Canada Goose Holdings Inc. — Fiscal 2024 Form 20-F
Reporting period: Fiscal year ended March 31, 2024 (52 weeks), with fourth-quarter comparisons to the 13 weeks ended April 2, 2023. The company reports in Canadian dollars and prepares its audited financial statements under IFRS. Unless noted otherwise, amounts below are C$ millions.
Business context and performance
Canada Goose is a performance-luxury apparel, footwear and accessories company. It is shifting toward direct-to-consumer (DTC) sales while expanding its store network and broadening beyond heavyweight down outerwear. DTC, Wholesale and Other are its reporting segments.
| Metric | FY2024 | FY2023 | Change |
|---|---|---|---|
| Revenue | $1,333.8 | $1,217.0 | +9.6% reported; +8.6% constant currency |
| Gross profit / margin | $917.4 / 68.8% | $815.2 / 67.0% | Margin +180 bps |
| Operating income / margin | $124.5 / 9.3% | $147.6 / 12.1% | Income -15.7%; margin -280 bps |
| Net income | $58.1 | $68.9 | -15.7% |
| Net income attributable to company shareholders | $58.4 | $72.7 | -19.7% |
| Basic / diluted EPS attributable to shareholders | $0.58 / $0.57 | $0.69 / $0.69 | Down year over year |
| Operating cash flow | $164.6 | $116.3 | +$48.3 |
| Cash at year-end | $144.9 | $286.5 | -$141.6 |
Fourth quarter
Revenue rose 22.1% to $358.0 (23.4% constant currency). Gross profit was $233.0 and gross margin was 65.1%, up 20 bps. Operating income increased to $23.1 from $17.6, with operating margin of 6.5% versus 6.0%. Net income was $7.6, compared with a $10.0 loss; EPS attributable to shareholders was $0.05 versus a $0.03 loss. Adjusted EBIT, a non-IFRS measure, was $40.1 versus $26.6, and adjusted EBIT margin was 11.2% versus 9.1%.
Revenue mix and material changes
- Channel mix: FY2024 DTC revenue increased 17.8% to $950.7; Wholesale declined 16.5% to $312.3; Other increased 97.2% to $70.8. DTC represented 71.3% of total revenue, up from 66.3%, while Wholesale fell to 23.4% from 30.7%.
- Geography: Greater China revenue grew 47.0% to $422.2 and accounted for about 31.7% of total revenue. North America declined 1.8% to $570.9, and EMEA fell 9.1% to $256.0.
- Products: Heavyweight down generated 54% of revenue, down from 57%. Its revenue was flat overall; non-heavyweight-down categories grew year over year across all regions except EMEA.
- Drivers and pressure points: DTC growth reflected new stores and strong Asia Pacific performance, partly offset by weak comparable sales in North America and EMEA and e-Commerce declines in those regions. Wholesale was pressured by partner inventory, promotions and deliberate account streamlining.
- Margins and costs: Annual gross margin improved, primarily from pricing. However, SG&A rose 18.8% to $792.9, or 59.4% of revenue versus 54.9%, as retail expansion and corporate costs more than offset gross-profit growth. The resulting operating margin contracted.
Cash, debt and liquidity
- Operating cash flow was $164.6; investing activities used $72.4, including $54.9 of property and equipment purchases and $15.9 for the Paola Confectii acquisition; financing activities used $232.8.
- Cash fell to $144.9. Financing outflows included $141.4 for share repurchases and $69.2 of lease-liability principal payments.
- At year-end, reported principal debt was $398.5: $393.1 under the U.S.-dollar term loan and $5.4 under the Japan facility. No principal was outstanding under the revolving facility or Mainland China facilities. Lease liabilities were an additional $330.5.
- Unused revolving-facility borrowing capacity was $203.7. The facility matures May 15, 2028; the term loan matures October 7, 2027. The company reported covenant compliance.
- Net debt, as the company defines it (including lease liabilities), was $584.1, versus $468.1 a year earlier; net debt leverage was 2.0x adjusted EBITDA versus 1.7x. These are non-IFRS measures.
- Inventory was $445.2, down from $472.6, while the disclosed obsolescence provision increased to $60.8 from $43.2. Receivables increased to $70.4 from $50.9.
Outlook, management commentary and risks
- The company withdrew its previously issued long-term fiscal-2028 guidance, as disclosed in a May 16, 2024 earnings release. This filing provides no replacement numerical long-term guidance or clear fiscal-2025 revenue or earnings target.
- Management is continuing its Transformation Program, targeting more efficient and scalable operations and long-term margin expansion. Fiscal 2024 actions included consolidating a Montreal manufacturing facility and workforce reductions of approximately 10% in the second quarter and approximately 17% in a further action on March 26. Transformation-related costs were $40.1 for the year, including consultancy and severance costs; management said the severance costs were not expected to recur.
- Other unusual or notable items include $15.9 cash consideration for Paola Confectii and a $7.4 estimated earn-out, recognized as remuneration for future services subject to continued employment and performance conditions. Annual adjusted EBIT was $171.8 versus $174.1, despite adjusted EBITDA increasing to $298.2 from $276.7.
- Seasonality is significant: most DTC revenue is generated in the third and fourth quarters, while wholesale deliveries concentrate in the second and third. Management cautions that individual-quarter results may not indicate annual performance.
- Key risks include discretionary-spending weakness and promotional pressure; dependence on cold-weather demand; inventory forecasting and obsolescence; expansion and profitability of DTC stores and e-Commerce; brand and product acceptance; supplier, labour and logistics disruption; foreign exchange and variable-rate debt exposure; and execution of the Transformation Program. The company also faces cybersecurity, privacy, climate and geopolitical risks.
- The company reported effective disclosure controls and internal control over financial reporting, with an unqualified auditor opinion. Deloitte identified inventory obsolescence and estimates of future selling prices and demand as a critical audit matter. No cybersecurity incident during FY2024 was reported to have materially affected operations or results.
Important facts for investors to verify
- Whether Greater China growth and the DTC expansion can offset weakness in North America, EMEA and Wholesale, and how comparable sales evolve.
- Inventory quality, sell-through and provisioning assumptions, particularly given the higher obsolescence provision and increased friends-and-family sales events.
- Whether Transformation Program savings and other cost actions translate into better operating margins after the FY2024 expense increase.
- Cash generation, planned share repurchases, debt service and lease commitments; confirm the company’s net-debt definition includes lease liabilities.
- The assumptions and circumstances behind withdrawal of the prior long-term outlook, and any replacement guidance issued after this filing.
- Paola Confectii earn-out exposure and Japan joint-venture contingent consideration and put-option liabilities, whose values depend on forecasts and other estimates.
- Governance implications of the dual-class structure: multiple voting shares carry 10 votes each, and controlling shareholders held approximately 91.8% of voting power at March 31, 2024.