Thank you for standing by. My name is Amy, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Canada Goose Inc. Second Quarter Fiscal 2026 Earnings Call. It is now my pleasure to turn the call over to Neil Bowden, Chief Financial Officer. You may begin.

Good morning, everyone, and thank you for joining us on the Canada Goose Q2 Fiscal '26 Earnings Call. Today, you'll hear from myself, Dani Reiss, our Chairman and CEO; Carrie Baker, President of Brand and Commercial; and Beth Clymer, President and Chief Operating Officer. We'll start with prepared remarks and then answer questions. Today's presentation will contain forward-looking statements that are based on assumptions and therefore, subject to risks and uncertainties that could cause actual results to differ materially from those projected. We undertake no obligation to update these statements, except as required by law. You can read about these assumptions, risks and uncertainties in our press release issued this morning and our filings with the U.S. and Canadian regulators. These documents are also available on the Investor Relations section of our website. We report in Canadian dollars. So the amounts discussed today are in Canadian dollars unless otherwise indicated. Please note, the financial results described on today's call will compare second quarter results ended September 28, 2025, with the same period ended September 29, 2024, unless otherwise noted. With that, I'll turn the call over to Dani.

Thanks, Neil, and good morning, everyone. We are extremely pleased to share with you today our results of our second quarter. Our core direct-to-consumer business continued to show strong momentum across the board. Direct-to-consumer comparable sales grew 10% year-over-year with positive comps in all regions and notable bright spots in the United States and China. This marks 10 consecutive months of positive comps beginning last December as our operating imperatives drive stronger consumer engagement and results. I'll talk more about that in a moment. Wholesale represented about half of our total revenue in Q2, which is typically our largest wholesale quarter. Revenue for the quarter was in line with our expectations, slightly down year-over-year and flat through the first half. We see strong positive leading indicators in the channel with stronger sell-through globally, improved inventory health and greater product diversity and excitement from our partners about our upcoming collections. Our continued top line strength is a result of disciplined execution across our four operating imperatives. First, expanding our product offering to enhance year-round relevance. Revenue from new styles as a percentage of total revenue more than doubled year-over-year, driven by new products in both our downfilled and non-downfill categories. This drove notable growth in our DTC channel with revenue from newness now representing roughly 40% of DTC sales for the quarter compared to 10% last year. We see significant runway for growth through product newness. Striking the right balance between new products and a very strong core is critical to our long-term success. Apparel remained our fastest-growing category as we continue to strengthen our year-round relevance and reach a broader range of consumer lifestyles and environments. Second, building brand heat through focused marketing investments. Our fall/winter 2025 campaign presents our brand with a fresh perspective rooted in both city life and the outdoors, amplifying the hero products through compelling storytelling, bold design, and seasonal relevance. We launched an exciting new product collaboration with Canadian basketball player and our global brand ambassador, Shai Gilgeous-Alexander, NBA Champion and MVP. This was a cultural moment fusing style and heritage in a way that speaks to today's global luxury consumer. We also announced an exciting new global brand ambassador, acclaimed actor Hsu Kuang-han. His impact in APAC and Mainland China in particular have been immediate, driving engagement, reach, and relevance. Later this month, our Snow Goose collection returns at the height of our peak season with another bold statement of who we are and where we're going. We are speaking more frequently to our consumers, and it is really resonating. Third, driving business expansion through strategic channel development. We continue to deliver an elevated experience at every touch point. The direct-to-consumer comparable sales growth has been consistently strong, showcasing our integrated approach to store execution, inventory availability and enhanced, more frequent marketing activities. Store conversion rates have increased year-over-year in every region for the third quarter in a row, a tangible indicator that our renewed focus on disciplined retail execution is working. We also strengthened our store network this quarter, opening one store in Macau and completing two strategic relocations, one in Beijing and most notably a new Paris store on Champs-Élysées. We are thrilled about our new location in Paris, strong traffic and luxurious adjacencies and have introduced an elevated store design. I personally attended the grand opening just last week, and two things stuck out to me. How busy the store was during the day with a full mix of consumers eager for our product and its elegant design elevated unmistakably Canada Goose. In wholesale, we are evolving our brand presence with more relevant assortments and elevated visual storytelling. This quarter, we unveiled a new brand expression through key in-store activations such as the Fall/Winter '25 Chilliwack immersive pop-up with an archive discovery experience at Selfridges in London and Galeries Lafayette in Paris. With these activations, we're bringing our brand to life in a consistent way everywhere. Our fourth operating imperative is operating efficiently with pace and accountability. Neil is going to talk about this one in more detail, but I want to emphasize that we are very pleased with our top line results so far this year, although our margin in the first half was pressured year-over-year. This was deliberate and driven by key investments in marketing and in our stores that will fuel growth in the second half and beyond. We are very happy to report that the second half is off to a strong start with positive DTC comps in October. We are entering our peak season well positioned and with confidence across both store and e-commerce channels and with a clear focus on translating that progress into sustained profitable growth and stronger margins. In closing, the combination of more consistent marketing, a stronger mix of in-season product newness and sharper channel execution is driving improved financial performance and deeper consumer engagement. I'm confident in our direction and proud of the foundation that we've built for long-term growth. On behalf of our senior leadership team, I want to again thank our Canada Goose teams around the world for their passion for the brand and relentless preparation for our peak season. And with that, I'll turn it over to Neil.

Thanks, Dani. Before diving into the financial results, I want to cover two key points to frame our financial performance in Q2. First, we are very pleased with our top line results, particularly strength in the DTC channel. A year ago, we reported weak comps, and we were in the early stage of implementing a number of changes to our D2C operations, which began delivering results late in the third quarter of fiscal '25. We look at the performance over the last three quarters as evidence that those changes across our network are working. The channel mix is where we want to be. Strong D2C performance underpinned by comp growth, wholesale performance meeting internal expectations through H1, and reduced emphasis on activity in our other channel. Second, given our SG&A profile this year, particularly spend in our stores, marketing, and product creation, our EBIT dollars and margin are lower than they were a year ago in both Q2 and the first half of the year. On the back of stronger-than-expected comp performance and tighter cost control, we are well set up for the balance of the year. That said, we are focused on operating margin expansion, and I'll cover the puts and takes as we move through these comments. Okay. Let's get into the details. Revenue for the second quarter was $273 million, 2% higher than $268 million in Q2 of last year, but down 1% on a constant currency basis. Now some color on channel performance before getting into the regional results. All the revenue figures I cite are on a constant currency basis. D2C revenue was up 21% with sustained strong performance in all our regions and across both stores and e-commerce. Channel growth was fueled by direct-to-consumer comparable sales growth of 10%, led by North America and APAC, while EMEA was slightly positive. That's three consecutive quarters of positive comps, a clear indicator of sustained momentum and solid execution of our operating imperatives. Wholesale revenue was down 5%, in line with our expectations and down 3% on a year-to-date basis as we continue to focus on elevating brand positioning within the channel and maintaining a healthy inventory position. You heard us say over the past few quarters that we expected it to be stable this year, and this is exactly where we are as we exit H1. Revenue in our other channel totaled $10 million compared to $27 million last year, reflecting an intentional pullback in friends and family events in the first half of the year. We expect somewhat limited activity in Q3, given our focus on executing in the most important quarter of the year. Now commentary on the geographic revenue trends in Q2. In North America, outstanding D2C comp performance in Q2 was the most important factor. The brand is performing very strongly in both Canada and the U.S., where stores and e-commerce comps grew in the low teens. Channel mix away from both other revenue due to fewer activities and timing of wholesale shipments led to the regional revenue being down 8% year-over-year. In APAC, revenue increased 20%, driven by growth across both DTC and wholesale channels. The region delivered high single-digit comp growth during the quarter with Mainland China leading the way. Our performance in this market remains solid, even as consumer sentiment in China is somewhat mixed. Demand in Japan was robust with substantial revenue growth supported by new store openings and a full quarter of performance from our flagship in Tokyo Ginza that opened late in Q2 fiscal '25. E-commerce performance in the region was solid on a comp basis and was further aided by growth in our Douyin channel. In EMEA, revenue was down 7% year-over-year. The trends in this region have been consistent, strong performance on the continent and a more challenging consumer environment in the U.K. With this backdrop, we delivered slightly positive comps accompanied by a timing shift in the wholesale order book to later in the year compared to fiscal '25. We remain focused on optimizing conversion in our channels and marketing execution to mitigate those trends. Moving down the income statement. Let's turn to gross profit, which was $6 million higher than the prior year. Gross margin expanded 110 basis points year-over-year to 62.4%, primarily due to favorable channel mix, more DTC and less revenue in the other channel, partially offset by higher product costs and a higher mix of apparel. Shifting to SG&A. Reported SG&A expense for the quarter was $188 million, an increase of $25 million or 16% year-over-year. Excluding the quarterly earn-out charge for our knitwear manufacturer, SG&A as a percentage of revenue was 67.6%, up 730 basis points year-over-year, reflecting planned investments in key revenue-driving areas such as marketing and stores ahead of peak. This was mitigated somewhat by corporate SG&A leverage. The increase in marketing expenditure this quarter reflects our deliberate shift toward upper funnel activity to build cultural relevance and brand desirability as well as a more balanced approach to our marketing calendar throughout the year following a quieter period in H1 last year. We've continued to invest in our stores with a focus on labor and training to prepare for peak season as well as key store openings, which led to some deleverage in Q2. These investments are partially offset by leverage from our corporate expenses, which are growing at a much slower rate than revenue, even while we're adding talent in areas like product creation. We recognize there's still meaningful runway to improve SG&A costs as a percentage of revenue. And while we continue to invest in key areas that will deliver long-term value, we remain disciplined and thoughtful about how and where we spend. In our fourth operating imperative, operating efficiently with pace and accountability, we continue to enhance the flexibility and agility of our operations to better support growth. Here is an example of one such win. In July, we closed our largest U.S. warehouse and nearly all shipments to North American retail stores are now fulfilled from Canada. This gives us a single larger pool of inventory, allowing us to deliver products to stores more quickly while reducing overhead costs. For clarity, this was neither in reaction to any tariff concerns nor does it change our trade risk profile based on what we know today. It was about simplifying our operations and reducing costs. With revenue growth and gross margin expansion offset by planned SG&A growth, our adjusted EBIT was a loss of $14 million for the quarter, which decreased from a profit of $3 million in Q2 last year. Adjusted net loss attributable to shareholders was $13 million or $0.14 per share compared to a profit of $5 million or $0.05 per share in Q2 of fiscal '25. We ended the quarter with a strong balance sheet. Inventory was $461 million, down 3% from last year, reflecting stronger consumer demand and tighter inventory management. Inventory turnover was 0.9x, slightly improved compared to the same period last year. Net debt at quarter end was $707 million compared to $826 million in the second quarter of fiscal '25 as net working capital improvements over the past 18 months, particularly inventory, delivered operating cash flows that led to reduced short-term borrowings compared to the same period last year. During Q2, we successfully amended our term loan by extending the maturity until 2032, solidifying our capital structure. Our net debt leverage was 2.6x adjusted EBITDA compared with 2.9x adjusted EBITDA at the same time last year. CapEx in the second quarter was higher versus the prior year as planned, given our fiscal '26 store opening program. As we've said, we'll be opportunistic in adding stores as our confidence in delivering comp sales growth increases, which has been demonstrated around the world for the past three quarters. We enter peak season with confidence based on execution to date and our plans ahead but with our collective heads down working towards continued success in the second half of fiscal '26. And with that, I'll turn the call over to our operator.

Operator, you can open the line for questions.

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

Oliver, thanks. It's Carrie here. We're really excited about our DT comp sales. I think that has been such a big effort over the last 18 months, and you've seen us quarter after quarter start to deliver on that. There's a few things. It's not just one or the other; it's the combination of we've better trained our staff. We've hired earlier and so that they're ready for peak. They're starting to deliver that. So sharper channel execution. There's also a product piece, which is really exciting. So we—as you heard Dani talk about, we've delivered so much more newness, 40% of newness now being DTC revenue. And that's both seasonal relevance. So there's better product for Q2 so that people are choosing something they're wearing it right now, but then also the inventory availability. So we've done a lot of work of making sure that the stores and online are ready for peak, they're ready for people to come in when we're marketing it. So the third piece is the marketing. Really, it's been such a boon to the traffic, the engagement, the excitement that we're seeing from consumers. As you heard Neil talk about, we're marketing earlier. It's a more consistent execution that we're seeing. So that combination of all those three things is really driving our success in DTC, which we're thrilled about, and we're seeing that continue into Q3.

In terms of the productivity, Oliver...

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

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

So on the U.K., yes, so I don't think it's anything different than we've been seeing the trend. You heard Neil talk about that as well. Many brands are experiencing that. It's very different than what we're seeing in Continental Europe, which remains strong. And so we're doing what we're focused on. The teams are focused on maximizing every person that comes into the store, every visit online. And so that's sharper execution. I think we have opportunities still to improve that, but I think the efforts that we've been implementing, the incentives in-store staff, having the product inventory available has really helped us there, and we'll continue to monitor that.

Oliver, it's Beth. I'll take your question on SG&A. Part of the reason we are so energized by the positive comp results is that creates a really nice opportunity for margin expansion over the medium and long term because of our fixed-variable makeup. Obviously, the more we can drive from comp store sales growth, the more we can leverage the fixed costs in our retail network. So we feel really good about our revenue growth profile, allowing us to continue to drive productivity there. Obviously, as you know, we are making investments this year, investments in Q2. That is intentional. That is to drive growth not only in peak season, but in fiscal '27 and beyond, brand relevance, and store experience, right? So there are obviously investments that are pressuring the margin and the SG&A as a percent of revenue at the moment, but we feel really great about the underlying productivity and our ability to drive that margin in the medium to long term.

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

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

For sure. Thanks for your question. It's Carrie again. We're feeling really encouraged. I mean the thing to me is like despite the differences in all of our markets, the consistency of our performance there and being able—higher conversion, the comps increasing, it just makes us feel very good, and we're also seeing that continue into Q3. I think, as I said earlier, it's really a number of factors. The teams are well trained. They are ready for peak. We've got the inventory. And the newness we're seeing, let me comment a little bit on that. It's not just that we're broadening the assortment to more seasonally relevant. That is a big part of it. But it's also newness and animation of some of our classics. So if you're looking online or if you're going into our stores today, you'll see a big focus on our Chilliwack. And Dani mentioned some of the activations that we're doing in some of our wholesale partners. And that is a big part of what people come to Canada Goose for, but we're giving them a new reason to be excited. So the Chilliwack is a classic product that we've had in our line for at least 10 to 15 years. When you come in store today, you see six different animations of it, versions of it, different fabrications, whether it's wool, a puffer version, our Chilliwack fleece is flying. That is like the number one demand product right now. People are asking for more. So that's the way we're animating and bringing people back into store or attracting new consumers, and that's consistent across every region.

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

Thanks, Jon. Yes, I think I'd point to a couple of things. So obviously, the fuel that comes from positive comps is critical to driving overall channel margin expansion as well as being able to leverage the corporate costs to the extent that they're fixed. And so we're absolutely focused on continuing, just to your first question, continuing to drive that comp sales. Second is ensuring that the investments that we've made up to this point, whether that's marketing or whether it's store labor are delivering in season as we expected. And we've been pretty clear this year that not everything will deliver in season, but some will. And then third, how do we get enough leverage out of maintaining a disciplined approach to the corporate kind of fixed cost here in the center so that when we grow the revenue in the channels, we are leveraging that fixed cost. And so those are the three levers that we're pulling. And you're absolutely right to hear degree of confidence around continuation of that top line performance and where we think we've got control over the other things.

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

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

Absolutely. So yes, I think there's two things that are sort of masking the actual amazing sales results that we're seeing in DTC. One is wholesale, and that is just purely timing. As you heard Neil talk about, wholesale remains stable. Our expectations are exactly where it should be. That strategy of like intentionally pulling back and making sure that we're growing with the right partners, that is working. And so you're just going to see that timing difference there. The second part is the intentional pullback of—in our other channel. And so that was—last year, it was important for helping us clear through some inventory, and that just didn't happen in Q2, and that was intentional on our part. So we're really encouraged and the momentum that we're seeing is not just in one or the other market. It's in both Canada and the U.S., and we see that again continuing into Q3.

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

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

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