Canada Goose Hldgs (TSX:GOOS) reported second-quarter financial results on Thursday. The transcript from the company’s second-quarter earnings call has been provided below.
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Summary
Canada Goose Holdings reported a 5% year-over-year revenue increase in Q2 to $274 million, with growth across all channels despite a 7.5% decline in direct-to-consumer (D2C) comparable sales.
The company completed the sale of its Baffin Limited business to focus on core strategic priorities, contributing to adjusted EBIT margin expansion of 170 basis points in the first half of fiscal 2027.
Strategic initiatives include the introduction of the ‘Natural Intelligence’ brand platform, expansion into new product categories, and enhanced digital and in-store customer engagement tools.
Operational highlights included opening three new stores in Asia Pacific, implementing a new logistics network in EMEA, and successfully launching a Shopify-powered commerce platform.
The company remains on track to achieve its full-year financial objectives, expecting low single-digit revenue growth and an adjusted EBIT margin of 11% to 12%, despite ongoing macroeconomic challenges and new tariffs between the US and Canada.
Full Transcript
OPERATOR
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 1 again. I will now hand the conference over to Anna Raman. Anna, please go ahead.
Anna Raman (Director of Investor Relations)
Good morning everyone and thank you for joining us today on the Canada Goose Q2 fiscal 2027 earnings call. Today you’ll hear from Danny Reese, 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 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 the 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 27, 2026 with the same period ended September 26, 2025, and stated percent changes are in constant currency unless otherwise noted. On August 10, 2026, we completed the sale of our Baffin Limited business, reflecting our continued focus on simplifying the business and concentrating resources on our highest priority growth opportunities. As a result, we will be speaking to financial results from continuing operations excluding Baffin Limited, and prior periods are reclassified accordingly. 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.
Danny Reese (Chairman and Chief Executive Officer)
Good morning everyone and thank you for joining us. At the beginning of fiscal 2027 we set a clear financial objective to expand adjusted EBIT margin while continuing to invest in the long-term growth of Canada Goose. Halfway through the year, we remain on track to achieve that objective and the full year outlook we set at the beginning of the year. In the second quarter we grew sales, strengthened the brand and continued to expand our relevance across products and seasons. Our wholesale partners responded well to our growing assortment, and when consumers engaged with us directly, we saw encouraging results. At the same time, we stayed disciplined on costs and focused our investments, allowing us to deliver adjusted EBIT margin expansion in the first half of the year. Now we’re heading into our most important selling season.
We feel good about our fall-winter assortment, our teams are focused and the opportunity is clear: turn customer interest into stronger demand. We are focused on three priorities to build a bigger, stronger and more profitable Canada Goose. Our first priority is to deepen brand desire and turn it into more consistent demand. This year we introduced Natural Intelligence, a new brand platform. It captures something that has always been at the heart of Canada Goose: exceptional craftsmanship, human performance and a deep connection to the natural world. It feels authentic because it comes directly from who we are.
In the second quarter we brought that idea to life through campaigns, expeditions and experiences that showed both the performance and versatility of our products. We’re reaching more people and seeing brand engagement ahead of our benchmarks. We’re also bringing Canada Goose into new worlds. Our collaboration with Keanu Reeves and Arch Motorcycle Racing brings us into motorsport with a custom capsule designed for the team. Our new partnership with Ewan McGregor’s True Wind Expedition puts our performance credentials to work in demanding sailing conditions, particularly through our Seamantra collection. Together with our broader Ambassador network, these partnerships are introducing Canada Goose to new audiences and showing that the brand can play a much bigger role in consumers’ lives.
Throughout the year we are seeing that reflected in the brand metrics. Awareness, consideration and desire improved year over year in markets including the UK, France and mainland China. At the same time, store traffic remains softer in parts of our network. When customers engage with us, they’re responding. E-commerce profit grew and conversion did improve in stores and online. This gives us confidence in the relevance of the brand and our products and tells us where we need to focus.
Our second priority is building a repeatable product playbook that works across seasons. We’ve made real progress in expanding what Canada Goose means beyond winter and giving customers more reasons to wear us throughout the year. Apparel, Wind and Rainwear continued to perform exceptionally well in the second quarter, building on the momentum that we saw in the first quarter. We are particularly pleased by the traction in lifestyle products. They’re bringing new customers into the brand and helping us build a more balanced business.
At the same time, our core colder-weather outerwear continued to perform very well, with growth across key styles year over year. That gives us good momentum heading into fall-winter. The assortment is strong, with better outfitting opportunities, refreshed icons and exciting newness alongside the products Canada Goose is known for. We feel well positioned going into our biggest selling season. Our third priority is to improve channel productivity and capital efficiency. In wholesale, our partners continue to show confidence in both the brand and the broader assortment. Our spring-summer 2027 order book grew significantly over last year. That matters because it’s another sign that the work we are doing to build a more year-round business is working. In direct-to-consumer, we’re investing in the capabilities that help us know and serve our customers better.
We launched a new clientele tool earlier this year that equips our teams to engage our customers more effectively. While still in the early stages, we’re seeing strong conversion from both interactions. We also successfully launched our Shopify-powered commerce platform across multiple markets, along with new point-of-sale systems across our store network. Together, these tools give us an even better view of our customers and inventory and create a connected experience between our stores and digital channels.
We also opened three stores in Asia Pacific, two in Tokyo and one in Sydney. During the quarter we closed one store and we consolidated our presence in Las Vegas. We will continue to optimize our retail network, investing where we see opportunity and making changes where we believe that we can improve profitability. Direct-to-consumer revenue grew year over year while comparable sales declined 7.5% in the quarter, with softer store traffic continuing to be a headwind.
Again, when customers came through the door, the response was strong: conversion improved and average revenue per unit and units per transaction increased. We are encouraged by these results and are confident in our ability to build on that momentum and to return to positive comp sales growth across the business. We’re also improving gross margin through a combination of commercial and operational actions that contributed to adjusted EBIT margin expansion in the first half of fiscal 27, and we’re focused on continuing that progress through productivity and cost discipline. Canada Goose is becoming a broader, more relevant year-round brand. We’re bringing new customers in, we’re building momentum in lifestyle categories, our wholesale partners are showing confidence in where we’re going reflected in a higher order book, and we’re becoming more productive as a business.
Our priorities for the second half of the year are straightforward: build on stronger conversion, drive more traffic and return to positive comparable sales growth while sustaining our focus on profitability. We have a strong fall-winter assortment and a healthy wholesale order book. Now we must execute. With that, I’ll turn it over to Neil.
Neil Bowden (Chief Financial Officer)
Thanks Danny and good morning everyone. In the first half of fiscal 27 we delivered revenue growth of 6% and 170 basis points of adjusted EBIT margin expansion ahead of our expectations. The mixed consumer environment we discussed last quarter has continued. While we also see clear opportunities to strengthen our own execution, both of which have weighed on DTC comparable sales year to date, we are taking action to improve DTC performance and despite the challenging backdrop, remain confident in our ability to deliver our full year outlook.
I’ll now provide more detail on our Q2 performance, starting with our results by geography followed by a brief review of our channels. Q2 revenue increased 5% year over year to 274 million with growth across all channels. D2C comparable sales declined 7.5%, primarily reflecting lower store traffic across all regions, not sufficiently offset by conversion gains and the strength of e-commerce. Asia Pacific delivered strong growth in the quarter with revenue increasing 21% year over year, supported by both D2C and wholesale performance. Wholesale strength was supported by continued momentum on Hainan Island and in Korea, which also benefited from the earlier timing of shipments.
In D2C, revenue increased in both stores and e-commerce. D2C comparable sales declined 4%, primarily reflecting lower traffic, particularly in mainland China amid a softer macroeconomic environment. Importantly, conversion improved, including double-digit growth in store conversion across the region, demonstrating strong execution in the market where our capabilities are the strongest. To support traffic levels and build on these conversion gains, we are investing in market-specific customer activations, clienteling, localized digital outreach and greater visibility in key retail destinations.
In North America, revenue increased by 8% year over year as both D2C and wholesale experienced growth and where we had incremental friends-and-family activity. Compared to the same quarter last year, D2C comparable sales declined 4% in the region, but performance varied by market. Comparable sales in Canada were flat despite softer traffic, offset by better conversion in both stores and e-commerce. The challenge and therefore the unlock for improving performance in North America is in our US stores.
Heading into peak, demand generation activities are a critical focus for these markets with specific attention on converting the traffic we have at a higher rate than the first half of the year. EMEA performance in the quarter was challenged, reflecting softer local and tourist demand, evolving consumer purchasing patterns and product flow delays related to the implementation of our new logistics network. Shifting some wholesale orders into Q3, revenue declined 14% year over year with D2C comparable sales down 27%. As noted earlier, EMEA and Asia Pacific also experienced temporary product availability constraints associated with the implementation of our new logistics network.
The transition led to a delay in wholesale deliveries in EMEA that we expect to catch up in Q3 and some product delivery delays in both EMEA and Asia Pacific, which impacted our D2C business. As with any significant network transition, the ramp-up takes time and is important to get right. We are approaching normal operating capabilities now, with product availability continuing to improve. We are already seeing a benefit from this investment and believe this transition will contribute to operating margin improvement starting this year.
Turning briefly to our channels, D2C revenue grew 1% to $130 million supported by new stores and e-commerce growth. Comparable sales performance partially offset that growth. As I just discussed, e-commerce was an area of strength with positive comparable sales led by North America and Asia Pacific. Customers responded positively to our broader product assortment, targeted digital marketing and enhanced online experience. Wholesale continues to be a significant source of momentum, particularly in North America and Asia Pacific, with revenue increasing 5% year over year to 128 million in the quarter and 13% year to date. This reflects both the growth in our spring/summer and fall/winter 26 order books and strong in-season demand. The underlying indicators reinforce the strength of the channel. Global sell-through is up, channel inventory is more balanced and partners are buying deeper and wider, increasing adoption of our broader lifestyle assortment, evidence that our product is resonating with key opinion leaders around the world.
As Danny mentioned, our spring/summer 27 order book grew significantly compared to spring/summer 26, supporting our confidence in both the strength of our wholesale business and its increasing seasonal diversification. We currently expect to ship our spring/summer 27 order book in our upcoming fourth and first quarters. Other revenue was 16 million compared with 10 million in the same period last year due to a shift in friends-and-family activity into our second quarter. Other sales were down 6% on a year-to-date basis. A quick note on our sale of Baffin, which we divested in Q2: Baffin played an important role in supporting our entry into footwear and provided valuable expertise that continues to inform our long-term strategy for the category. We made the decision to divest the business to focus our resources on our highest strategic priorities.
Baffin generated approximately $35 million in fiscal 26 revenue, primarily in the wholesale channel and mostly during the second and third quarters. To provide a consistent comparison, we are excluding Baffin from both current year and prior year results. Now turning to the income statement, gross profit was 183 million compared with 166 million last year. Gross margin was a significant area of strength in the quarter, expanding 280 basis points year over year to 66. This improvement reflected favorable product mix, sourcing and production efficiencies, higher pricing and favorable freight and duty. New tariffs between the US and Canada went into effect halfway through the second quarter, but our mitigation actions meant we saw immaterial impact in Q2.
More broadly, the gross margin expansion demonstrates the benefit of our product economics and the actions we have taken to strengthen the operating model. Turning to SG&A, SG&A expense was 205 million compared with 183 million last year, representing an approximately 380 basis point increase in SG&A as a percentage of revenue. The increase primarily reflects expansion of our store network, marketing, which was mostly a timing shift from Q1 to Q2, and a modest increase in other costs such as personnel and IT related to key strategic priorities. The comparison also included lower foreign exchange gains this year.
Marketing spend as a percentage of revenue increased by approximately 140 basis points year over year, reflecting the ramp-up in activity ahead of our peak season year to date. Marketing spend as a percentage of revenue improved 45 basis points over the same period last year. Turning to channel margins, wholesale operating margin expanded year over year in Q2, excluding depreciation and amortization associated with our retail network. D2C operating margin expanded, reflecting more effective store labor management even as we navigated pressure on D2C comparable sales and continued to invest in stores that have yet to open. Finally, we are also transitioning from expenditure to benefit realization across several of our major capability investments, which were front-loaded this year.
With the implementation of a new e-commerce and point-of-sale platform and the evolution of our EMEA logistics network largely complete, our focus is shifting to realizing the productivity and operational benefits of these capabilities. Operating loss was 22 million compared with a loss of 18 million in the prior year. Adjusted EBIT was a loss of 22 million compared with a loss of 14 million in the prior year. Importantly, we delivered 170 basis points of adjusted EBIT margin expansion through the first half of fiscal 27, supported by strong gross margin performance and our continued focus on productivity. In Q2, adjusted EBIT margin was negative 7.9% compared with negative 5.5% a year ago.
The year-over-year contraction was on plan and largely reflected the timing of planned investments, including in our retail network, partially offset by strong gross margin expansion. Adjusted net loss attributable to shareholders was 19 million, or 20 cents per share, which increased from a loss of 13 million, or 14 cents per share, in Q2 fiscal 26. Turning to the balance sheet, our inventory position reflects the growth and diversification of the business as we prepare for our peak selling season. Inventory at the end of the second quarter was 497 million, up 8% year over year. This reflects a combination of an expanded product assortment, a larger wholesale order book, as I’ve already mentioned, and lower-than-planned D2C sales compared to the same period last year. This is in addition to planned production growth to support anticipated demand ahead of our peak season.
Inventory turnover improved 8% year over year. Net debt was 782 million at quarter end, an increase of approximately 75 million year over year, entirely reflecting an increase in store lease liabilities. We remain comfortable with leverage at 2.6 times adjusted EBITDA, particularly given that Q2 is typically our peak level of working capital investment. During Q2, we repurchased approximately 2.1 million shares for total cash consideration of approximately 24 million, ending the quarter with 87 million of cash on the balance sheet, compared with 94 million of cash at the end of the second quarter of fiscal 26.
Our balance sheet remains strong and provides us with the flexibility to continue investing in our strategic priorities while maintaining a disciplined approach to capital allocation. I’ll briefly touch on our full year outlook and early view of the third quarter. We remain on track to deliver low single-digit revenue growth in fiscal 27, supported by growth in both D2C and wholesale. Our performance through the first half of the year, inventory position and strength of our wholesale order book give us the confidence that our outlook appropriately reflects the range of opportunities and risks we see through the balance of the year.
Looking at the second half of the year, improving D2C productivity remains a clear priority and an area where we are taking decisive action. D2C comparable sales remained negative in October as softer traffic persisted, with warmer weather delaying seasonal purchasing. Consumers are increasingly shopping closer to need, with demand more closely aligned to colder weather. We are responding by stepping up targeted local marketing and customer activations, showcasing the breadth of our product assortment while strengthening clienteling, in-store execution and product availability.
In wholesale, we enter the second half from a position of strength. We continue to execute well against the order book, supported by strong partner demand and continued confidence in our expanding assortment. Our first half margin expansion plus revenue expectations for the balance of the year keeps us on track to deliver our full year adjusted EBIT margin guidance of 11% to 12%. That includes absorbing an expected 100 basis points of full year impact from the US tariffs implemented in August, compared with our previous estimate of less than 200 basis points.
We are positioned well as we exit the first half of the year. We have exciting new product and a brand that resonates. We have delivered strong wholesale results to date with further opportunity ahead, and we have greater clarity on the actions needed to improve D2C performance. Our focus is on driving traffic, improving conversion and ensuring every customer who engages with us receives an elevated experience and understands the breadth of our assortment.
Together these actions position us to drive stronger performance in the second half and deliver our full year revenue and margin objectives. Operator, please open the line for questions.
OPERATOR
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 one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question, from the line of Jonah Kim of TD Cowen. Your line is open. Please go ahead.
Jonah Kim (Analyst at TD Cowen)
Thank you for taking my question. Danny, just curious on your brand awareness opportunity in terms of the nonpart guidance, where you see the opportunities to increase awareness, and any strategic initiatives that you’re implementing to improve that. And then the second question, Neil, just given the strength that we saw on the gross margin line in the second quarter, how should we think about key presentations in the second half? Thank you.
OPERATOR
A reminder to mute or unmute yourself locally as needed.
Danny Reese (Chairman and Chief Executive Officer)
Hello, can you hear me? Hi, thank you for the question. I’m really happy about our counter-seasonal product and about the way our consumers are perceiving our brand. Our non-down, non-core products are growing much faster than our core products, which are also growing. I think another proof point of this, and makes us very excited, is the performance at wholesale. Our wholesale sell-in and sell-out of Q2 product and first-half product has been very strong.
And further to that, I think our spring ’27 order book, that order book is very strong, and that’s a very strong leading indicator of how our customers and our wholesale partners are seeing our brand.
Beth Clymer (President, Chief Operating Officer)
And John, this is Beth. I’ll take your question on gross margin. Obviously, we’re really pleased with the gross margin results through the first half of the year, expanding 280 bps in Q2 and 210 year to date. And we do believe this is pretty much all structural. So, as you heard Neil say, strong product mix, pricing benefits, sourcing and manufacturing efficiencies, lower freight and duty costs — we’re seeing strength really across all of the drivers of gross margin, and we do expect those to continue in H2 and beyond.
And obviously, gross margin expansion is a core part of our path to continuing to drive long-term EBIT margin expansion. As Neil mentioned, we will see some pressure from the new U.S. tariffs in the second half. We saw little effect of those in the first half, but we’ve done a good job of mitigating the effect of those. We expect the impact to be only 100 bps on the full year. And you saw duty favorability in the first half of the year. Things like our MEN network and other duty optimization efforts globally can hopefully continue to make duties generally a positive thing even as the duty environment around us gets more complex.
I just want to take a minute to highlight why this is all happening, because as a business we’ve been working in completely new ways cross-functionally over the past now several years to focus on driving great, desirable product newness, excitement and energy, and margin at the same time. And I think all of us in this room are really proud of what our teams across our product creation teams have been able to experience that you’re seeing really show up in these great margin results in the first half of the year and in the future.
Jonah Kim (Analyst at TD Cowen)
That’s helpful. And just one follow-up: just the China weakness you’re seeing — how much of that do you think is due to macro, and how are you sort of mitigating with the levers that you have to improve that trend? Thank you.
Carrie Baker (President)
So APAC was actually quite a strength. Excuse me, it’s Carrie. And APAC was quite a strength. You know, when you’re seeing revenue up 20%, double-digit improvement in in-store conversion — that’s all despite the traffic pressure. Of course, you know, it’s consistent with what others are seeing in the broader luxury market. And as we mentioned in the remarks, there were some product availability issues which have been resolved. So we’re quite thrilled with how APAC is performing.
The consumer is responding quite well. They love the new categories that we’re, you know, we’re introducing — whether it’s apparel, whether it’s rainwear — still responding to our heavyweight down and obviously the category that we built, Canada Goose Hldgs. And we’re happy with what we’re — you know, we had a strong Golden Week, and so we look forward to that continuing.
Jonah Kim (Analyst at TD Cowen)
Thank you.
OPERATOR
Your next question, from the line of Brooke Roach of Goldman Sachs. Your line is open. Please go ahead.
Mentoshin Otadamo (Analyst at Goldman Sachs)
Hi, this is Mentoshin Otadamo for Brooke Roach. Thanks for taking our question on DTC. You’ve talked about returning to positive comparable sales growth in the second half while October comps remain negative. Can you help us unpack the drivers of improvement from here across traffic, conversion, product availability, and the fall/winter assortment? And as you think about the full-year outlook, how much of the improvement in DTC comps is contemplated through the balance of the year — 3Q versus 4Q?
Thank you.
Carrie Baker (President)
Sure. So thanks for your question. So we feel good. As we said, we’re entering the quarter, or the second half, with strength. And our confidence comes from the fact that we’re seeing progress across several parts of the business, so we’re not relying on one thing to change. Our focus, for sure, is on what we can control. There are macro factors at play in each region to varying degrees. So we know, we’re aware. We want to make sure that we’re executing against the things we can do.
So whether that’s driving more traffic to our stores, whether it’s making sure our product is in the right places at the right time — we’re making progress on that — whether it’s converting. And so there are lots of opportunities. We feel very clear about what that opportunity is. So again, driving more qualified traffic, convert that traffic quite effectively, building on the improvements that we’ve already seen in conversion, UPT and AOV. And we feel good about that because we have such a strong, broad assortment. So our follow into newness — the consumer is responding to that. So we’re seeing those early indicators of that. So it’s quite clear to us what our opportunity is. And the macro will be the macro. We’re going to focus on what we can control.
As it relates to the sequencing between third quarter and the fourth quarter, I think the broad point is, you know, we’re focused very much, as you’ve heard in our remarks and in the responses, on everything that we can do to inflect. We delivered positive comps last year in both of those quarters. We had a couple months within those quarters where things, depending on the region, might have been a little better and might have been a little softer.
And so that maybe makes it a little bit easier. But, you know, our expectation for this business is that we can deliver positive comps over the back half of the year. And to the extent that that doesn’t happen, you know, we feel like we’ve got enough room in wholesale delivery and in other factors for us to — so we’ve got confidence around all the things that we can do in order to deliver that. And I’ll pass it on. Thank you.
OPERATOR
Thank you. There are no further questions at this time. I will now turn the call back to Anna Raman, Director of Investor Relations, for closing remarks.
Anna Raman (Director of Investor Relations)
Well, thanks everyone for joining us today. And as always, we are here to answer your questions following this earnings call. Thank you so much.
OPERATOR
This concludes today’s call. Thank you for attending. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
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