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 everyone to the Canada Goose Second Quarter Fiscal Year 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise, and after the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the conference over to Ana Raman, Vice President of Investor Relations. Ana, you may begin.

Thank you, operator, and good morning everyone. With me today are Dani Reiss, our Chairman and CEO; Carrie Baker, President of Brand and Commercial; and Beth Clymer, President of Finance Strategy and Administration; and Neil Bowden, Chief Financial Officer; 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, as well as in our filings with US and Canadian regulators. These documents are also available on the Investor Relations section of our website. We report in Canadian dollars, so all amounts discussed today are in Canadian dollars, unless otherwise indicated. Please note that financial results described on today's call will compare second quarter results ended September 29, 2024 with the same period ended October 1, 2023 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. For today's call, Dani, Carrie, Beth and Neil will deliver prepared remarks, following which we will open the call to take questions. With that, I'll turn the call over to Dani.

Thanks, Ana, and good morning, everyone. I'll start my thoughts on our second quarter results and progress and then turn it over to Carrie, Beth and Neil to review our performance in greater detail. All-in a solid start to the year with sales up 4% in the first quarter, top line momentum decelerated in the second quarter, down 5% year-over-year. Our wholesale business performed as expected, down 15% year-over-year on a reported basis as we continue to elevate the status of our brand presence within the channel. Our DTC business came under more pressure than anticipated and we faced an increasingly challenging consumer environment. This resulted in DTC comparable sales declining 13% over the second quarter of last year. As Carrie will discuss later, we also shifted the timing of some of our marketing spend as we build excitement with first capital from our Creative Director, Haider Ackermann, to be unveiled later this month. While this shift impacted Q2 results, we expect to see benefit from this activity over the second half of the fiscal year with more marketing dollars at work across several initiatives. As a reminder, approximately 75% of our revenue opportunity is still ahead of us this fiscal year based on our historical performance. We remain steadfast in our view that we can drive positive DTC comparable sales growth out of our stores in both the near and the long-term. We are focused on executing with excellence through our busy holiday season and building an enduring brand that connects with our customers. In the second quarter, we took concrete action for our three key operating imperatives to set us up for success. That said, due to a softer second quarter and the weaker macro environment around us that has impacted consumer confidence, you will see that we…

Thanks, Dani. Q2 was a productive quarter as our team continued to execute against our key operating imperatives while also preparing for peak our season. We made significant progress on several fronts, which I'm proud of, and I'm excited to share with you shortly. First, though, let me start by putting our Q2 DTC comparable sales results into context. One of our biggest priorities in retail this fiscal is driving comp growth, but this fell short of our expectations in the quarter. Year-over-year DTC comp revenue declined 13% as performance in Asia-Pacific and North America weighed on overall results. While EMEA comp growth was down year-over-year, performance improved sequentially compared to our first quarter. On a global basis, store traffic and conversion declined year-over-year, while e-commerce saw increased sessions yet lower conversion. The exception here was also EMEA, where store traffic was up significantly, reflecting the busy summer event season in the region. We were encouraged to see conversion start to improve across our key regions in September. While consumer sentiment weakened during the quarter, our Q2 performance was further pressured by two decisions we made in line with our long-term strategy, a part of the transformation work we started last year. First, we made the deliberate decision to implement most of our marketing spend in the second half of fiscal 2025 as opposed to previous years where we typically ramp investments in Q2. This enables us to fully support the launch of Haider's first capital ahead of holiday, our seasonal strength, and showcase our elevated brand expressions and consumer engagement strategies during our peak season when it matters most. Haider's first capsule is a big brand moment for Canada Goose, not just from a product perspective, but also in how our brand comes to life across all touch points.…

Thanks, Carrie, and good morning, all. Our third operating imperative in fiscal 2025 is to simplify and focus the way we operate as an organization. We are doing this through internal operating excellence and focused capital deployment. We've made good progress on both of these fronts in our second quarter, which I'll take you through now. Starting with achieving operating excellence. In Q2, we continued to simplify the way we work and ensure our spending is lean while investing in key areas to drive growth through the business. To share some examples, we've been aggressively reviewing our third-party vendors, which has resulted in the renegotiation or cancellation of numerous contracts in the first half of the year and yielded significant savings. We also continue to evolve our teams in ways that reduce costs and improve their effectiveness. We continue to prudently manage our headcount, hiring for only the most critical roles as we exercise discipline over our cost base. While we've been hiring since the workforce reductions we implemented at the end of our last fiscal year in March, we have also been very judicious about when and whether their roles are truly needed. Our actions drove efficiency with our Q2 SG&A expenses decreasing year-over-year. This occurred despite investments in critical areas such as technology infrastructure and product design, including scaling up the team in our Paris Design Studio. However, it's important to note that due to slower top line growth, SG&A as a percent of revenue increased year-over-year after normalizing for adjustments in both periods. We acknowledge the importance of cost deleverage, and we are not satisfied with this outcome. However, we believe our focused investment and cost management strategies position us well to improve SG&A as a percent of revenue as we drive sales growth in the coming…

Thanks, Beth. As you've heard so far today, we are making good progress across our execution levers. I'll start with reviewing our second quarter financial performance and then discuss our updated outlook. Revenue in Q2 was down 5% year-over-year or 6% on a constant currency basis due to a decline in DTC revenue and a planned decrease in wholesale revenue, partially offset by an increase in other channel revenue. First, I will describe our regional performance on a year-over-year constant currency basis. North America revenue decreased 3% on lower DTC and wholesale revenue, partially offset by higher sales activity in the other channel, primarily friends and family events. Asia Pacific revenue grew 3%, mainly due to higher travel retail revenue in Greater China, which is included in our wholesale business, partially offset by lower DTC in the region and revenue in EMEA down 17%, primarily due to a planned decrease in wholesale revenue. From a channel perspective, second quarter DTC revenue was down 5% or 6% on a constant currency basis due to softer demand in both our in-store and e-commerce channels. DTC comparable sales were down 13% year-over-year due to the factors Carrie discussed earlier that impacted both traffic and conversion in the quarter. August and September were the more challenging months in the quarter as consumer sentiment weakened. It's worth repeating that despite consumer caution in our markets, we believe that being somewhat quieter on marketing ahead of the Haider capsule launch later this fall dampened traffic as well. We began to see some improvement toward the end of September as we started to ramp up our marketing investments with the second drop of our fall/winter collection and the kickoff of the Snow Goose campaign. I would like to point out that Golden Week was a bright spot…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Adrienne Yih with Barclays. Please go ahead.

Good morning. Thank you for all the detail and the color. Dani, I guess we're -- the macro aside --, the macro kind of setting everybody back, let's call it, a year, and it's not you specific. It's just macro generally. But as we think about kind of the things that you can control, let's say, the notion that we kind of want to move some of the seasonality and not have so much concentrated in the back two quarters of the year, expansion into other categories, more of the seasonally adjusted kind of like apparel for other seasons. Can you talk about what the business looks like by channel mix and by region, by winter versus non-seasonal apparel in three to five years? So just maybe like a re-landscape of that LRP that you had given us probably pre-pandemic, I think it’s important, just to recalibrate where we are in that cycle? Thank you so much.

Yeah. Thank you for your question. And I'll give some high level commentary and color on the future. I mean, I think that we know that our opportunity remains tremendous, and we know that our brand is extremely strong through multiple ways of research that we've been doing, and we're very excited about that. From a product evolution point of view, we've evolved, as you've seen, our product has evolved quite a bit over the last number of years and the plans for that continue. We have a new merchandiser joining us soon, which will really help with that. And with our new design studio in Paris, which to me is one of the biggest things we're doing this year, most bold moves we're making to drive this business forward. We're really going to have strong design, desirable products coming out of that facility, and which works together, of course, with our design capabilities here in Toronto and manufacturing capabilities in Canada. So I do believe that -- and my vision is to see our product line expand quite considerably with beautiful products that people really want to have, and we're working really diligently to build an organization that can support that.

Adrienne, this is Beth. I'll add to that. Well, obviously, we're not specifically pointing to that long-term guidance anymore. There are many themes in that, that remain very true. We have a significant amount of footprint expansion opportunity across all geographies. We have a significant amount of expansion of retail and D2C execution expansion opportunity, brand building opportunity that will continue to grow, consumer sentiment, which will create both D2C and wholesale revenue opportunities in multiple markets. And we do expect to see our non-heavyweight down categories grow faster, because they are newer categories for us, but we also believe there's plenty of growth opportunities in heavyweight down as well. So the thematic elements that you heard in that long-range plan, we certainly still feel are very much true, even though the specific revenue and EBIT forecast suggested by that, we pulled back on.

Great. And then a quick one, just a follow-up for Neil, what was the shift in marketing dollars? How should we think about that hitting the SG&A line as we model out the SG&A for next quarter? And then are there any stores anywhere globally that are not hitting your four-wall, your internal -- your IRR metrics that would be under consideration for potential closing, or is that kind of not even in the cards? Thank you.

Yeah. I'll take the second part of the question first, Adrienne, and thanks for your questions. No, we're not giving any consideration to that right now. The focus for the business top to bottom is about peak and peak execution. And to the extent that we need to look beyond that, we will at the right time. But right now, we're very focused on driving productivity and profitability out of every store. And as a reminder, our metrics in those stores are very, very strong. As it relates to the shift in marketing, we don't necessarily give color on specific marketing spend or where it falls particularly in the quarters. But what I can tell you is, on a year-to-year basis, we're going to be slightly up in the marketing spend, and we have been a little bit quieter in the first half than we will be in the second half of the year, obviously, putting all of our heft behind the Haider launch, which is coming soon as well as some commercial marketing activities that we know that can drive some search volume and some of the other KPIs that help fund -- help lead to revenue in the channels.

Fantastic. Thank you very much for your help.

You're welcome.

Your next question comes from the line of Rick Patel with Raymond James. Please go ahead.

This is Josh Reiss filling in for Rick. Thanks for taking my question. I was hoping you can provide additional color behind your plans to improve on the comps for the remainder of the year, curious, how to really think about the opportunity to drive those higher productivity levels on a -- from a regional perspective.

Yeah, absolutely, it's Carrie here. So one of the biggest things that we started in the first half is what I talked about before, making sure our stores are well staffed -- sorry, well stocked with inventory, and we're in such a better position than we were this time last year, even six months ago. We've made considerable efforts on training our staff and then also making sure that we're staffed appropriately when we see the traffic. So all of those programs have been massive efforts in the first half, and we started to see green shoots of that probably fastest in EMEA, as we talked about. We're applying that same playbook to every region. And so we're really seeing that improvement in APAC. North America is taking a little bit longer. It's obviously a larger store base. So really, it's continuing what we've already started and making sure that we're just being as aggressive as we have been in the first half. Hopefully, with the influx of more marketing, we're going to see a little bit more traffic, especially in our comp stores. So to me, it's really staying the path of things that we've already done and hopefully seeing a lot more traction from those efforts.

And I think as we stand here today as well, I mean, we're clearly through the first big month in our peak. We've got some data on how those things have contributed. There are regions, particularly China, where we see some level of resilience in the consumer that perhaps wasn't there in the second quarter. And so that gives us a degree of confidence. What we can do about the macro is really out of our control. And so we're focused on how do we drive traffic to the stores and then all the stuff that Carrie just referred to that helps lead to conversion once they're in there. And I just don't think we can underscore enough how much effort there is around the world going into labor and training and ensuring that the luxury experience for the consumer is where it needs to be as we get deep into peak.

Thanks. And one quick follow-up on just that China component, can you talk -- like I know you performed pretty well relative to the industry. Can you talk about what you're currently seeing from like the Chinese consumer? -- perhaps any more color on what you're seeing in China that can inform our expectations for the region for the rest of the year?

Yeah. I think today, the story is a little bit different than it probably was in the second quarter. We have continued to open stores as planned. We know that, as you probably do, that the macro environment in China, is a challenge. We're hopeful that the stimulus that came through will lead to something over the long-term. We're not necessarily planning for that. What we do know is that our brand resonates with Chinese consumers wherever they are in the world, and they shop our stores in Canada, in the U.S., in Europe and especially in Mainland China. Travel seems to be somewhat muted. But again, that's over the long term, those trends will correct. What we have seen in the past few weeks with both Golden Week and with Singles' Day is some positive forward momentum. We're hopeful that, that trajectory continues. And that gives us, as I said a few moments ago, some confidence that the Chinese consumer will continue to support Canada Goose.

I just one add on there is the other -- the growth that we're seeing also in -- with our wholesale business, whether it's travel retail, that also gives us confidence. There is demand out there. Our partners do want more inventory. And so having been there, yes, it's a little quieter. So if that stimulus really affects the luxury spender. But I think there's so many bright spots that are giving us confidence in both the mid and long term.

Thanks, so much.

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

Hi. Thank you. Regarding the new Head of Merchandising, what would be some key priorities? And as you think ahead with the innovation and the execution you're having with the new creative designer, how are you thinking about creating new icons and balancing new versus evergreen product and just developing new evergreen icons as well? Thank you.

So Oliver, it's Carrie here. So our new Head of Merchandising, so I mentioned in my remarks that worth noting, they'll be working very closely, obviously, with Haider and the team in broadening our assortment. So again, we've made such great progress in showing up as a lifestyle brand, but there's so many more opportunities still ahead of us. And as you said, we're not trying to do more just for the sake of more. We want to do more that's better. And so reflected by our current season offering, it's a lot of focus on bestsellers and icons because we don't want to just have this broad assortment that confuses customers. We want to have a very clear, well mapped out distinctive voice that comes through our products. So whether it's eyewear that we're introducing, whether it's accessories, whether it's doubling down on some new icons that we're introducing for heavyweight down, that's going to be the focus. So really understanding the consumer demand, listening to what's -- what they're asking for, but then also really translating our DNA of who can is in protection and performance and style.

Okay. And Neil, as we think about the gross margin longer term, what should we know about puts and takes that you could articulate and also category mix dynamics? Thank you.

Yes. I mean I think keeping in mind that we don't necessarily have a long-term view out, I'll speak sort of more qualitatively, Oliver. Clearly, product mix over the last many years has shifted away from heavy weight down in a way that excites us both because it makes the store economics really, really attractive as we start to get deeper into the categories that as Gary just alluded to, the merchandising leader will help alongside Haider. And so product mix perhaps creates a little bit of a headwind. I'm not certain that's the case, but it certainly is going to create a lot more dollars of gross profit and ultimately EBIT leverage as we look forward. We continue to be vertically integrated. That is a major competitive advantage for us. The team that exists both in our product development chain as well as inside our supply chain are laser-focused on delivering high-quality products that consumers love, but it allows us to control the manufacturing in a cost environment that gives us informed decisions. And so we think, as I say, I think that gives us a competitive advantage over the long term. I think beyond that, certainly, our view is over the long-term, we want to grow each revenue channel, and we're going to do that responsibly through comp growth as well as some pricing. But pricing isn't necessarily the lever that we want to pull. We want to pull on creating tremendous products for our consumers and growing volume through those -- through all of our channels.

Thanks, Neil and Carrie. Best regards.

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

Good morning and thank you for taking our questions. I was hoping you could elaborate on your plans to drive an acceleration in comp trends in North America and how you're thinking about that growth opportunity between stores and online? And then separately, can you contextualize the number of days of wholesale inventory you have on hand by channel or by region in the channel? Thank you.

Thanks, Brooks, it's Carrie here. So in terms of accelerating D2C comps in North America, so we talked about North America is a little more challenged on the store front. Just it's a larger network, a little more mature and so it just hasn't come as fast as maybe some other regions. And so, it's the same playbook that we talked about. So, making sure that we're just being super diligent on whether it's traffic, labor and matching labor hours, monitoring BA performance, making sure we've got the right inventory in those stores. It's really the same playbook. The only other thing I would say in North America is looking at just the state of the US. So Canada is actually remaining quite strong in an environment where the macro headwinds are there. I would say the luxury spending in the US and the weakened consumer sentiment is impacting those stores a little bit more. And so, we're looking at whether we need to put a little more marketing investment, how do we make sure that we're being responsible to the different consumer demand patterns that we see by region. The brand health is not the same across the US. And so, we're being very laser-focused on a local level to drive that comp performance. In terms of wholesale channel, Beth, do you want to talk about inventory?

Yes, I can -- I'll take the question, Brooke about inventory by channel and region. So I think there's really 2 stories here. There is the wholesale channel inventory story, which is that we are in a significantly lower inventory position in the channel this year than we were last year. That's obviously quite intentional. Our pullback in wholesale revenue this year is to create that, so that those wholesalers can experience higher sell-through, so that we are maintaining our full price proposition in wholesale, as well as in retail. And so we see that coming to fruition, which we and our wholesale partners are pleased with. In D2C, it's the opposite. We were not in, as Carrie alluded to, a strong enough inventory position in D2C everywhere. We had certain products that were well received by customers that were sold through too quickly, et cetera. So we are in a much stronger inventory position in our D2C channel now at the beginning of peak than we were last year. And we expect that we'll retain, and we're leveraging the vertical integration. You heard Neil talk about earlier to capitalize on that and to chase sales opportunities when they do exist and we can get more product quickly enough. So, that's really -- it's really a tale of 2 channels there. By region, I don't think there's a lot of variation between regions. Those are pretty -- those themes are pretty true across regions within each of those channels.

Great. Thank you, so much. I’ll pass it on.

[Operator Instructions] And that concludes our question-and-answer session. I would now like to turn the conference over to Ana Raman for closing comments.

Thank you everyone for joining today's call. We look forward to giving you our next update with our Q3 results. We wish everyone a happy and healthy holiday season. Thank you.

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