Good day, and welcome to the Canada Goose First Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to Amy Schwalm, VP of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. With me are Dani Reiss, Chairman and CEO; Jonathan Sinclair, EVP and CFO; and Carrie Baker, President. Our call today, including the Q&A portion, contains forward-looking statements. Each forward-looking statement, including our financial outlook, is subject to risks and uncertainties that could cause actual results to differ materially from those projected. Certain material factors and assumptions were considered and applied in making these forward-looking statements. Additional information regarding these forward-looking statements, factors, and assumptions is available in our press release issued this morning as well as the Risk Factors section of our most recent annual report filed with the securities regulators. These documents are also available on the Investor Relations section of our website. The forward-looking statements made on this call speak only as of today, and we undertake no obligation to update or revise them. Lastly, our commentary includes certain non-IFRS financial measures which are reconciled at the end of our press release. With that, I will turn the call over to Dani.

Thanks, Amy. Good morning, everyone. This morning, we released our results for the first quarter of fiscal 2023. I'll start with some highlights from the quarter. In Q1, we reported revenue growth of 24%, hitting almost $7 million. This was ahead of our expectations, and we are very happy with the trajectory of our business as we move into the fall season. North America continued to be a standout market for our brand. As of June, our stores in Mainland China have all reopened, and we are seeing positive signals as consumers are returning to stores. Additionally, our maiden Canada model continued to help insulate gross margins for us at a time when others are seeing erosion. Our first quarter, while the smallest, has always been an indicator of brand strength. Combined with our exciting product launches, store openings, and the progress we've made against key strategic objectives, I believe we have what it takes to seize the tremendous opportunities that lie ahead of us. From a macro perspective, I think it is important to acknowledge the concerns of the global recession and the uncertainty and volatility of today's world. However, as of today, we have not seen any signs of slowing demand. It is also important to highlight the strength of our performance through previous recessions. Canada Goose has grown substantially through every recession, save for the first wave of COVID. I believe this is a testament to our products grounded in performance and functionality as well as our brand luxury positioning and the brand heat our teams continue to drive around the world. I'd like to give an update on the progress we continue to make against four key pillars of our long-term strategy: one, growing our direct-to-consumer mix overall; two, increasing our penetration in key markets; three, re-envisioning our product offerings; and finally, expanding our margins. In the quarter, across our direct-to-consumer business, we saw comparable sales growth of 10.7%. This is due to strengthening traffic trends and enhanced productivity across our existing store network. North America performed very well, and we see no signs of slowing demand. The U.S. continued to show significant gains on top of those made during the pandemic, with Canada's trajectory surpassing the U.S. in this quarter. The U.S. specifically has a tremendous amount of space to grow our store network and expand our customer base. We began our West Coast expansion in 2021, opening our first California location in South Coast Plaza last October. That opening was followed by a pop-up store in Seattle's Bellevue Square last November. We will continue to expand our West Coast footprint this year with new stores in Las Vegas at the Shops at Wynn and in Denver at Cherry Creek, both opening by the end of this calendar year. We have further openings planned in the U.S. this fiscal year, and I look forward to continuing to update you on our progress. With just 43 stores globally, we have so much room to grow our retail store network. We approach new locations strategically and deliberately, placing our stores in some of the most preeminent shopping destinations in the world. Brick-and-mortar remains a key strength for our business, a meaningful touchpoint for our customers and an opportunity for growth as we move forward. In Europe, we are starting to see the return of tourism, which is very encouraging. Recovery across markets varies, with France showing the strongest signs of improvement. In Germany and the U.K., where we have our highest concentration of stores in the region, tourism is also recovering, albeit at a slower rate. We are in the early stages of our retail store journey in EMEA. Six stores opened during the pandemic, and they are finding their momentum after a few volatile years. The development stage of these stores is reflected in our expectations for fiscal 2023. We continue to leverage our influential wholesale partners for awareness, and our strong order books also confirm brand heat in the region. Turning to Asia-Pacific, as I mentioned earlier, as of June, all our stores in APAC are open, and we have begun to see positive momentum as shoppers return to stores. We remain cautiously optimistic in Mainland China, given the proven resilience of the consumer and the operating environment we see today. Last quarter, we spoke about our plan to open four new stores in China in fiscal 2023. We opened in Xian in May, with Qingdao's Hisense Plaza and Chengdu SKP set to open this fall. Our Qingdao Hisense Plaza store places Canada Goose in one of the most preeminent shopping destinations in this coastal city of almost 9 million people, while our Chengdu SKP store will be our second in the city and our fourth within the highly influential SKP group of properties in Mainland China. Moving on, last quarter, we announced our joint venture in Japan. Before the end of the calendar year, we plan to open two new stores in Japan. There are also further store openings planned for calendar year 2023, and I will share those with you in the coming months. South Korea represents a tremendous amount of opportunity for us, having transitioned to our new distributor Lotte Group. We have an incredible amount of whitespace in which to grow in South Korea relative to others in the market as well as our own typical market share. We believe we have the right model and the right partner in place to deliver success in both the short-term and long-term. For both Korea and Japan, we envision multiple new store openings over the next 3 to 5 years as well as dedicated e-commerce capability in both markets, which will drive direct-to-consumer growth in our APAC region. A key element of our growth strategy is expansion into new product categories. We are proud of the progress we have made globally as a performance luxury lifestyle brand. Let me share some recent examples of success from the first quarter across our direct-to-consumer business. Lightweight down sales have grown more than 90% since Q1 last year and represented 40% of total sales in the first quarter. In our apparel category, fleece and newer styles have grown more than 60% over the same period. And all told, non-heavy weight down revenue accounted for approximately 60% of our total sales in the first quarter, marking the highest percentage of non-heavy weight down we have ever realized. This is just a snapshot of one quarter, but it gives us confidence in our ability to successfully expand into new categories. Expanding on that, in September, we will launch a new collection combining the style, performance, and versatility women consumers are looking for with new silhouettes and elevated fabrics and trims. We are taking meaningful steps to grow with the female consumer while continuing to build on the strength of the men's business. To support this key moment, we will launch our first all-female global campaign featuring an iconic cast of extraordinary women who live in the open. We have a tremendous opportunity with our women's business as we continue to evolve and expand our offering, and I look forward to the launch in September. As we noted in our last conference call, we plan to accelerate profitability in fiscal 2023. Jonathan will talk more about this in a moment, but we feel very good about our Mid-Canada model and the advantages it provides us against an ever-evolving backdrop. We also feel strongly about the opportunity ahead of us. As I've said in the beginning of my remarks, our first quarter has always been an indicator of brand strength in the year ahead, and we see positive signs across all of our business. Our exciting product launches, store openings, and the progress we've made against key strategic objectives will help us deliver against the tremendous opportunities ahead. I will now turn it over to Jonathan to discuss our results in more detail and our outlook for the next quarter.

Thank you, Dani, and good morning, everyone. All of my comparisons will reference the first quarter ended July 3, 2022, versus the prior year quarter, which ended June 27, 2021, unless I say otherwise. Our Q1 results reflect a strong start to the year. Total revenue increased 24.2% to $69.9 million, which exceeded the top end of our guidance range of $60 million to $65 million. On a constant currency basis, total revenue grew 24%. The gap between reported and constant currency revenue growth was quite small, as 43.2% of our revenue was denominated in CAD this quarter compared to a lower number, typically of about 25% in a full year. Direct-to-consumer revenue increased 19.6% to $34.8 million due to continued retail expansion and an increase in existing store sales alongside the reopening of stores following COVID-related closures. In Q1 fiscal 2023, we were impacted by COVID-related restrictions in Mainland China and similar closures in the comparative quarter, which affected certain stores in Canada and EMEA. Those stores were open this year. We reported direct-to-consumer comparable sales growth of 10.7% in the quarter, the first time we have reported this metric. As companies define it differently, I wanted to point out our definition. We report the measure on a constant currency basis. It includes sales from e-commerce and from stores which have been operating for one full year or 12 successive fiscal months, excluding store sales for the specific trading days when the stores were closed in either period. The metric was modest this quarter as it was impacted by factors in Mainland China that I've just described. Excluding Mainland China, direct-to-consumer comparable sales growth increased to 32.7% in Q1. Revenue from our wholesale segment increased 27.2% to $33.2 million, largely due to customer requests for earlier shipments as well as pricing changes. In addition, the comparative quarter included $9.3 million in revenue from the Japanese market, which was recorded in the wholesale channel prior to our joint venture. This revenue historically occurred primarily in the first and second quarters. As a result of the joint venture, we now share in both direct-to-consumer and wholesale business, shifting revenue recognition to later in the year, more in line with the seasonality of our direct-to-consumer and wholesale segments for the rest of our business. Consequently, our underlying wholesale revenue, excluding Japan for comparability, rose 97.6% in Q1 2023, better representing normalizing shipping patterns. Revenue increased across all regions, except for Asia-Pacific. In particular, North America saw standout performance for the quarter. The U.S. continued to perform very well, with revenue growth of 68.8%, while revenue growth in Canada accelerated to 80.8%, following the recent removal of COVID restrictions in Canada. EMEA grew 37.4% largely due to the retail network expansion relative to the prior year quarter. Europe also benefited from travel corridors reopening and increased U.S. tourism spending in many large cities as the U.S. dollar strengthened against the euro. As I mentioned, Asia-Pacific results were impacted by COVID in Mainland China as well as by the timing of revenue recognition related to the Japan joint venture. Half of our stores in Mainland China had experienced closures and many had restricted hours. In addition to store closures, we could not fulfill e-commerce orders for a meaningful period. Improved sales in Macau partially offset these disruptions in Mainland China. We grew consolidated gross profit by $12 million to $42.7 million, primarily due to higher revenue and gross margin expansion. We are pleased to report Q1 gross margins increased 660 basis points to 61.1% at a time when others are guiding to lower gross margins due to cost pressures from expedited freight. At a channel level, both direct-to-consumer and wholesale gross margins expanded, coming in at 72.7% and 50.6%, respectively. Q1 2023 gross margins increased largely due to pricing and lower product costs from production efficiencies. The gross margin in wholesale also benefited from more Parker sales compared to the prior year quarter. The adjusted EBIT loss was higher at $75.6 million, driven by increased SG&A expenses. The increase of 33.4% to $123.4 million was largely driven by the timing of $12.6 million in marketing investments, which occurred earlier this year than compared to fiscal 2022. These investments were encouraged to drive brand salience ahead of our peak season. Additionally, we have $6.9 million in higher costs related to opening new stores and running stores at full capacity, as well as $3.8 million in strategic investments, including digital, and $2.9 million in costs to support the new joint venture. The adjusted net loss attributable to shareholders, after backing out the non-controlling interest, was $58.5 million, or $0.56 per basic and diluted share. Turning to our balance sheet, I will start by discussing the Japan transaction. We entered into a joint venture with our distributor, Sazaby League, to accelerate our growth particularly in the direct-to-consumer channel in Japan and better share in the economics of that growth. We determined it should be accounted for as a business combination, consolidating results and backing out a non-controlling interest. We paid cash of $2.6 million and recorded contingent consideration fair valued at $20 million for a total consideration of $22.6 million. In addition, the joint venture includes a put option, fair valued at $21.2 million. Both the contingent consideration and the put option were recorded in other long-term liabilities. In exchange, we acquired $27.3 million of inventory at fair value as opposed to historic cost, meaning there will be less profit recorded as we sell this through. We also acquired a series of other assets and liabilities, which are outlined in the MD&A and financials. We ended Q1 fiscal 2023 with cash of $81.8 million compared to $305.9 million at the end of the comparative quarter, largely due to a greater investment in working capital and share repurchases of $253.2 million in fiscal 2022, of which $65.9 million occurred in Q4. Inventory was $504.7 million compared to $404.5 million at the end of the comparative quarter. Of the $504.7 million, $27.3 million was included upon entering the Japan joint venture. Inventory levels increased ahead of our peak selling season as domestic production gradually returned to pre-pandemic manufacturing levels. Supply chain risks are also mitigated by the earlier acquisition of offshore production compared to the prior year quarter. Further, more inventory is being held in Asia-Pacific as the size of that business grows in anticipation of the peak season with more points of distribution across the region. We are monitoring the levels of inventory in each of our sales channels and across geographic regions and aligning with the demand we are forecasting in each region. Turning to our outlook, as Dani mentioned, the macro environment has become more uncertain since our last earnings call in May. We are closely observing the health of the consumer and forecasted demand. To date, current trends for us remain strong, and we have not seen signs of slowing demand. Our performance in Mainland China has been positive since our stores reopened in June. We continue to expect total revenue between $1.3 billion and $1.4 billion. Importantly, the lower end of our full-year guidance ranges of revenue and profitability assumes limited periodic COVID disruptions in Mainland China during our peak season, while the higher end of the range assumes a return to regular trading levels during this peak season in Mainland China. For the direct-to-consumer segment, this assumes low to high teens comparable sales growth, with the channel projected to reach 70% to 73% of total revenue. Wholesale revenue is assumed to be 6% for the year. At roughly double the contribution we saw last year, we continue to expect $60 million to $65 million in revenue from the Japanese market. Another key contributor to our outlook is product expansion. Alongside continued momentum in our core products, we are seeing significant growth in our non-parker product categories, as Dani touched upon earlier. Moving to profitability, we continue to anticipate an adjusted EBIT margin of 19.2% to 20.7%, driven by gross margin expansion as well as lower SG&A growth and improved retail productivity. We assume consolidated gross margin will be in the high 60s as a percentage of total revenue, with expansion driven by the direct-to-consumer mix shift. We have a long history of taking price in excess of cost inflation grounded in the quality and functional value that our products provide. Our differentiated operating model as a vertically integrated manufacturer, with most products made or purchased in Canada, and higher average unit prices also helps mitigate some inflationary pressures. Gross margin will also benefit from the conversion of our Japanese business from a distributor arrangement to a joint venture. Although this is only the first quarter and our smallest, we have seen green shoots from the improved traffic in markets where closures and restrictions have lifted. This translates to improved store productivity and accelerated profitability. As I said before—and I want to reiterate it here—our margin outlook is not dependent on a full recovery of international traffic, nor on the return of traveling Chinese consumers. Flowing through that, we continue to expect adjusted EPS between $1.60 and $1.90, representing growth of 47% to 74%. This does not assume any incremental share buyback activity. Lastly, I will cover our outlook for the second quarter. We expect total revenue of between $255 million and $275 million. This is in line with the guidance we talked about at the start of the year and reflects the earlier shipment of wholesale orders in the first quarter that I described earlier. It also assumes there will continue to be disruptions in this quarter in China related to COVID. We expect adjusted EBIT of between $8 million and $18 million. Although we expect lower SG&A growth in the full fiscal year, quarter two of 2023 SG&A is expected to be approximately 20% higher than the comparative quarter, largely due to costs of new store overhead support for Japan, volume-related logistics costs, including e-commerce growth, as well as more headcount globally to support strategic initiatives and expanded regional operations. This flows down to adjusted net income per diluted share of between $0.02 and $0.14. In summary, we remain cautiously optimistic for the year ahead. We continue to enjoy the tailwinds of stronger retail traffic and meaningful sales growth in many parts of the world, and we benefit from what we believe to be a unique operating model and supply chain. As we get closer to our business season, we are eager to get our new products into the marketplace. None of this is without risk, given the prevailing uncertainties in the macroeconomic and geopolitical environments. While these persist, we are confident in our strategies, remain focused on the things we can control, and will continue our strategic investments in an effort to drive profitable growth sustainably in the longer term. With that, I will pass it over to the operator to begin Q&A.

And our first question will come from Oliver Chen with Cowen. Please go ahead.

Great quarter. China continues to be a big opportunity. Last peak season ended with closures due to COVID and Omicron in China. Stores have just opened up again recently. How confident are you with respect to brand strength in China as you head into your peak season? And the follow-up on women's and non-heavy execution, they both sound really exciting. I would love color on the women's opportunity ahead as a percentage of mix? And any other details you could provide on the key points of differentiation on the non-heavy customer side—what is this customer like versus your traditional parkas customer?

Thanks, Oliver. I appreciate the questions, and they are good questions. I think we're very confident with China for a number of reasons, particularly as we've built a strong business there to date, and we continue to see strong demand from our Chinese consumers who love our products. Recent trends are encouraging. All of our stores are open again as of June, and the trends today show positive momentum. We expect to see that continue. Moreover, our ability to renew leases and secure new ones in the best shopping districts is a testament to brand heat. It's hard to get great locations unless we're drawing consumers into the malls and shopping centers. This reality showcases why we are strong in China. Our branded guidance surveys indicate solid brand awareness and conversion in the region, and we see strong results in our own brand surveys. Leadership in China has been crucial recently; Belinda Wong, who runs Starbucks' Asian business, has joined our Board of Directors and has been insightful in navigating the Chinese landscape. Additionally, we hired a new President for the region, who starts in early fall, further strengthening our local leadership. We are firmly committed to China for the long term and excited about the upcoming peak season and the opportunities ahead. As for our women's business, we see this as a significant opportunity. Currently, our sales are more or less 50-50 or slightly skewed towards men, but we believe there is much room for growth. To that extent, we've heavily invested in styles and designs to accelerate the adoption of our products among female consumers.

As you think about non-heavy jackets and such. What are you seeing with that customer relative to others and the nature of that frequency?

I believe our products have long appealed to both men and female consumers. It’s about designing and creating a new category of products that resonate with women in a different kind of way, allowing them to wear these pieces in varied use cases. We've demonstrated that we have repeat customers across genders, and we see an opportunity in the women’s category. We aspire to increase our sales and the percentage of business transacted with female consumers, which will significantly benefit our overall top line.

Our next question will come from Ike Boruchow with Wells Fargo. Please go ahead.

I want to go back to the comment you made about the first quarter being a key indicator for you guys regarding brand strength for the remainder of the calendar year. Is there anything else you can share anecdotally or more specifically about how much visibility you have in the business moving forward into the holiday season? This could include conversations with wholesale partners or order books.

Yes. Thank you, Ike. I can say that our first quarter has been an indicator of brand strength and a leading indicator of what’s to come. This year, we posted revenue growth of 24% to nearly $70 million. All of the metrics and momentum we’ve seen has been very strong, giving us strong conviction that this momentum will continue. Our product is something people buy for its functionality. Even in recessionary times, people tend to buy products like ours because they last longer. We have a lifetime warranty on our products that offer protection and are timeless. We've grown through every economic cycle over the last 20 years, save for the first wave of COVID. Hence, we feel quite strong about our future and the quarters to come.

If we consider this from a wholesale perspective, we had an order book at the beginning of the year, and our guidance for growth in the wholesale business remains at 6%. There have been no conversations to sway that view, and we’ve started off strongly in terms of shipments to the wholesale community. Additionally, excluding Mainland China, we saw a record 32.7% growth in direct-to-consumer comparable sales, demonstrating strong momentum.

When you look at inventory across the globe, particularly in North America, are you observing anything that indicates building inventory or competitive pressure in the categories you operate in?

We aren't seeing anything that raises concern. As we look at our own inventory levels, they’ve increased with our expanding store network, allowing us to support the potential of our stores. Inventory is being staged globally so we can maximize demand. We have a solid business operation, so we feel confident about our inventory levels versus the competition.

Our next question will come from Jonathan Komp with Robert W. Baird. Please go ahead.

Could you clarify the positive response in China since the reopening of stores there—does it mean positive sales compared to closure trends, or is it more about overall consumer behavior? And as you evaluate the balance of the world, how are you planning for economic downside scenarios?

We've experienced a gradual recovery in the Chinese market as consumer shopping behavior improves. We've seen pent-up demand since reopening our stores in June, and we expect this to continue, as our current numbers indicate trends towards recovery. We're optimistic about the future of our business in China, and we continue to consider it a crucial market, enhancing our customer base by opening more stores this year.

To add to that, several of our stores faced closures during Q1, affecting consumer traffic. We noticed improvement as business restrictions eased, revealing growth compared to the last period. Although variability exists, we've mapped our performance back to past consumer behaviors during previous lockdowns.

Our next question will come from Michael Binetti with Credit Suisse. Please go ahead.

Regarding your guidance, do you feel you've left any conservatism that may aid in achieving the high end of your range? What have you seen in terms of cancellations attributed to the caution we've observed in the retail channel looking ahead into the fall holiday? And, Jonathan, when considering your profitability potential, what are the key components you need to unlock to reach a 25% EBIT margin in the coming quarters?

Our supply chain provides us with substantial flexibility; we can respond to demand wherever it appears. Therefore, instead of labeling it conservatism, we can react positively to anticipated demand as we approach peak season. Furthermore, we are not observing significant cancellations in the wholesale order book. Retailers remain loyal to their orders, reflecting a healthy wholesale channel, which contributes to strong gross margin density. To reach our margin expansion goals, it revolves around concerted growth in our retail network. Our existing network and store placements facilitate ongoing improvements, and we have a strong focus on enhancing sales density.

Our next question will come from Omar Saad with Evercore ISI. Please go ahead.

Can you remind us how the footwear business developed last winter in China, especially given the lockdowns around that time? Can you also share insights about the Japanese market, particularly your expectations for that business and the rationale behind the joint venture?

Last year, our parkas business in China performed strongly through Q3, which is one of our peak shopping quarters. However, lockdowns began to affect traffic starting in December, continuing to impact store operations for about six months. Moving forward, we remain optimistic about the growth of the joint venture in Japan. We have a strong partner who brings an excellent understanding of developing Western brands in the Japanese market, which we believe will significantly enhance our direct-to-consumer business.

Our next question will come from Meaghen Annett with TD Securities. Please go ahead.

Can you share your thoughts about CapEx regarding manufacturing capacity? Are there any expected changes in your manufacturing mix between in-house and third-party production due to the strength you're seeing in non-parka categories?

Our capital expenditure is pretty stable; it correlates with store openings and investments in our supply chain and operating model. We own eight factories, which provides flexibility in allocating production to manage different categories and volume requirements without limiting our current plans. As we expand into new categories, we will seek to engage the best global resources for production. However, the majority of our down production remains in Canada.

Our next question will come from Brooke Roach with Goldman Sachs. Please go ahead.

With the strong performance in the U.S., can you articulate your view regarding sustainability, growth outlook within your direct-to-consumer channel for the remainder of the year? Additionally, as you consider brand investments and product expansion in North America, what do you believe is the right ZIP code for long-term revenue growth?

For the U.S., we remain early in our journey. We're seeing significant growth across multiple channels, with a robust pipeline for planned store openings indicating sustained growth. Our customers are increasingly discovering our brand and our offerings beyond parkas, leading to swift adoption of new categories. We see no signs of a slowdown and continue to strengthen our market presence.

Our strategy focuses on growth in North America, which in turn fuels potential in EMEA and Asia-Pacific. As we enhance our retail density, it supports broader growth across our global operations.

Our next question will come from Adrienne Yih-Tennant with Barclays. Please go ahead.

Dani, I wanted to revisit your comments regarding shoppers returning. Can you provide insight into the current percentage of sales from tourists compared to more normalized pre-pandemic levels? Jonathan, what portion of sales comes from Mainland China this quarter versus last year? Regarding lower product costs, are these due to freight improvement, modal mix, or economies of scale?

Regarding tourist sales, we have not included international tourism in our models or guidance. We are assuming that Mainland China trends back towards normal, especially as we approach our peak selling season.

In the quarter, the majority of our Asia-Pacific revenue comes from Mainland China due to limited performance from other countries in the region. As we move forward, we'll continue to monitor these dynamics closely while innovating to improve our product costs through sourcing efficiencies, especially as we return to higher volumes following COVID-related restrictions.

Our last question will come from Jay Sole with UBS. Please go ahead.

Can you elaborate on the footwear business following last year's launch and any general revenue targets or marketing expenses for its growth?

We have extensive plans for our footwear line and are expanding our style mix with new offerings that I believe will perform well in both outdoor and urban settings. We aim to grow this category steadily and see substantial business opportunities in the coming years as we build this successfully.

This concludes our question-and-answer session, which also concludes our conference for today. Thank you for attending today’s presentation. You may now disconnect.