in on any of the demand trends, she will. So I think let's just start with, we exit Q4 with a lot of wind in our sales, obviously. Top line was very strong across channels, across regions. And so we're certainly feeling good about what the momentum is showing. And obviously, that's not just the last 3 months. There's been strong momentum really here for quite a while.

The things that are in our control as we turn the page into '27 are things like pricing, which we've implemented a pricing change now early in our fiscal year. We expect that to be a benefit. We know what our wholesale order book looks like. And as you heard, we had some strong momentum here in the fourth quarter. That also gives us a bit of confidence looking forward. We know we're going to open a handful of new stores. Again, that's a positive. And we've got lots of work left to do on DTC execution. So let's put all of the sort of positives in one box.

I think where we see some level of conservatism here is not just in the early part of the fiscal year this year or in the last few weeks of the year. It's a little bit of a broader sense that the macro environment is going to be more challenging than it was a year ago. I don't think we know how much more challenging. And so we want to give ourselves a pretty wide range of outcomes. And our focus, with respect to what the demand is, is doing the things that are within our control. And as I've outlined, there are a number of them, and we feel really good about those.

Got it. And also wanted to better understand the levers that you have around SG&A. So expectations to slow the growth this year. Can you just help us understand where you see room to pull back on the investment spending? And does this play into your expectations for softer revenue as well? Or is that just a macro point of view?

Yes. I'll take that. This is Beth, Rick. We are really proud of what we accomplished in Q4 with regards to EBIT margin expansion. We were laser-focused on delivering that expansion at both the channel and the consolidated level on both aggregate EBIT margins and SG&A. And obviously, if we exclude the store impairments, we did that, and we're really, really proud of that. That was even with some annual costs that disproportionately hit the quarter. So as we look to fiscal '27, we expect that trend to continue, for SG&A growth to remain below revenue growth, supporting that growth in operating leverage.

There's really opportunity on a number of different dimensions. Obviously, you've heard us speak about the investment in store labor this year. That investment remains incredibly important, but we can do it smarter, and we can do it in a more directed way at the store level, at the daypart level to really ensure that we're driving optimal labor productivity while still driving that great comp growth momentum.

Similarly, marketing. We made a tremendous amount of progress on kind of driving brand heat and energy this year with that marketing, a lot of top-of-funnel investment. That is going to continue. But we can do it smarter. There were some investments made last year that don't need to recur, but the momentum is still there. So we don't view that pullback of investment as something that should at all hamper our ability to drive great comp growth. It's just a matter of focusing more on the ROI and the precision of those investments to drive margin expansion.

And then lastly, obviously, we have now for 2 years in a row, delivered really solid operating leverage on our controllable overhead investments. That will continue. We were able to do that this year while simultaneously making important investments in teams like product creation that are pivotal to driving the product evolution you've seen. So we'll continue those investments in a judicious way, but continue driving the control in the rest of the cost bar to drive controllable leverage. So overall, we feel we've got a number of really strong levers available to help drive against the margin expansion goals you heard Dani and Neil speak about.

Your next question comes from the line of Oliver Chen with TD Cowen.

As we think about the guidance for revenue growth, what are your thoughts in terms of North America relative to Asia and the trends that you're seeing relative to how you're guiding, and what we should expect given that there's different footprints and different traffic and conversion considerations?

And then, Dani, as you mentioned repeatable product, would love your thoughts on that relative to all the momentum you're seeing with new and apparel and the latest in terms of the customers you're obtaining from the newer lifestyle product as well.

And third and final, on marketing, how should we think about marketing as a percentage of sales or the dollar amount or anything we should know on potential shifts or what you're anniversarying as we look ahead to next year? The demand creation is important, and I'm sure you're balancing the marketing spend relative to revenue growth.

Oliver, thanks for your questions. I'll start with the guidance question, and then we'll rotate on the other answers. So in terms of the market health and sort of what we're seeing today, both through the fourth quarter and where we exit the year, we're expecting to have growth in all markets and in all channels. And so we feel like we've got the right mix. I mean, certainly, the fourth quarter results in both Europe and Asia were stronger than they were in North America, as you heard, but we did see growth in each of those regions.

We're focused a little bit on the impact of what's going on in the Middle East, in Europe, in particular, where there's been much less inbound traffic. And that's a market where we have historically had good levels of inbound traffic and luxury purchasing from places outside of Europe. And so that's an area where store traffic remains under pressure. And we've got the ability to compensate for that with a really healthy e-commerce channel.

I think the North American traffic trends are fine. Probably like to see those a little bit healthier. And so as we enter fiscal '27, some of the caution there is really about, is the traffic in the store -- how much of the traffic in the store can we maintain? And to the extent that's pressured, can we offset that with the conversion improvements that we've seen now over the last 18 months. Asia, generally speaking, remains pretty healthy. And so I guess we'd say, as we said a few minutes ago, a lot of tools in the toolkit here to drive revenue, but we're monitoring sort of the macro environment and the health of the consumer in each of those markets and reacting accordingly.

Yes. Thanks, Neil, and thanks, Oliver. Talking about product, we've really invested a lot into our product creation, product development engine, and over the past few years, I'm really happy with where we are at the current moment. We are in a place where we are able to create beautiful and desirable products at the right margin and at the right price point for our consumers. And when we're able to do that. Our consumers have always wanted to buy best products from us. And it continues to drive our customers into our stores and online, across all seasons, all products, and all categories.

These days, our fastest-growing category is apparel, and in the category spring products and new apparel products are performing extremely well. And we're very happy about that, and we're going to continue to grow into those categories. And while at the same time, we continue to hold our strength in our core outerwear products. So overall, our product inflection is strong. It's getting better, and I'm very, very confident in the trajectory that we're on with regards to our product creation.

I'll take -- actually, I'll pick up on the product, Oliver. The newness that Dani is talking about, I think when you walk into our stores or when you go visit us online, it's a very different feel. There's energy, there's different color palettes, that is obviously a direct influence for buyer looking at -- Spring '26 was this first mainline collection that you ever saw. And so when you look at the results in Q4, that newness isn't just about great product or driving incremental sales, it's also about giving us more stories to connect our consumer with. So when you got great product, then you see the marketing, the marketing just works so much better.

And so your question around, how we think about that as a percentage of sales this year? It's going to be lower. You already saw that in Q4, and it's continued to drive momentum from a brand perspective, from a traffic perspective, from a conversion perspective. So great product. Then you have the great marketing. We've got to tell amazing new stories to people, and it's working. And so that momentum continues.

Of course, our goal, and we heard Beth talk about this, is about efficiency, right? We tried a lot of things. We had some investments last year that we don't need to repeat, whether that's reshooting our catalog. So as we test new channels, as we test new things, we want to be able to make sure that we're measuring it with different tools. There's a more rigorous focus on what that return is from that marketing activity. So even though it's a lower percentage of sales, it doesn't mean we're stepping back at all from that momentum that we've already built.

Great job on the new product. Best regards.

Thanks, Oliver.

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

I think, Neil, 2 questions for me. On the DTC outlook you guys have, can you -- what's embedded on store growth? What's your underlying comp assumption, at least on an annual basis? Could you give us a little bit more variables into what underpins that?

Yes. I think on both of those, Ike, there's, I think, both positivity embedded in the outlook, but we haven't given real precision on either comp growth. We expect that the momentum that we've had now 5 quarters sets the standard that we expect to have positive comp growth. That's the goal for us. And then on new stores, we've got a range of outcomes here. I think in the last 12 months, we were something like high single digits, and we would expect to be sort of not that far removed from that, but we're going to continue to evaluate opportunities as the year goes. So without getting too precise, that will give you a little bit of flavor for those 2 inputs.

Okay. And then just trying to make sure the Street numbers kind of align to what you're thinking as best we can. Understanding the revenue mix you kind of gave, which makes sense seasonally. Can you help us out a little bit more with the earnings? I know you said some deleverage in the first half versus leverage in the back half, but can you go beyond that? I mean if you look at the margin guide for the year, I think that's like $175 million to $185 million of EBIT. Could you maybe say how much of a loss you're expecting in the first half versus a gain in the back half? Just something to help us get the models tight again. I feel like you guys have come out the last couple of quarters and had a really good revenue and then you're off versus the Street on the bottom line. I'm just trying to help that scenario kind of come to an end.

Yes. I certainly appreciate where you're trying to go. I think our objective here is to provide clarity over the year, and we feel like we've got a really good plan over the next 12 months and obviously now 11 months. The seasonality of the business has not changed that much. We're still highly dependent on executing from sort of the September through February time frame, which mostly straddles the third and fourth quarter. As you know, that's where all of the profit comes over that period of time. And so we will run a loss for the first half of the year as we have historically and then drive towards expansion -- or drive towards profitability in the second half and ultimately, margin expansion. So without giving too much color on the kind of quarterly splits, our focus is really on how do we deliver the year.

Your next question comes from the line of Michael Binetti with Evercore ISI.

I want to just double-click on that a little bit. I'm a little confused with low single-digit revenue growth in total with pricing in place, store growth and expected same-store sales growth, and wholesale expected to be positive. It feels like there's a take that we're missing there to get to low single-digit growth. If you could just help me round out what I might be missing there?

And then would you mind just helping us think through SG&A. Last year -- I can hear the focus on this call, but last year, I think we started guiding it to single-digit growth that actualized at 19%. Can you just help us break down -- I know you mentioned 2 onetime items, the bad debt and the impairment. How that evolved through the year, excluding those items and where the composition of the SG&A growth through the year and where the delta was, please? We didn't have the revenue guidance last year to go on. So it's very hard to tell how much of that SG&A moved higher on variable costs tied to sales that might have been ahead of your plan versus -- since we didn't have a sales guide last year.

Sure. So I'll help with the math on the first part of the question, Michael, and then Beth can pick up some of the SG&A profiling over the last 12 months. So I think there's an element that we've not yet talked about, which is we are not expecting to -- we're expecting to have lower sales in the other channel than we did a year ago. And so that will certainly result in some reduction of revenue in that area, which will reduce the benefits that we were talking about in the other areas. I think we're also -- as we're saying here, like we have a degree of uncertainty. And so while our plans are to drive against all of those positives, wholesale order book growth, same-store sales, pricing, et cetera, we know that for sure, we're going to be facing into -- or we are facing into a tougher environment, and we want to make sure that we respect what that might bring. And obviously, if that assumption isn't correct, then we'll update as we go.

And Michael, on your question on the SG&A profile and margin profile in the full year, if you step back, there's really 3 categories: driving core structural margin expansion. Second, making intentional investments to really cement that comp growth flywheel. And then third, some one-timers. So maybe I'll go kind of in reverse order. The one-timers, as you talked about, were really twofold. The wholesale bad debt expense that we took in Q3 and the impairment in Q4, those were $16 million and $8 million, respectively. So about 150 basis points of margin pressure from those 2 one-timers. Those are nonrecurring. We will get the tailwind from those back in the back half of next year, pretty straightforward.

The intentional investments were really focused on 3 things: marketing, store labor, and product creation. Those show up in different places, some on the channel P&L, some on consolidated P&L. But we planned to make at the beginning of the year, while we didn't guide, we obviously communicated the intention to invest in those. That was critically important to really get the conversion engine in the store that we had seen excellent green shoots on in the back half of the prior year to get that really consistently executing day in, day out. We've got that going now. So next year, we can shift the store labor focus to be a bit more about productivity. Still keep that conversion engine going, still use it to drive comp growth, all that, but can do it a bit more efficiently.

Similarly, marketing, we've obviously touched on already, but same idea, critical investments really help fuel brand heat, really help tell the product story, the brand story. The same will continue next year, just in a slightly more efficient way. And then the product creation investments, those have already started to kind of stabilize and get some leverage as the product flywheel that you heard Dani described has taken root, and you see that show up in the pricing power we believe we have this year, for example, that we can fund some of those investments through the gross margin expansion. So those were intentional investments. They continue to remain important areas of spending for us, but will just be much more efficient next year, and we believe can be more efficient without a corresponding kind of decline in the top line.

And then when you back all that out, which we appreciate we haven't given you exactly quantification to back all that out, there is core fundamental structural margin expansion happening underneath there. And that's what excites us about the margin potential for fiscal '27 and beyond is continuing the structural margin expansion, get greater efficiency out of those intentional investments, get rid of those one-timers that added some noise and some pressure, and all that can add together to a nice margin expansion profile for next year and hopefully for many years beyond.

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

Great. Just to follow up a little bit on those thoughts. The companies continue to focus on retail productivity. Can you just talk a little bit about what you plan on doing this year to drive further productivity? I mean, how you feel like the store teams performed this year relative to what you expected? A little detail there would be super helpful. And any sort of financial implication of that?

Yes. Thanks for the question, Jay. It's Carrie. So we're very proud, as we've talked about before, of what the teams in store has been able to do in terms of conversion. And again, it's a lot of things working, right? Great product, making sure it's in the right places at the right times. So there's a lot of focus from shoppers on buy now, wear now. So us being able to pull up Spring in Q4, having a dedicated Lunar New Year capsule in APAC that worked really well. So there's lots of reasons for people to be shopping and ability for our teams to convert.

The focus on conversion is not going to change, right? So we saw the results of that in Q4. We saw it all year, driving that comp. What Beth just talked about is that labor agility, getting that dialed perfectly -- perfect is maybe a lofty goal, but we're going to try as hard as we can to make sure that we're meeting the traffic -- meeting the labor when the traffic is there. And just being more flexible. I think one of the things that we have learned over the last year is the flexibility, how do we build that into the system? How do we look ahead a little bit more rigorously? How do we plan scenarios a little more in advance, so that we can switch that dial as we need to.

So the other part of that is more training. We invested a ton in our -- from our retail team in terms of product training, experience training. Again, for us, when you walk into a store, we don't want people to just feel like it's a transactional business, it's an experiential brand. We want people to feel that Canadian warmth, that distinctly Canada Goose offering. And so of course, we want to drive revenue, but we also want it to be an amazing experience, so that people come back again and again. And that is what we're seeing, right? We talked about the investment in marketing driving not only new customers, but repeat customers. So all of those things working together, we have to continue doing that with just a greater focus on efficiency and productivity.

I think from a financial perspective, the connection is pretty tight. I mean, at the top line, you can see, over the year, high single digits of comp store growth or rather DTC comp growth. And that's translated directly into the productivity per square foot. We've always said $4,000 a square foot is kind of where we need to be. We're over that hurdle this year after a few years sort of trending a little bit below that. And so that translation is obviously meaningful. We've spent time over the last 12 months talking about how we balance the labor investment against the conversion outcomes. Carrie just touched on it, an area where we're going to continue to monitor the dials, but we know that the connection between those 2 is tight, and having that conversion lift, which leads to the productivity and comp sales has been a really powerful unlock for us over here over the last several months.

Your next question comes from the line of Jonathan Komp with Baird.

This is Alex Conway on for John. I just first wanted to follow up on something you said, Carrie, about not needing to repeat some of the marketing investments you made last year this year. I'm just curious like when you look at what worked and what didn't over the past year, what do you kind of find and what investments are you kind of carrying forward into this year? And what are the ones that you don't really need to repeat?

Yes, great question. I think it's more fundamental. When we have a new look and feel, you're going to reshoot the way we look online. And so it's just making sure that what we're showing represents the brand and the evolution and the elevation of our brand. So that -- we saw a lot of our iconic catalog in a different way. And so that's something that doesn't need to be repeated. What does need to be repeated, and we talked about, is our strategy hasn't changed. So we are still investing in upper funnel, right? We have a brand. Investing in that brand, making sure it reaches the right people, at the right time in any number of channels, and we tested a lot and just tested in different ways. That needs to repeat, and we will continue to do that.

The focus, as I said before, is just about making sure we're measuring it in different ways, making sure we're seeing that ROAS. We already are starting to see that. We just need to make sure that every dollar we spend has a really strong ROI, whether that's in brand heat, building desires, taking market share and/or converting, ideally both. So not a massive change in strategy. I don't want you to walk away thinking we're doing something differently. It's just more rigorous focus on the delivery of where we spend.

Great. And then I don't think you provided a store opening guidance, but just any color there on amount, timing, like where you're looking across regions the most?

Yes. Thanks, Alex. No, we've not provided any precision around how many stores we plan to open, when or where, aside from -- we think that balancing comps against, as we've said a lot, the comp performance against where the store investments are and how many of them we can accommodate is kind of a critical balance. We're going to continue to use that as a guiding principle for store investments. We will open stores this year, and we expect that they will be positive contributors certainly to our top line, but we'll just have to update you as we go on when and where.

[Operator Instructions] Your next question comes from the line of Angus Kelleher with Barclays.

This is Angus Kelleher on for Adrienne. On the earlier wholesale shipments, can you help quantify how much of the full year guide is impacted by timing-related pull forward? And then how much of the Spring/Summer pull forward was better underlying demand, particularly in non-down and apparel categories. And then I have a follow-up.

Sure. Yes, thanks for the question, Angus. It's a good point to clarify. So we would not consider any of this to be a pull forward. This was very much by design. We have product ready for spring now earlier and that shipped earlier. The size of that order book is larger than it was a year ago, reflecting, as Dani talked a lot about the newness, the relative acceptance by our wholesale customers of product, the excitement that comes with that, them wanting to have Canada Goose in their stores in greater depth at more times of the year. And so we do not anticipate that the fiscal '27 guide is impacted whatsoever by that. We know how much of the order book was expected to be delivered in Q4 and how much was delivered and what we expect to see in our first quarter and through the balance of spring, just to be really clear about that.

On the product category, so really, I mean, wholesale in general -- I'll just give you a little more color on the product categories. And it's really, they're responding in the same way that consumers are responding to the expansion, right? The relevance of a buy now, wear now consumer expanding -- while not diluting our core, but expanding into more seasonal opportunities for people to put us in their closet or wear us in a different season is really working. So wholesale partners have seen that change as well. We're getting some very strong feedback from them on apparel, whether it's lighter weight categories of outerwear, whether it's everyday, whether it's T-shirts and fleece, there really is strong demand. In addition, not just from a category perspective, but again, this whole evolution of brighter colors, more energy, more enthusiasm, they're seeing that elevation come through and the demand for that product is great. So we're very happy with how that order book is shaping up. It's in line with where we're growing as a business.

Great. And then just on input costs. Can you provide more color on what input costs are changing, including any freight surcharges you're seeing currently and what you have embedded in the fiscal '27 cost structure regarding increases in freight and broader input costs? And also just to say thank you for providing guidance.

You're welcome. On input costs, obviously, there is a lot of uncertainty right now on how ongoing geopolitical conflicts will impact really 2 things: freight charges and freight availability as well as raw materials and input costs. We have petroleum exposure in some of our fabrics, for example. So we are continually monitoring that with our supply base and have incorporated an assumption of some pressure on that into the guide. But that said, we have a tremendous amount of execution opportunity across all of the cost elements that hit COGS. We are driving significant manufacturing productivity improvement year-over-year, significant sourcing improvements.

The investments we've been making in product creation include investments in kind of how we manufacture and how we source, and we believe there is productivity that can be driven in those that hopefully, we can use to help offset any structural kind of macro pressure on some of those input costs. Some of those, we have a lot of confidence in, because we're already seeing them show up in our cash product creation costs, but they're just not yet hitting the P&L due to the nature of how we capitalize inventory. But lots of execution levers we can and are pulling, but albeit in an uncertain macro environment with regards to input costs and freight.

There are no further questions at this time. I will now turn the call back to Ana Raman, VP of Investor Relations, for closing remarks.

Well, thanks, everyone, for joining the call and for all your questions. We look forward to connecting with you in the coming weeks.

This concludes today's call. Thank you for attending. You may now disconnect.

Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to the Canada Goose Third Quarter Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Ana Raman, Vice President, Investor Relations. Ana, you may begin.

Good morning, everyone, and thank you for joining us today on the Canada Goose Q3 Fiscal 2026 Earnings Call. Today, you'll hear from Dani Reiss, our Chairman and CEO; Neil Bowden, Chief Financial Officer; Carrie Baker, President of Brand and Commercial; and Beth Clymer, President, Chief Operating Officer. We'll start with prepared remarks from Dani and Neil and then open up the call for questions.

Today's presentation will contain forward-looking statements that are based on assumptions and therefore, subject to risks and uncertainties that could cause actual results to differ materially from those projected. We undertake no obligation to update these statements, except as required by law. You can read about these assumptions, risks and uncertainties in our press release issued this morning and our filings with U.S. and Canadian regulators. These documents are also available on the Investor Relations section of our website.

We report in Canadian dollars, so the amounts discussed today are in Canadian dollars unless otherwise indicated. Please note, the financial results described on today's call will compare third quarter results ended December 28, 2025, with the same period ended December 29, 2024, and stated percent changes are in constant currency, unless otherwise noted.

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 Dani.

Thanks, Ana, and good morning. At the start of fiscal 2026, we made a deliberate decision to invest ahead of demand. We did that to unlock long-term potential by expanding product relevance, strengthening brand equity and building the channel and geographic foundations we need for long-term growth. Those choices contributed meaningfully to our top line in Q3, which you can see clearly in our DTC business, where we delivered our fourth consecutive quarter of positive comparable sales growth. This is tangible proof that these strategic investments are fueling sustainable top line growth.

We delivered strong revenue growth across channels and regions in our most impactful quarter, reflecting the momentum building behind the brand and the high level of execution across the whole company. These results also reinforce the consistency of the levers we are activating through our intentional investments driving traffic and conversion and evolving product mix.

While we are pleased with the top line performance and our brand momentum, our adjusted EBIT margin contracted meaningfully. Neil will walk you through the drivers behind the margin movement and actions underway to rebuild profitability. We have made real progress in reducing corporate overhead in recent years, but Q3 showed that we have more work to do. I am committed to returning Canada Goose to margin expansion, and I'm confident in our ability to do so in fiscal '27. To be clear, delivering strong and sustainable profitability is my top priority for our organization.

The best indicator of our long-term trajectory is our progress against the 4 operating imperatives we set out at the start of the year, and here's where we stand. First, expanding our product to enhance year-round relevance. In Q3, our expanded year-round assortment continued to resonate with consumers. Lighter-weight styles drove growth while down-filled outerwear remains a clear market leader in warmth, posting solid gains.

Styles featuring newer fabrics like EnduraLuxe and Wool did exactly what we intended, elevating design, performance and consumer response. Newness, both in the form of new styles like our bomber jackets and new fabrics and colorways in core silhouettes performed strongly. Revenue from newness doubled year-over-year, driving high unit sales velocity across lighter weight styles, including our apparel assortment and Snow Goose collection designed by Haider Ackermann. Snow Goose also serves as a halo for the main collection and led to brand equity enhancement across the line.

This broader offering contributed to a lift in both store traffic and conversion. Consumers aren't just responding to new styles and fabrications, they're responding to the elevated design direction we brought to the line this year. That's central to our long-term goal of growth in all seasons, building lasting relationships with customers and leveraging the brand's economic strength. We're very encouraged by this momentum and are progressing well with our Spring/Summer '26 collection and upcoming campaigns, which will now start to feature greater design oversight from [ here ].

Second, building brand heat through focused marketing investments. In Q3, our marketing investments delivered a clear commercial impact. We increased visibility and cultural relevance through global campaigns and high-value activations over 3 key marketing moments, the launch of our fall/winter '25 and Snow Goose collections and our holiday season campaign. This integrated approach drove higher quality traffic across retail and digital channels globally and supported the top line performance we delivered.

Brand desire, brand momentum and social media velocity all moved in the right direction, supported by the intentional shift we made towards upper funnel investment this year. Brand desire exceeded our competitive benchmark in our key focus markets, especially Mainland China, with both paid and nonpaid reach as well as [indiscernible], outperforming targets. At the same time, lower funnel efficiency strengthened significantly. Despite a planned reduction in lower funnel spend, we saw a year-over-year increase in repeat customers and delivered higher return on ad spend, reinforcing brand heat and conversion.

Together, this shows that our marketing strategy is working as designed, building brand heat for the long term while maintaining disciplined efficiency in the lower funnel. We intend to continue our planned brand investments through the remainder of this fiscal year and build on our success to date, starting with our second winter Snow Goose [ drop ], which launched in mid-January. As we do, we're sharpening marketing efficiency and measurement. We're tightening our media mix for more scalable impact, improving targeting and increasing alignment of our measurement architecture across the entire organization in order to achieve greater capital allocation discipline.

Third, driving business expansion through strategic channel development. I'll first address our direct-to-consumer channel. Direct-to-consumer revenue grew 13% in the third quarter with comparable sales up 6% over last year. North America and Asia Pacific delivered double-digit growth. In Mainland China, our teams drove high conversion through the quarter, proof of both brand strength and strong retail execution.

In Europe, we elevated key flagships, including the strategic relocation of our Milan store in the quarter, which has stronger adjacencies and with that is seeing higher traffic quality. We continue to refine our retail network across other key regions in the third quarter, opening 2 stores in China and a new store in Chicago.

Operationally, the teams delivered outstanding service and stronger visual merchandising. Our inventory was well positioned across channels, and we responded quickly to the demand signals we saw through the fall, adjusting buys and production to meet that strength. While we had pockets of sold-out styles, that scarcity is part of what has always made our brand powerful. This has been a meaningful step forward in how we manage inventory with more disciplined planning and faster response across the business.

Online improvements in discovery, navigation, speed and storytelling all contributed to stronger engagement and lower return rates across most regions. In our Wholesale channel, revenue grew 14% in the third quarter, largely due to shipments shifting from Q2 to Q3 and incremental in-season demand. We also saw improved sell-through of our fall/winter collection, supporting positive sales trends in the quarter.

Our disciplined approach remains consistent, brand aligned partners, clean channel inventory and product newness, all contributing to healthy order books for both spring and fall '26 that reflect stronger demand for our year-round assortment. Wholesale continues to play a strategic role in brand elevation and control distribution, and we are pleased with our progress here in fiscal 2026.

And fourth, operating efficiently with pace and accountability. In fiscal '26, we deliberately chose to invest in revenue-driving areas. These choices strengthen demand, but we did not strike the balance right with margin, and that showed up as cost inflation across parts of the business. Q3 made that clear. SG&A grew ahead of revenue and labor costs ran above productivity. We now sharpen our focus on leverage. Importantly, we've driven a second consecutive year of leverage in corporate overhead costs, reversing what had previously been a source of margin decline. This improvement reflects both tighter cost discipline and strong revenue growth, and it gives us a solid foundation to build from. We're also embedding greater operating discipline across the company and continue to evolve our leadership team to ensure we are fit for purpose.

In closing, the third quarter demonstrated the strength of our brand and progress of our strategy. We remain focused on executing with precision, improving profitability and driving sustainable long-term growth. Thank you to our teams for everything you put into this peak season. Your passion, resilience and commitment move this company forward every single day. I'll pass it to Neil to provide our third quarter financial update.

Thanks, Dani, and good morning. First, I'll cover the details of our third quarter performance and then outline the concrete actions underway to deliver operating margin expansion over the long term.

Revenue for the third quarter increased 13% year-over-year to $695 million, led by strong growth in both DTC and Wholesale in North America and Asia Pacific. Turning to channel performance. DTC revenue increased 13%, supported by double-digit growth in North America and Asia Pacific. Comparable sales grew 6%, marking the fourth consecutive quarter of positive comps with contributions from both stores and e-commerce channels. Sales were strong across all major product categories.

Wholesale revenue increased 14% in Q3, with revenue up 3% on a year-to-date basis over the same period last year, ahead of our expectations, supported by elevated brand positioning with our partners, well-managed inventory levels and healthier demand for our year-round assortment. Revenue in our other channel was $15 million, roughly flat versus $14 million a year ago.

Moving to regional trends. In North America, revenue grew 20%. Comparable sales increased in the high single digits, supported by strong traffic in both Canada and the U.S. and conversion improvement. Retail execution was sharper this quarter, underpinned by staffing investments and improved inventory positioning. E-commerce also contributed to positive DTC performance, benefiting from solid traffic trends throughout the quarter. Wholesale benefited from shipment timing and incremental orders and other channel performance was also positive, albeit minimal in the quarter.

In APAC, revenue increased 12%, led by strong DTC performance and high single-digit comp growth driven by exceptional volume. Mainland China was the largest contributor with robust consumer demand, strong e-commerce momentum on Douyin and Tmall and conversion gains in several key stores.

In EMEA, revenue declined 3% year-over-year, reflecting continued softness in the U.K. consumer environment. Continental Europe performed comparatively better as our newly relocated Paris and Milan stores ramp up their activity. Comparable sales decreased mainly due to lower tourist traffic, most pronounced in the U.K. despite healthier trends in several European locations. Wholesale was softer due to planned shipment phasing that pushed more deliveries into different periods versus last year. Our focus in EMEA remains on improving conversion, tightening digital execution and sharpening marketing effectiveness to mitigate ongoing macro headwinds.

Moving down the income statement, let's turn to gross profit. In Q3, gross profit grew in line with revenue and gross margin declined 40 basis points year-over-year. The primary driver was product mix. While customer demand for down-filled outerwear was strong this quarter, non-down-filled outerwear grew faster, putting pressure on overall margin. This is consistent with our strategy to expand year-round assortment. This was partially offset by a favorable channel mix with another quarter of positive DTC comp growth. While this product mix shift weighed on DTC channel margin, it supported margin in our Wholesale business as we build demand for our expanded offering with wholesale partners.

Moving to SG&A. SG&A increased by $66 million to $314 million or 45% of revenue, up 450 basis points year-over-year. Two discrete items accounted for $24 million of this increase. First, a $15 million onetime bad debt provision related to a U.S. wholesale partner and a $9 million foreign exchange gain in fiscal '25 that does not recur this year.

Planned marketing investments represented a further $13 million of the increase year-over-year. Outside of these items, we continue to generate leverage in our corporate cost base through disciplined headcount management and tight control over discretionary spending. Operating margin compression in our DTC channel came from both gross margin decline and SG&A investments to fuel growth. Our Wholesale channel operating margin increased year-over-year, excluding the bad debt provision.

In DTC, we absorbed the planned run rate impact of new stores and relocations coming online, but the larger issue was store labor productivity during the quarter. In months of exceptionally strong traffic and revenue, we maintained labor levels that were higher than required to support demand, and this dynamic drove SG&A deleverage in DTC. Taken together, the gross margin dynamics and SG&A profile flowed through impacting our adjusted EBIT.

Q3 adjusted EBIT was $204 million. This translated to an adjusted EBIT margin of 29.3%, 450 basis points lower than the previous year for the reasons I've covered. Adjusted EBIT excluded $3.5 million in earn-out costs related to the acquisition of our European manufacturer. This is the last quarter in which we'll have the earn-out related charges. Adjusted net income attributable to shareholders was $142 million or $1.43 per diluted share compared to $148 million or $1.51 per diluted share last year.

We ended the quarter with a strong balance sheet. Inventory of $409 million remained relatively flat year-over-year despite strong sales growth, reflecting strong demand and tighter inventory management with turns improving to 1.1x, up 16% from last year. Net debt fell to $413 million from $546 million in Q3 last year, mainly due to disciplined working capital management, cash generated from operating activities in recent quarters and lower borrowings from our credit facilities compared to the prior year. We allocated more capital to new store builds in Q3, reflected in higher expenditures in the quarter over last year.

As we look ahead, we're taking decisive steps to realign our cost base with the level of rigor our growth now demands. We've defined a clear set of actions already underway, and we expect these initiatives to support meaningful margin expansion in fiscal '27. Our first group of actions is about operating more efficiently. We've already started to make changes in the way we manage store labor, tightening our models to become more agile and drive higher labor productivity. These changes were implemented in Asia Pacific in mid-December and rolled out across the rest of the regions in January. While the financial impact will be immaterial in fiscal '26, ensuring that store payroll aligns with expected conversion outcomes is the clear path forward to creating leverage in the DTC channel.

Next, we're improving marketing efficiency with the intent to reduce marketing as a percentage of revenue in fiscal '27. We will continue to invest to drive in-quarter demand and sustain brand momentum and expect to apply this year's learnings on channel mix, funnel allocation and working dollar effectiveness to our fiscal '27 plans. We are fully committed to delivering on our operating imperative and a key part of that is driving more efficiency and getting greater returns from every dollar we invest in marketing.

Spending in the fourth quarter is expected to be lower than last year as a percentage of revenue, reflecting a more balanced cadence throughout this fiscal year versus the back half heavy investment last year. We will also continue our disciplined focus on minimal corporate expense growth, including headcount and discretionary spend.

Our second area of focus is the optimization of our retail network. We continue to evaluate our store footprint to ensure every location supports our target brand and margin profile. Even with 4 consecutive quarters of positive comp growth, we see opportunities to further strengthen the economics of our retail network. To be clear, we will open new stores in fiscal ' 27 and the plans related to those locations are coming into focus. However, over the balance of this fiscal year, we are reviewing our entire network and expect to implement optimization initiatives in fiscal '27.

Our third set of actions is centered around gross margin. This has had a modest positive contribution to EBIT margin so far this year even with limited price increases. Being vertically integrated is a core strength of the Canada Goose brand, offering several levers to expand gross margin over time, which has been evidenced in our historical performance going back many years. While there are always opportunities with sourcing and operational improvements, we have delivered cost efficiencies despite a changing product mix, which, as we have heard, has been key to our growth this year and will continue to anchor our product pillar.

Finally, on pricing, we are planning to implement price changes across our markets and product assortment in early fiscal '27 as usual, which we expect will be a source of gross margin leverage.

Lastly, our plan is to continue to deliver durable broad-based revenue growth as the primary driver of margin expansion. January performance remains strong, and we expect this momentum to continue with Lunar New Year shopping occurring later in the quarter versus last year. As we move into Q4 and beyond, our priorities are clear: balance the strong revenue growth we have seen in fiscal '26 with a level of investment that delivers operating margin expansion beginning in fiscal '27.

Before closing, I want to say thank you to our teams. Our peak season, of which Q3 is the most important period is our most anticipated time of the year. The work you delivered in our stores, our factories and across our business shows up clearly in these results. Let's now open the call for questions.

[Operator Instructions]

Your first question comes from the line of Oliver Chen with TD Cowen.

As we look at your DTC progress, what was the complexion like for traffic relative to conversion and any callouts? Also on all the progress you're making on non-parka as well, I would love your thoughts on catalysts ahead there and also the things we should note on the margin contributions to that. And then finally, Greater China and the focus on that region, how have trends been in terms of sequential improvement and run rates that you're seeing with that volatile market?

Oliver, thanks for all of your questions. I'm going to try to remember them all. First one was on traffic and conversion in DTC. So as you talked about, we made a specific investment in labor investment in those stores, and we saw that deliver. And so global store conversions has trended higher now for 4 consecutive quarters. We're seeing that being led by APAC and North America.

So EMEA conversion lagged a little bit. But as we talked about, lots of initiatives underway to improve that and mitigate sort of the broader macro pressures that we see mostly in the U.K. So in e-com, we also saw strong traffic. And again, this was a direct result of the investment that we made in marketing. The job in marketing was to drive brand heat, bring back some momentum, make sure that people are seeing the new products and just showing up in a bolder way. And so that did drive the traffic. So that investment is paying off. So we're very happy with the traffic we're seeing, conversion improving, and we want to see that continue into the Q4 and beyond.

In terms of products, so non-parka, we heard Neil talk about how we are making great progress with expanding our assortment being more relevant 360 days of the year. And so we saw more growth in our other categories, so non-heavyweight down. We still see meaningful growth. We saw really strong response to newness, whether that's actually new styles in some of our core categories or newness, meaning our classic bombers, our classic bestsellers in new fabrications, new colorways.

So we really -- I'm very happy with the response that we saw in both of those. But the intention is to make sure that we have a product assortment that is relevant outside of just Q3, and that's what we're doing. That's what we're seeing.

And from -- okay, Greater China, that was the other one that you asked about. So we're seeing -- that's one of our strongest markets. When you look at the investment that we've been making for a number of years, what we look at when we see -- when we look at the competitive set, how we're doing relative to that, we are seeing demand very strong. So the performance in Mainland China specifically continues to perform well. We see strong digital momentum. We see healthy store performance. That's both better traffic, improving conversion and again, that really strong response to our newness. So very happy with what we're seeing there.

The shift, I think, in terms of Lunar New Year, we saw a bit of a shift of demand out of December and closer and moving into Q4. And so we've started to see that pick up. And as we get closer and closer to the Lunar New Year holiday, we expect that to continue.

Oliver, there was a part of your question we struggled to hear a bit. Can you repeat that one for us?

If there was any aspect of your question, I...

Pardon the interruption. He has disconnected. Your next question comes from the line of Rick Patel with Raymond James.

This is Suraj Malhotra on for Rick Patel. So how would you describe the level of newness in stores right now? Specifically, what share of today's floor set is new, year-round relevant product versus core product? And looking ahead, are you comfortable with where the assortment and merchandising sits today? Or do you plan to increase the mix of newness to drive more year-round relevance?

Thanks, Suraj. So we're really happy with the assortment. So I'll kind of repeat what was said in some of the remarks that expanding product relevance, that is working. And so the newness, lighter weight, year-round categories, they all outperformed heavyweight down, but that shift is intentional.

And so in terms of newness, the newness performance revenue doubled year-over-year. And so that's intentional. We want to bring newness to the floor. We want to be able to drive repeat visitors, bring people back to see something new. And the commentary around newness, I just want to make clear, newness, we see that as it needs to resonate as newness to the consumer. It doesn't necessarily mean we're introducing a ton of new styles. It means we're animating some of our best sellers, which I just talked about.

So that is working. The response to -- people love the Chilliwack. We've had that in our product line for 20 years, but now they get it in a new fabric. Now they get it in a new puffer version. And so that is working. So I would say the balance in terms of what we're putting in store and online is a mix of that. How do we make sure that people that know and think about Canada use for protection, for work, can come into a store and get what they need as well as, "Wow, I'm surprised by something that I never knew we offered."

So apparel, our everyday, our rain categories, all of our major categories are growing. And so we're really pleased with that response, and we expect that to continue. We're watching it carefully. Obviously, we don't want to get over skewed. We don't want to have a too big an assortment for the size of our offering -- our stores. But right now, we're feeling very comfortable with that mix.

Your next question comes from the line of Jonathan Komp with Baird.

Neil, helpful commentary on some of the margin initiatives you're kicking off here. I guess bigger picture stepping back, I think at one point, the discussion was around 50% plus incremental margin on DTC revenue recovery. So maybe just a broader postmortem, what's gone differently? And how quickly can you address some of the issues today on the operating margin, especially since there's 3 quarters ahead of lower seasonal sales volumes here, which typically have been tough to show progress?

Jon, this is Beth. I'll take that one. Thanks for your question. I guess if we step back, it's worth framing the margin journey we've been on over the past 2 years, right? Priority #1, Phase 1 of that journey was to rightsize corporate costs. We did that, that is sustaining and is serving now for the second year in a row is really nice source of leverage. Second, driving sustained positive comps, reinvigorating that brand heat and excitement through those first 3 operating imperatives around product and marketing and D2C execution. And then third, leveraging that strength to drive meaningful margin improvement, right? Those are the 3 steps.

We've achieved step 1. This year is the year we are excited to be able to say we have decisively achieved step 2. We've delivered our fourth straight quarter of positive comps. We've got really nice positive indicators in terms of sell-through new products, like you just heard from Carrie, brand heat measures like you heard from Dani in our opening remarks. So we feel that we've really got step 2 locked.

Now the focus can shift to step 3. We're not done with step 3, right? So your question around the incremental profit flow-through of D2C growth, that's what comes in step 3. And so the margin results this year, I think, are helpful to see in that context. So this year, obviously, this quarter, in particular, we saw some unusual margin compression from some of these discrete nonrecurring items. Those make up 2/3 of the SG&A margin compression in the quarter. So very material.

When you put those aside, we did still compress margin, SG&A as a percent of revenue by 150 basis points. But that is all the margin initiatives you heard from Neil in our opening remarks are all about improving that, driving store cost efficiency, marketing efficiency, sustaining the corporate cost leverage, getting gross margin, those are the things that will get us back towards that really attractive D2C flow-through that you described. There's nothing fundamental to our economic model that doesn't make that level of flow-through possible. But part of the reason you didn't see us achieve it yet in this quarter was that investment in the things to accomplish step 2 and really drive that sustainable positive comp growth.

Okay. I appreciate that. And then just as a follow-up around the practice for guidance here. I think part of the issue for the December quarter is it's hard to model out some of the discrete issues without more clarity. So just any thoughts still on not providing any forward visibility? And specifically on the level of margin expansion for fiscal 2027, it would be very helpful to give some context around that comment in terms of quantifying the opportunity?

Sure. Yes. I mean, Jon, I think, obviously, we're just about through the end of this fiscal year. I'll give a bit of direction on what we're looking at for performance to date in Q4. As we usually do when we get to the end of the fiscal, we'll talk about what our plans are for fiscal '27. And at that time, look to give some more color and just have to stay patient for at least one more quarter.

Your next question comes from the line of Brooke Roach with Goldman Sachs.

Can you help contextualize the relative contribution you expect to see from each of the 3 focus areas for operating margin into fiscal '27? What gives you confidence that you can maintain the strong top line comp and conversion momentum that you've achieved this year as you start to adjust the labor model and reduce marketing spend?

Thanks for the question, Brooke. The investments we made this year and last year are investments that we believe when we made them, and we still believe now that we are seeing their impact are investments that will fuel growth in the short, medium and long term. So for example, this year, our marketing investments were very focused in the top of funnel. Changing how we show up to the consumers, changing where we show up to the consumers, the message that -- those aren't investments that pay back in the month or even in the quarter of the year. Those are investments that are changing the hearts and minds of consumers and pay back over time.

And so that gives us -- and some of those are onetime investments that are repositioning, how product photography shows up, things like that. So we can pull back those investments without actually changing the frequency at which our media shows up in front of consumers, et cetera. And so there are -- because the nature of these investments were medium and long-term payback, that means that we can begin to get some leverage on them without impacting growth. And in fact, the impact of those investments will build.

Same thing is true in store labor. A lot of our store labor investment this year, yes, was more staffing in critical time periods than peak, but it was also more labor in the stores in June, July, August, September so that the store brand ambassadors were trained up. That training bear fruit next year and the year after. And so these are investments that were incremental to the P&L this year, but are normal course and effect, sources of leverage as the effectiveness of them build.

And so that's how we get comfortable with that. It's not like all of our incremental investment this year was a whole bunch of paid media to drive in-month conversion, right? It was much more strategic substantive focus on brand relevance, which is what gives us confidence that we can moderate those and have it become a source of leverage while simultaneously driving the top line growth.

In terms of relative contribution, there's massive opportunity in all of these. And so our focus is across all of them. I think it would be premature to comment on which one might contribute more or less or faster or slower. But we have -- we believe we have real opportunity in each of these areas. And more importantly, we believe we have the plans to execute and drive margin improvement in all 3 of those focus areas.

That concludes our question-and-answer session. I will now hand it back over to the management for closing comments.

So thanks, everyone, for joining us today, and please reach out to Investor Relations if you do have further questions. We'll close the call with that. Thank you.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.

Thank you for standing by. My name is Amy, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Canada Goose Inc. Second Quarter Fiscal 2026 Earnings Call. [Operator Instructions]

It is now my pleasure to turn the call over to Neil Bowden, Chief Financial Officer. You may begin.

Good morning, everyone, and thank you for joining us on the Canada Goose Q2 Fiscal '26 Earnings Call. Today, you'll hear from myself, Dani Reiss, our Chairman and CEO; Carrie Baker, President of Brand and Commercial; and Beth Clymer, President and Chief Operating Officer. We'll start with prepared remarks and then answer questions.

Today's presentation will contain forward-looking statements that are based on assumptions and therefore, subject to risks and uncertainties that could cause actual results to differ materially from those projected. We undertake no obligation to update these statements, except as required by law. You can read about these assumptions, risks and uncertainties in our press release issued this morning and our filings with the U.S. and Canadian regulators. These documents are also available on the Investor Relations section of our website.

We report in Canadian dollars. So the amounts discussed today are in Canadian dollars unless otherwise indicated. Please note, the financial results described on today's call will compare second quarter results ended September 28, 2025, with the same period ended September 29, 2024, unless otherwise noted.

With that, I'll turn the call over to Dani.

Thanks, Neil, and good morning, everyone. We are extremely pleased to share with you today our results of our second quarter. Our core direct-to-consumer business continued to show strong momentum across the board. Direct-to-consumer comparable sales grew 10% year-over-year with positive comps in all regions and notable bright spots in the United States and China. This marks 10 consecutive months of positive comps beginning last December as our operating imperatives drive stronger consumer engagement and results. I'll talk more about that in a moment.

Wholesale represented about half of our total revenue in Q2, which is typically our largest wholesale quarter. Revenue for the quarter was in line with our expectations, slightly down year-over-year and flat through the first half. We see strong positive leading indicators in the channel with stronger sell-through globally, improved inventory health and greater product diversity and excitement from our partners about our upcoming collections.

Our continued top line strength is a result of disciplined execution across our 4 operating imperatives. First, expanding our product offering to enhance year-round relevance. Revenue from new styles as a percentage of total revenue more than doubled year-over-year, driven by new products in both our downfilled and non-downfill categories. This drove notable growth in our DTC channel with revenue from newness now representing roughly 40% of DTC sales for the quarter compared to 10% last year. We see significant runway for growth through product newness. Striking the right balance between new products and a very strong core is critical to our long-term success. Apparel remained our fastest-growing category as we continue to strengthen our year-round relevance and reach a broader range of consumer lifestyles and environments.

Second, building brand heat through focused marketing investments. Our fall/winter 2025 campaign presents our brand with a fresh perspective rooted in both city life and the outdoors, amplifying the hero products through compelling storytelling, bold design and seasonal relevance. We launched an exciting new product collaboration with Canadian basketball player and our global brand ambassador, Shai Gilgeous-Alexander, NBA Champion and MVP. This was a cultural moment fusing style and heritage in a way that speaks to today's global luxury consumer.

We also announced an exciting new global brand ambassador, acclaimed actor Hsu Kuang-han. His impact in APAC and Mainland China, in particular, have been immediate, driving engagement, reach and relevance. Later this month, our Snow Goose collection returns at the height of our peak season with another bold statement of who we are and where we're going. We are speaking more frequently to our consumers, and it is really resonating.

Third, driving business expansion through strategic channel development. We continue to deliver an elevated experience at every touch point. The direct-to-consumer comparable sales growth has been consistently strong, showcasing our integrated approach to store execution, inventory availability and enhanced more frequent marketing activities. Store conversion rates have increased year-over-year in every region for the third quarter in a row, a tangible indicator that our renewed focus on disciplined retail execution is working.

We also strengthened our store network this quarter, opening one store in Macau and completing 2 strategic relocations, one in Beijing and most notably a new Paris store on Champs- lys es. We are thrilled about our new location in Paris, strong traffic and luxurious adjacencies and have introduced an elevated store design. I personally attended the grand opening just last week, and 2 things stuck out to me. How busy the store was during the day with a full mix of consumers eager for our product and its elegant design elevated unmistakably Canada Goose.

In wholesale, we are evolving our brand presence with more relevant assortments and elevated visual storytelling. This quarter, we unveiled a new brand expression through key in-store activations such as the Fall/Winter '25 Chilliwack immersive pop-up with an archive discovery experience at Selfridges in London and Galeries Lafayette in Paris. With these activations, we're bringing our brand to life in a consistent way everywhere.

Our fourth operating [ imperative ] is operating efficiently with pace and accountability. Neil is going to talk about this one in more detail, but I want to emphasize that we are very pleased with our top line results so far this year, although our margin in the first half was pressured year-over-year. This was deliberate and driven by key investments in marketing and in our stores that will fuel growth in the second half and beyond.

We are very happy to report that the second half is off to a strong start with positive DTC comps in October. We are entering our peak season well positioned and with confidence across both store and e-commerce channels and with a clear focus on translating that progress into sustained profitable growth and stronger margins.

In closing, the combination of more consistent marketing, a stronger mix of in-season product newness and sharper channel execution is driving improved financial performance and deeper consumer engagement. I'm confident in our direction and proud of the foundation that we've built for long-term growth. On behalf of our senior leadership team, I want to again thank our Canada Goose teams around the world for their passion for the brand and relentless preparation for our peak season.

And with that, I'll turn it over to Neil.

Thanks, Dani. Before diving into the financial results, I want to cover 2 key points to frame our financial performance in Q2. First, we are very pleased with our top line results, particularly strength in the DTC channel. A year ago, we reported weak comps, and we're in the early stage of implementing a number of changes to our D2C operations, which began delivering results late in the third quarter of fiscal '25. We look at the performance over the last 3 quarters as evidence that those changes across our network are working. The channel mix is where we want to be. Strong D2C performance underpinned by comp growth, wholesale performance meeting internal expectations through H1 and reduced emphasis on activity in our other channel.

Second, given our SG&A profile this year, particularly spend in our stores, marketing and product creation, our EBIT dollars and margin are lower than they were a year ago in both Q2 and the first half of the year. On the back of stronger-than-expected comp performance and tighter cost control, we are well set up for the balance of the year. That said, we are focused on operating margin expansion, and I'll cover the puts and takes as we move through these comments.

Okay. Let's get into the details. Revenue for the second quarter was $273 million, 2% higher than $268 million in Q2 of last year, but down 1% on a constant currency basis. Now some color on channel performance before getting into the regional results. All the revenue figures I cite are on a constant currency basis. D2C revenue was up 21% with sustained strong performance in all our regions and across both stores and e-commerce. Channel growth was fueled by direct-to-consumer comparable sales growth of 10%, led by North America and APAC, while EMEA was slightly positive. That's 3 consecutive quarters of positive comps, a clear indicator of sustained momentum and solid execution of our operating imperatives.

Wholesale revenue was down 5%, in line with our expectations and down 3% on a year-to-date basis as we continue to focus on elevating brand positioning within the channel and maintaining a healthy inventory position. You heard us say over the past few quarters that we expect it to be stable this year, and this is exactly where we are as we exit H1.

Revenue in our other channel totaled $10 million compared to $27 million last year, reflecting an intentional pullback in friends and family events in the first half of the year. We expect somewhat limited activity in Q3, given our focus on executing in the most important quarter of the year.

Now commentary on the geographic revenue trends in Q2. In North America, outstanding D2C comp performance in Q2 was the most important factor. The brand is performing very strongly in both Canada and the U.S., where stores and e-commerce comps grew in the low teens. Channel mix away from both other revenue due to fewer activities and timing of wholesale shipments led to the regional revenue being down 8% year-over-year.

In APAC, revenue increased 20%, driven by growth across both DTC and wholesale channels. The region delivered high single-digit comp growth during the quarter with Mainland China leading the way. Our performance in this market remains solid, even as consumer sentiment in China is somewhat mixed. Demand in Japan was robust with substantial revenue growth supported by new store openings and a full quarter of performance from our flagship in Tokyo Ginza that opened late in Q2 fiscal '25. E-commerce performance in the region was solid on a comp basis and was further aided by growth in our Douyin channel.

In EMEA, revenue was down 7% year-over-year. The trends in this region have been consistent, strong performance on the continent and a more challenging consumer environment in the U.K. With this backdrop, we delivered slightly positive comps accompanied by a timing shift in the wholesale order book to later in the year as compared to fiscal '25. We remain focused on optimizing conversion in our channels and marketing execution to mitigate those trends.

Moving down the income statement. Let's turn to gross profit, which was $6 million higher than the prior year. Gross margin expanded 110 basis points year-over-year to 62.4%, primarily due to favorable channel mix, more DTC and less revenue in the other channel, partially offset by higher product costs and a higher mix of apparel.

Shifting to SG&A. Reported SG&A expense for the quarter was $188 million, an increase of $25 million or 16% year-over-year. Excluding the quarterly earn-out charge for our knitwear manufacturer, SG&A as a percentage of revenue was 67.6%, up 730 basis points year-over-year, reflecting planned investments in key revenue-driving areas such as marketing and stores ahead of peak. This was mitigated somewhat by corporate SG&A leverage. The increase in marketing expenditure this quarter reflects our deliberate shift toward upper funnel activity to build cultural relevance and brand desirability as well as a more balanced approach to our marketing calendar throughout the year following a quieter period in H1 last year.

We've continued to invest in our stores with a focus on labor and training to prepare for peak season as well as key store openings, which led to some deleverage in Q2. These investments are partially offset by leverage from our corporate expenses, which are growing at a much slower rate than revenue, even while we're adding talent in areas like product creation. We recognize there's still meaningful runway to improve SG&A costs as a percentage of revenue. And while we continue to invest in key areas that will deliver long-term value, we remain disciplined and thoughtful about how and where we spend.

In our fourth operating imperative, operating efficiently with pace and accountability, we continue to enhance the flexibility and agility of our operations to better support growth. Here is an example of one such win. In July, we closed our largest U.S. warehouse and nearly all shipments to North American retail stores are now fulfilled from Canada. This gives us a single larger pool of inventory, allowing us to deliver products to stores more quickly while reducing overhead costs. For clarity, this was neither in reaction to any tariff concerns nor does it change our trade risk profile based on what we know today. It was about simplifying our operations and reducing costs.

With revenue growth and gross margin expansion offset by planned SG&A growth, our adjusted EBIT was a loss of $14 million for the quarter, which decreased from a profit of $3 million in Q2 last year. Adjusted net loss attributable to shareholders was $13 million or $0.14 per share compared to a profit of $5 million or $0.05 per share in Q2 of fiscal '25.

We ended the quarter with a strong balance sheet. Inventory was $461 million, down 3% from last year, reflecting stronger consumer demand and tighter inventory management. Inventory turnover was 0.9x, slightly improved compared to the same period last year. Net debt at quarter end was $707 million compared to $826 million in the second quarter of fiscal '25 as net working capital improvements over the past 18 months, particularly inventory, delivered operating cash flows that led to reduced short-term borrowings compared to the same period last year.

During Q2, we successfully amended our term loan by extending the maturity until 2032, solidifying our capital structure. Our net debt leverage was 2.6x adjusted EBITDA compared with 2.9x adjusted EBITDA at the same time last year. CapEx in the second quarter was higher versus the prior year, as planned, given our fiscal '26 store opening program. As we've said, we'll be opportunistic in adding stores as our confidence in delivering comp sales growth increases, which has been demonstrated around the world for the past 3 quarters. We enter peak season with confidence based on execution to date and our plans ahead but with our collective heads down working towards continued success in the second half of fiscal '26.

And with that, I'll turn the call over to our operator. Operator, you can open the line for questions.

[Operator Instructions] Your first question comes from the line of Oliver Chen with TD Cowen.

Regarding direct-to-consumer comp sales, the momentum and solid numbers you're seeing there, what initiatives are you prioritizing to sustain the momentum here? And how close are you to the longer-term opportunity of $4,000-plus sales per square foot and thoughts there?

Oliver, thanks. It's Carrie here. We're really excited about our DT comp sales. I think that has been such a big effort over the last 18 months, and you've seen us quarter after quarter start to deliver on that. There's a few things. It's not just one or the other. It's the combination of we've better trained our staff. We've hired earlier and so that they're ready for peak. They're starting to deliver that. So sharper channel execution.

There's also a product piece, which is really exciting. So we -- as you heard Dani talk about, we've delivered so much more newness, 40% of newness now being DTC revenue. And that's both seasonal relevance. So there's better product for Q2 so that people are choosing something they're wearing it right now, but then also the inventory availability. So we've done a lot of work of making sure that the stores and online, they're ready for peak, they're ready for people to come in when we're marketing it.

So the third piece is the marketing. Really, it's been such a boom to the traffic, the engagement, the excitement that we're seeing from consumers. As you heard Neil talk about, we're marketing earlier. It's a more consistent execution that we're seeing. So that combination of all those 3 things is really driving our success in DTC, which we're thrilled about, and we're seeing that continue into Q3.

In terms of the productivity, Oliver...

Sorry, Oliver. Yes, just in terms of the productivity, we closed the year last year a little bit below that $4,000 sort of magic threshold. But I don't think anyone in this room feels that that's the opportunity. We think that's the minimum. And certainly, our historical numbers have been higher than $4,000 and well above, and we're aiming to be more in that zone than just at $4,000. And so we feel great about all the things that have happened, and we know there's a lot more to go.

Okay. And a follow-up. Any thoughts on globally in terms of U.K. softness or other regions that you're slightly more cautious on? And as we think about SG&A ahead, what would you speak to in terms of fixed versus variable that we should know about?

So on the U.K., yes, so I don't think it's anything different than we've been seeing the trend. You heard Neil talk about that as well. Many brands are experiencing that. It's very different than what we're seeing in Continental Europe, so which remains strong. And so we're doing what we're focused on.

The teams are focused on maximizing every person that comes into the store, every visit online. And so that's sharper execution. I think we have opportunities still to improve that, but I think the efforts that we've been implementing the incentives in store staff, having the product inventory available has really helped us there, and we'll continue to monitor that.

Oliver, it's Beth. I'll take your question on SG&A. Part of the reason we are so energized by the positive comp results is that, that creates a really nice opportunity for margin expansion over the medium and long term because of our fixed variable makeup. Obviously, the more we can drive from comp store sales growth, the more we can leverage the fixed costs in our retail network. So we feel really good about our revenue growth profile, allowing us to continue to drive productivity there.

Obviously, as you know, we are making investments this year, investments in Q2. That is intentional. That is to drive growth not only in peak season, but in fiscal '27 and beyond, brand relevance, store experience, right? So there are obviously investments that are pressuring the margin and the SG&A as a percent of revenue at the moment, but we feel really great about the underlying productivity and our ability to drive that margin in the medium to long term.

The next call comes from the line of Jonathan Komp with Baird.

I want to follow up on the comps that you're seeing. And clearly, the newness and especially some of the transitional seasonal items appear to be working. Just can you speak more on your confidence of sustaining that comps momentum across regions as you reach the seasonal and colder weather periods and any signals that you're seeing there?

For sure. Thanks for your question. It's Carrie again. We're feeling really encouraged. I mean the thing to me is like despite the differences in all of our markets, the consistency of our performance there and being able -- higher conversion, the comps increasing, it's just -- it makes us feel very good, and we're also seeing that continue into Q3. I think, as I said earlier, it's really a number of factors. The teams are well trained. They are ready for peak. We've got the inventory.

And the newness we're seeing, let me comment a little bit on that. It's not just that we're broadening the assortment to more seasonally relevant. That is a big part of it. But it's also newness and animation of some of our classics. So if you're looking online or if you're going into our stores today, you'll see a big focus on our Chilliwack. And Dani mentioned some of the activations that we're doing in some of our wholesale partners. And that is a big part of what people come to Canada Goose for, but we're giving them a new reason to be excited.

So the Chilliwack is a classic product that we've had in our line for at least 10 to 15 years. When you come in store today, you see 6 different animations of it, versions of it, different fabrications, whether it's wool, a puffer version, our Chilliwack fleece is flying. That is like the #1 demand product right now. People are asking for more. So that's the way we're animating and bringing people back into store or attracting new consumers, and that's consistent across every region.

Okay. Great. That's helpful. And then, Neil, maybe a follow-up. I mean the tone sounds very positive on the sales trends. It's hard to project the margin that we should expect. So could you maybe just talk about the factors that will drive changes in the leverage point as you come up on your key seasonal period here? It seems like you'd have much more ability to improve the margin performance year-over-year. But if you could talk a little bit more about some of those drivers and how they shift into Q3 here, that would be helpful.

Thanks, Jon. Yes, I think I'd point to a couple of things. So obviously, the fuel that comes from positive comps is critical to driving overall channel margin expansion as well as being able to leverage the corporate costs to the extent that they're fixed. And so we're absolutely focused on continuing, just to your first question, continuing to drive that comp sales.

Second is ensuring that the investments that we've made up to this point, whether that's marketing or whether it's store labor are delivering in season as we expected. And we've been pretty clear this year that not everything will deliver in season, but some will.

And then third, how do we get enough leverage out of maintaining a disciplined approach to the corporate kind of fixed cost here in the center so that when we grow the revenue in the channels, we are leveraging that fixed cost. And so those are the 3 levers that we're pulling. And you're absolutely right to hear degree of confidence around continuation of that top line performance and where we think we've got control over the other things.

Your last call comes from the line of Ike Boruchow with Wells Fargo.

This is Robert up for Ike. Can you just talk about some of the trends you're seeing in North America? It looks like there was a drop in third quarter -- or second quarter, sorry. Is that -- was that primarily because of the wholesale shift? Can you quantify that?

Absolutely. So yes, I think there's 2 things that are sort of masking the actual amazing sales results that we're seeing in DTC. One is wholesale, and that is just purely timing. As you heard Neil talk about, wholesale remains stable. Our expectations are exactly where it should be. That strategy of like intentionally pulling back and making sure that we're growing with the right partners, that is working. And so you're just going to see that timing difference there.

The second part is the intentional pullback of -- in our other channel. And so that was -- last year, it was important for helping us clear through some inventory, and that just didn't happen in Q2, and that was intentional on our part. So we're really encouraged and the momentum that we're seeing is not just in one or the other market. It's in both Canada and the U.S., and we see that again continuing into Q3.

There are no further questions at this time. Mr. Bowden, I turn the call back over to you.

Thank you, operator, and thanks to everyone who listened on the call, and we look forward to updating you in a few months' time after we finish our peak season. And so happy holidays to everyone, and we'll talk to you soon. Thanks.

Thank you. That does conclude our call for today. You may now disconnect.