Earnings Call Transcript - GOOS Q3 2025

Operator, Operator

Ladies and gentlemen, thank you for being here. My name is Krista, and I will be your conference operator today. I would like to welcome everyone to Canada Goose's Third Quarter Fiscal Year 2025 Earnings Conference Call. Thank you, and now I will turn the conference over to Neil Bowden, Chief Financial Officer. Neil, please go ahead.

Neil Bowden, CFO

Good morning, everyone. With me today are Dani Reiss, our Chairman and CEO; Carrie Baker, President of Brand & Commercial; Beth Clymer, President of Finance Strategy and Administration. 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 the 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 the financial results described on today's call will compare third quarter results ended December 29, 2024 with the same period ended December 30, 2023, unless otherwise noted. For today's call, Dani, Carrie, Beth and I will deliver prepared remarks, following which we will open the call to take questions. With that, I'll turn the call over to Dani.

Dani Reiss, CEO

Thanks, Neil, and good morning everyone. I'll start my thoughts on our third quarter performance and progress before turning it over to the team to review our results in greater detail. The third quarter marked solid progress towards our three operating imperatives, leading to favorable momentum throughout the month of December and into the New Year. Our third quarter revenue was slightly lower year-over-year, primarily due to the expected decline in Wholesale revenue. The direct-to-consumer business showed positive momentum. We delivered a negative 6% DTC comp, which, while below our expectations was an improvement from a year-to-date comp. More importantly, we saw a very significant improvement in the month of December, particularly in North America, where comp sales grew 22%. We are particularly encouraged by this performance as it validates the inherent strength of our business, when we execute well across product and marketing. Third quarter results witnessed continued progress across our three operating imperatives. First, setting the foundation for the next stage of our brand and product evolution. A major highlight was the launch of our first capsule collection from creative director Haider Ackermann, under the heritage label Snow Goose, which happened in November. The Snow Goose capsule reimagines our heritage through a new lens, while staying true to our performance roots. The launch was amplified by an integrated global launch featuring influential talent and a coordinated suite of activations around the world. We set records in media with over 30 billion impressions, representing our highest launch in recent history. Our purposeful and strategic efforts around this launch drove significant impact across key brand heat metrics and establishes a foundation for our marketing strategy in the future. The commercial results were equally impressive. 25% of people who purchased Snow Goose also bought mainline products, while nearly two-thirds of existing customers returned to the brand. We also had a three-year high in US search interest and exceeded our customer acquisition targets. All of this validates the more intensive, mature approach we took with our marketing and organizational alignment to reach both loyal fans and new customers. Our evolving marketing strategy this quarter included increased investment behind Snow Goose and peak holiday activities. Our mainline collection resonated well beyond traditional channels, showing up on the film set of Wicked and on the screen in Babygirl. Having a robust presence across the film and entertainment industry has always been a hallmark of our brand and demonstrates our broad cultural relevance. Key fashion capitals like Paris, London, and Italy drove significant follower growth as well. Our brand ambassador Shai Gilgeous-Alexander, the NBA MVP frontrunner, continued to perfectly embody our combination of style and performance. The breadth and caliber of these campaigns, alongside the extraordinary reach of the Snow Goose campaign, showcase the growing global relevance of Canada Goose as a lifestyle brand. We are incredibly proud of what the team has accomplished. Now, turning to our second operating imperative, implementing best-in-class regional execution. Here our precise focus on inventory management, labor optimization, and boosting sales training drove improvements in store conversion rates year-over-year, particularly in North America and EMEA. Third, simplifying the way we operate. We continue to streamline operations while maintaining strategic investments in key growth areas. We diligently managed our operating expenses and our inventory position improved significantly year-over-year, marking our fifth consecutive quarter of decreases. During the third quarter, while macro factors influenced consumer behavior in certain markets, overall, we saw strong performance and operational improvement and marketing initiatives gained traction. As we continue our transformation journey, we are energized with the strong execution of our strategy and the increasing global resonance of our brand. Positive response to initiatives like Snow Goose, the related marketing campaign, and an expanded product offering demonstrates how we are building and sustaining our momentum with consumers worldwide. And now, I'll turn it over to Carrie to discuss our commercial performance in more detail.

Carrie Baker, President of Brand & Commercial

Thanks, Dani. Q3 marked a foundational transformation for Canada Goose as we executed with focus, discipline, and strategic intent. We saw meaningful progress across our operating imperatives, particularly in December and I'm excited to share the results. So, first let me start by discussing our first operating imperative, setting the foundation for the next stage of our brand and our product evolution. Our performance in the third quarter was shaped by our strategic decision to fully support the Snow Goose launch at the end of November, our biggest brand moment for the year. To do that, we deliberately concentrated our marketing investments in the second half of the quarter, which meant that we required more than we normally would be in October and early November. As Dani mentioned, once we activated, our efforts delivered a remarkable improvement in brand momentum and commercial results across all regions and this continued through the end of the year. Our Snow Goose launch marked a sea change. It was a defining moment for us, not just for the quarter, but for how we move forward. Our campaign set a new standard, which showed up differently in all markets—bolder, louder, and yet unmistakably true to our brand. And in doing so, we built a new muscle of executing engaging, immersive, and fully integrated global campaigns that drive real results. On the product front, our mix continued to evolve in the third quarter with lighter down field outerwear revenue growing year-over-year, particularly in December. At the same time, we saw robust growth in our apparel offering, which demonstrates our accelerating brand heat, confirms our relevance beyond extreme cold weather moments, and reinforces our position beyond outerwear. Bestsellers included the Grandview Cropped Jacket and Vest, part of our new fall/winter 2024 collection, and the beloved Chilliwack Fleece Bomber, which was a top seller within apparel. That product evolution continued this month with our expansion into eyewear, representing another milestone in our product journey. Eyewear is a natural next step for us, and we are bringing a uniquely Canada Goose perspective to the category, inspired by nature, designed with purpose and delivering function and style. The launch complements the momentum we saw in lighter down-filled outerwear, and apparel during peak season and it underscores our transformation into a brand with year-round relevance and assortment for any market. Lastly, we strengthened our product leadership team in January, welcoming Judit Bankus as our new SVP of Merchandising. With nearly 20 years of luxury and fashion experience, Judit will oversee our global merchandising and pricing strategies from our London office. She will work closely with Haider Ackermann, in partnership with our design and product development teams to bring his vision to life, while guiding the expansion and evolution of our product roadmap. One of the other key elements of our brand evolution is our Wholesale strategy. Bottom line is, it's working. We intentionally limited allocations, we invested with strategic partners with brand-aligned values and we executed brand-first activations. This drove higher sell-through rates year-over-year, particularly in North America. It increased appetite for in-season reorders, and it means cleaner markets overall. Across the entire channel, we also saw wholesale partners holding to our full-price positioning much more consistently in Q3 than last year. This is exactly where we want to be and this progress sets a strong foundation for our strategy going forward. Now, let me share some more detail about our second operating imperative, delivering best-in-class retail execution. As Dani mentioned, our DTC performance accelerated notably throughout the third quarter, with December delivering improvement in both brand momentum and commercial results, which have carried through to the present day. The intensity of our actions to improve conversion and productivity started to pay dividends, despite the headwinds of lower traffic and macroeconomic pressures. In North America, we saw encouraging results with DTC comparable sales growing 3% in Q3 driven by strength in the US market. Our focus on streamlining retail operations, weekend staffing optimization, and the introduction of host positions across key locations drove meaningful improvements in customer engagement, UPT, AUR, and conversion. During the busiest shopping season, when people's expectations are highest and their time is at a premium, our hosts were critical in not only managing key wait times but in making sure customers were served with Canadian warmth and guided quickly and expertly to find the product they desired. In EMEA, our focus on improved execution delivered meaningful improvements in conversion rates, but not enough to offset the more challenging traffic trends. While broader market conditions led to slower foot traffic, particularly in the UK. I'm proud of how our teams capitalized on every selling opportunity, driving higher conversion, UPT, and AUR year-over-year. This is a direct outcome of our retail initiatives and training programs. In Asia Pacific, we saw positive momentum during key shopping periods including Golden Week and Singles' Day, despite slower traffic in some markets. This momentum has carried into Q4 with positive trends around Lunar New Year. In Japan, we opened two more department store concessions and DTC for the quarter improved significantly year-over-year, as we continued to build into the demand in this important global market. Looking at our online business, while e-commerce-based headwinds in Q3 impacted conversion, global traffic saw substantial year-over-year growth. We continue to believe this is a channel that can deliver stronger results and are actively implementing initiatives to enhance the digital experience, improve site speed, and drive improved performance. We are seeing some bright spots, though. We launched live shopping on Douyin in September. And despite facing challenges in Mainland China, it continues to show promise as a new channel for us. In North America, branded search demand increased approximately 20% in December, pointing to the considerable growth potential as we continue to enhance our digital capabilities. This quarter was a defining moment for us and goes beyond strong commercial performance. We have proven our ability to execute complex global initiatives like Snow Goose, driving meaningful retail improvements and strengthening our position in the wholesale channel, all while maintaining brand discipline and full-price positioning. This demonstrates not just the power of our strategy, but our increasing capabilities to deliver against it. As we look ahead, it's clear these foundations will continue driving both brand heat and commercial momentum across all our channels. I'll now turn it over to Beth.

Beth Clymer, President of Finance Strategy and Administration

Thanks, Carrie, and hello all. As a reminder, our third operating imperative for fiscal 2025 is to simplify and focus the way we operate. We are doing this through internal operating excellence and focused capital deployment. I'm pleased to share our progress in the third quarter. Starting with achieving operating excellence. As you have heard me say each quarter, we remain ruthlessly focused on prudently managing our headcount and third-party cost base. We are making critical hires in key areas of our business. For example, design and product development talent to support our brand and product evolution, including welcoming Judit to the team. Even with these investments, our corporate headcount has not grown since our March organizational changes and we are continually making changes where required to ensure our organization is fit for purpose. Additionally, we have been working to make our operations capabilities more flexible and nimbler to support the business. We demonstrated this with the Snow Goose capsule. These products included new fabrics, trims, and design features, yet we brought them from design conception to consumers in record time. This required new ways of working across our organization. We are also now manufacturing in-season small quantities of mainline products in response to consumer demand signals. For example, our HUMANATURE Chilliwack Fleece Bomber, a very popular product and one of my personal favorites, is manufactured in Winnipeg. And in response to strong consumer demand, we produced more of that style in-season. This has enabled us to capture incremental revenue opportunities and maintain strong sell-through rates. We have done this despite all of the teams involved in this work being smaller in Q3 this year than they were at the same time last year. This is about being simpler and more effective. As you will recall, the metric we look at to measure success of this operating imperative is SG&A expenses as a percentage of revenue. This metric, as reported, improved by 40 basis points year-over-year in Q3 fiscal 2025. However, after accounting for the EBIT adjustments from last year's transformation program investments, SG&A as a percentage of revenue unfortunately remains higher year-over-year for both Q3 and year-to-date. Let's break that down. SG&A deleveraged by 110 basis points, primarily driven by 230 basis points of higher direct costs associated with expanding our store base and our year-to-date comp sales performance not being as strong as we had hoped to give us greater leverage on those costs. This was however offset by approximately 120 basis points of efficiency in our overhead costs. These were driven by corporate savings from our two workforce reductions and our continued focus on optimizing headcount and third-party costs. We are proud of this overhead cost leverage, but we are of course not satisfied with our aggregate SG&A as a percent of revenue and remain committed to improving efficiency and SG&A independent of top-line performance. Turning to capital deployment, I'll first speak to our focused capital expenditures. You'll recall, we are opening fewer stores in fiscal 2025 as we concentrate on optimizing our existing footprint. This along with a general focus on prudent capital allocation has resulted in a significant year-over-year decline in CapEx for the third quarter. At the same time, we continue to invest in critical areas that drive revenue and fortify the foundation of our business. Next, inventory. We remain proud of our progress here. Our Q3 inventory decreased 15% year-over-year, marking our fifth consecutive quarter of reduction. Our inventory turns were 0.95 times, a 16% increase versus last year. Both of these reductions are an acceleration and improvement from prior quarters. Similar to prior quarters, this was due to the temporary reduction in production levels, reducing aged inventory through responsible exit channels, and an improvement in our planning and operations processes. Given our progress in inventory, we are re-ramping our production capacity from the temporarily lower levels at which we started the year. We intentionally remain below historical levels and we'll maintain our disciplined approach to inventory management while also planning effectively for the next fiscal year. This progress on our third operating imperative reflects our commitment to simplifying our organization and driving greater efficiency, while maintaining strategic investments in key areas. We believe the foundation we are building positions us well for sustainable and profitable growth. I'll now turn it over to Neil to review our financial performance and outlook.

Neil Bowden, CFO

Thanks, Beth. I'll now review our third quarter financial results, and provide an update on our outlook. Revenue for the third quarter was $608 million, slightly below last year's $610 million. This reflects revenue growth from the DTC channel, offset by the anticipated decline in the Wholesale channel. Here's a breakdown of our channel performance on a year-over-year constant currency basis. From a channel perspective, DTC revenue increased to $518 million from $514 million last year, reflecting sales from our 74 permanent stores, up from 65 in Q3 fiscal 2024. While comparable DTC sales declined 6%, we saw promising results in North America with comparable sales up for the third quarter. While we recorded positive comparable sales growth in both October and December, these were not enough to overcome a very challenging November. As we noted in our Q2 earnings call and what was repeated today, we chose to be quieter on marketing leading to the Snow Goose launch in late November, a massive brand heat moment. Since then, with marketing spend more in line with historical levels, we have seen positive results with both North America and APAC delivering positive comparable sales growth in January. Specifically in APAC, we've been encouraged by the consumer response to our brand during Lunar New Year. Wholesale revenue declined 8% on a reported basis and constant currency basis, aligning with our strategy to reduce wholesale order volume over the year. For the first nine months of the year, Wholesale revenue is down 17% tracking toward our full year expectation of a 20% decline. Channel inventory improved significantly year-over-year, an outcome that we welcome as we turn our attention towards next year's order book. Other revenue rose to $14.4 millionessentially flat from $14.1 million last year. We expect full year revenue from this segment to align with fiscal 2024 levels. Now some color on regional performance. North America revenue declined 2%, driven by a planned reduction in wholesale order volume. This was partially offset by strong DTC performance in both the U.S. and Canada, which continued to show momentum into January. North America Q3 DTC comparable sales was up 3% year-over-year. In APAC, revenue fell 2%, primarily due to macroeconomic factors impacting DTC in Greater China. However, Wholesale revenue grew due to timing shifts from Q4 to Q3 and higher travel retail sales. Excluding Greater China APAC saw robust growth, particularly in Japan. In EMEA, revenue was down 4% as the UK was weaker compared to the rest of EMEA, impacting DTC results. Wholesale revenue also declined slightly year-over-year as expected. Now, let's turn to gross profit. Gross margin expanded by 70 basis points to 74.4% driven by favorable pricing and reduced inventory provisions, partially offset by a greater mix of apparel, accessories and everyday product. We see this product growth as a major positive as these categories are clearly resonating with consumers. Adjusted EBIT for Q3 was $205.2 million, representing a margin of 33.8%, compared to $207.2 million and a margin of 34% last year. SG&A expenses decreased to $248 million from $251 million a year ago. We have mentioned several ongoing initiatives aimed at driving top line, while also demonstrating discipline in managing our cost base. SG&A as a percentage of sales was 40.7%, down 40 basis points year-over-year. You have heard the details on this from Beth, but it is worth underlining a few key points. First, margin compression from DTC comparable sales decline is a function of our business model and why we are so focused on the activities that drive those metrics positively, specifically traffic generation and conversion. Second, as we simplify the business, we are seeing real gains in corporate costs that are holding. And finally, marketing expense particularly related to Snow Goose, but also demand generation activities in Q3 were significantly higher year-over-year as we capitalized on its key brand and moment and consumer interest during the period. Beyond these three items, the year-over-year improvement on a reported basis reflects favorable foreign exchange impacts and transformation program costs incurred in fiscal 2024 that did not recur this year as well as investment in the store network during Q3 year-over-year. We remain committed to enhancing efficiency and overhead costs, regardless of top line performance. Adjusted net income attributable to shareholders was $148.3 million or $1.51 per diluted share, up from $138.6 million or $1.37 per diluted share in Q3 fiscal 2024 driven in part by share repurchases in the last fiscal year and a more favorable effective tax rate for this quarter. Inventory decreased 15% year-over-year driven by reductions, primarily in finished goods and raw materials which drove strong cash generation in the quarter relative to the same period last year. As a result, net debt at quarter end was $546 million compared to $587 million last year. Net debt leverage was down to 1.9 times adjusted EBITDA from 2.1 times EBITDA a year ago and is expected to end the year below historical levels. Our capital allocation priorities remain focused on driving shareholder value in the medium and long-term: first, investing in organic growth opportunities such as brand and product development, and expanding our retail network; secondly, enhancing the business's foundational needs, including upgrading our technology; and third, maintaining an efficient capital structure. Turning now to our fiscal 2025 financial outlook. We are maintaining our full-year revenue guidance to a range between a low-single-digit increase to a low-single-digit decline compared to fiscal 2024. Considering our year-to-date DTC performance was below our expectation, in particular, comparable sales growth and we had a quieter October and November in marketing ahead of the Snow Goose campaign, we have adjusted our full-year DTC comp sales outlook. We now expect DTC comparable sales to range between flat growth to a mid-single-digit decrease compared to our previous range of a low-single-digit increase to low-single-digit decrease. Our Wholesale revenue outlook remains unchanged with an expected decrease of approximately 20% year-over-year. Similarly, we continue to expect gross margin to stay consistent with fiscal 2024. Based on our performance in the first nine months and revised outlook for DTC comparable sales and a higher investment in marketing activities, we now expect the adjusted EBIT margin to range between flat to down 100 basis points compared to the prior year. This is a revision from our previous range of an increase of 60 basis points to a decline of 60 basis points. As a result, we expect non-IFRS adjusted income per diluted share to range between low-single-digit increase to flat compared to last year with approximately 98 million weighted average diluted shares outstanding. As a reminder, we continue to expect revenue distribution between the first half and second half of fiscal 2024 to follow our historical pattern of approximately 25% and 75% respectively. To close out today's remarks, we are seeing clear signs of progress against each of our strategic priorities. The Snow Goose launch demonstrated the power of our brand to captivate consumers and we are excited about this next phase for Canada Goose. In our channels, we are pursuing best-in-class retail execution and have seen evidence that our plans are working both in the consumer response but also, in the growth capabilities of our team. As we look ahead, we remain focused on what we can control: elevating our brand, driving operational excellence, and nurturing deeper connections with our customers around the globe. On behalf of the senior leadership team, I want to thank our teams around the world for everything they are doing to navigate the current environment while evolving the brand and delivering for our consumers on a day-to-day basis. With that, let me turn the call over to our operator for questions.

Operator, Operator

Thank you. We will now start the question-and-answer session. Your first question comes from Alex Perry with Bank of America. Please go ahead.

Alex Perry, Analyst

Hi. Thanks for taking my questions here. Just first, I wanted to ask about the revenue guide. So you kept the top line the same but lowered the DTC comp sales forecast with no change to the Wholesale guide. What are the puts and takes there to sort of get you in the same revenue range? Does it sort of assume a higher other revenue line? That's my first question. Thanks.

Neil Bowden, CFO

Sure, Alex. Thanks for your question. Yes, so I think a couple of things. As it relates to, obviously, we know where we are on the first of February or so, and so we've got clearly a handful of weeks under our belt and performance in January, which we're happy about. I think our issue is that with not enough time left in the year, we didn't think that we could deliver our original expectation around DTC. And so we probably put a little bit of conservatism in that comparable sales forecast. And where there may be upside in terms of performance that we've seen today, we'll happily take that. As it relates to other, we're not anticipating really to be materially different than last year, which is where the guide is. And the same thing is true about Wholesale, although that's a channel where there's a possibility of some upside if the rest of the year goes better than expected.

Alex Perry, Analyst

Perfect. And then just my follow-up. I wanted to ask about the 22% comp in North America in December, if I heard that correctly. Can you just talk about what you think drove that? Was that mostly the shift in the marketing activation? And then in terms of the momentum you're seeing in January I think you spoke to some positive comps in January. Was that overall DTC comps in January are positive at the company level? And what do you think is driving the January momentum as well? Thank you.

Carrie Baker, President of Brand & Commercial

Thanks, Alex. I'll take the first one. So 22% comp in December, yes, for North America so really that strength of the US. And there's a few reasons for that. Of course, it absolutely was about the initiatives that we put in place. Our teams were well trained. They knew how to capitalize on all the traffic that was coming. They knew they had inventory. The marketing component, I think, is a big thing. So if you remember, we were intentionally quiet in October and November to really support the Snow Goose launch. And so once we fully turned that on and started activating that really drove strong momentum around the world but saw the results of that in North America in stores in particular and that has continued. So I think of course in certain markets it was a little bit colder and so that always is an added benefit. But primarily, it's the combo of our teams doing what they had to do. They executed really well against their imperatives and then turning on the marketing just drove the momentum and gave us the reach we were looking for.

Dani Reiss, CEO

In January, I think your question really is about some color on where positive comps are. So we are seeing at a consolidated level or at least consolidated DTC positive comp. Stores are particularly outstanding, and that's across the world so we're really happy about that. Now it's a little bit of a timing shift in Asia in terms of having an earlier Lunar New Year. And so as we're getting to the comp component of that for last year's Lunar New Year, which was a little bit later, it's possible we're going to see a little bit of slowing in performance in Asia in the first few weeks of February. But we're really excited about what we've seen in the stores and what feels like a continued acceleration. And I'll just underscore the point Carrie made, and this goes a little bit to where the EBIT guide is as well. We have continued to spend on demand generation and marketing activities both top and bottom funnel as we come through January because we know and see that it's working. And so we have recognized that it may have a little bit of short-term pressure in terms of our ability to deliver EBIT for the year but know that it's working.

Alex Perry, Analyst

Perfect. Very helpful. Best of luck going forward.

Dani Reiss, CEO

Thanks, Alex.

Operator, Operator

Your next question comes from the line of Jonathan Komp with Baird. Please go ahead.

Jonathan Komp, Analyst

Hi, good morning. Thank you. Maybe just first a follow-up there Neil. Could you give any more color? I know that implied fourth quarter, given the seasonality of the business, there's a pretty wide range on outcomes you had implied by the full year guidance. So just any other details or color you can share on some of the assumptions you're making in the fourth quarter?

Neil Bowden, CFO

I believe the calculations align with our full year guidance. Additionally, I want to highlight that we expect to see a slight improvement in gross margin compared to last year. This might not be evident in the full year guidance since it remains flat for gross margin, but the Q4 figure is anticipated to be better, leading to some positive impact. As I mentioned earlier, we plan to continue investing in marketing during this period. However, this will apply pressure on operating income. If revenue exceeds expectations, that would also be beneficial.

Jonathan Komp, Analyst

Okay, thanks for that. And then maybe just a bigger picture takeaway question. As you step back and look at the performance of the new product and merchandising initiatives, the shift in marketing strategy, but also some of the short-term pressures, what are you taking away in terms of factors that are unique to the quarter versus any changes or implications for both the future growth of the business as well as the profitability just as we think forward beyond the fourth quarter here?

Carrie Baker, President of Brand & Commercial

I appreciate that. The key takeaway for us is that our decision to start marketing later had a short-term impact in Q3. Specifically, we didn't activate our marketing until the end of November, which wasn't part of our original plan moving forward. However, this period marks a pivotal moment for us. While there are short-term effects, we're also recognizing the long-term benefits. Our approach to market has fundamentally changed, reflecting higher creativity and execution quality across our events, whether in APAC, EMEA, or North America. This new strategy will yield positive results in Q4 and beyond into future quarters. It’s essential to note that we intend to implement our marketing strategies earlier in the future, which is already incorporated into our plans for fiscal year 2026.

Dani Reiss, CEO

What is particularly encouraging for us is the increasing proportion of our business occurring outside of down-filled outerwear. There has been strong performance in apparel and fleece in other categories. As we shift our retail presence away from traditional cold-weather locations, we are pleased with the adoption rate of these other categories, and we definitely plan to focus on them moving forward.

Operator, Operator

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

Brooke Roach, Analyst

Good morning, and thank you for taking our question. I was hoping we could dive a little bit deeper into the brand resonance that you're seeing with the Chinese consumer. I know there's some noise with marketing timing shifts and a shift of the Lunar New Year. But as you spent more money marketing in the market and launched new products, specifically Snow Goose, can you talk a little bit about the consumer response you saw with the Chinese consumer as well as what you view as the current competitive and macro environment leading to potential for growth in that market on a go-forward basis? Thank you.

Carrie Baker, President of Brand & Commercial

Sure. Thanks for your question, Brooke. The response has been quite consistent across the globe regarding how people are engaging with the Snow Goose capsule collection. In China, it’s worth noting that it's one of our strongest markets in terms of brand awareness and strength. The marketing efforts and investments we made there have only enhanced that. We've observed this trend continuing into January. Their activation began around mid-December, which triggered the momentum we've experienced week over week. The response has been very positive, with consumers appreciating the new offerings. As Dani pointed out in his remarks, this collection not only attracted new customers but also resonated with existing ones. About two-thirds of Snow Goose buyers globally are returning customers, indicating that we achieved our goals, which is evident in China, EMEA, and North America. Overall, we are pleased with these results. However, from a macro perspective, challenges remain. In markets like Hong Kong, Macau, and Taiwan, foot traffic is still lower. Mainland China presents a mixed scenario; we've seen strong performance on Douyin, Golden Week was successful, and we’re optimistic about Lunar New Year. Despite the tough conditions, we are noticing positive momentum in the areas where we are investing, and we are satisfied with the results from these key moments.

Brooke Roach, Analyst

Just as one quick follow-up. If we could pivot to the outlook for wholesale great to see some improving sell-throughs in North American wholesale. Can you speak to how those conversations with your wholesale partners are trending for fall/winter 2025? What is your outlook for stabilization in the wholesale channel into the next fiscal year?

Carrie Baker, President of Brand & Commercial

Our wholesale strategy is proving effective, leading to very positive discussions with our partners. We are being selective with our investments, focusing on those brands that align with our vision for future growth and a relevant market presence. The partnerships we've established, such as the PVI activation at Selfridges, are performing well, resulting in stronger sell-through rates and lower inventory levels, which is exactly what we aim for. This has created cleaner markets, allowing for better pricing stability, which is promising for future discussions. Our partners are thrilled about Haider's contribution, bringing energy, innovation, and a bold color palette, which fosters renewed trust and excitement for the future. We primarily observed this momentum in North America during Q3, but we are also having strong discussions in EMEA and noting ATS orders in both regions. In APAC, we see growth primarily from travel retail, which also feeds into our wholesale channel, garnering a similar positive response. Our partners appreciate our investments, which are beginning to yield results.

Dani Reiss, CEO

As far as 2026 goes, we're in the middle of our process so we'll update that outlook on the next call as we normally do.

Brooke Roach, Analyst

Great. Thanks so much. I will pass it on.

Operator, Operator

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

Oliver Chen, Analyst

A lot of the Haider product has been exciting. What have been key learnings and also your thoughts on launch cadence and the interplay with the new design and product development talent you mentioned? A second on traffic. How has that trended digitally and physically in terms of store traffic or any major callouts by geographies would be helpful as well. And third longer term on pricing what do you see happening across the portfolio perhaps like-for-like and mix as you think about modernization of the assortment? Thank you.

Dani Reiss, CEO

Thank you for the questions, Oliver. It's Dani. We were very pleased with the performance of our first capital provider. We believe we confirmed that the new energy around the brand and our launch of Snow Goose attracted both new and existing customers, and there was significant cross-selling. The product has received incredible feedback, as have the campaigns we implemented. I feel we're on the right path regarding how our brand is perceived, and this launch has really sparked that change. I'm very excited about the upcoming releases, which are going to be even better.

Carrie Baker, President of Brand & Commercial

And I'll add to that Oliver is that some of the product development and operations insights you've heard me say in the remarks and different this was for us. These products look very different. The materials are very different. The elevation of design and the speed at which we executed it was also really different. And so that just required new muscles across the organization, the way design product development, manufacturing supply chain, all in together the way we migrate product from the floor of the factory to the stores in a much faster period of time. We experimented with a lot of new things there. And those will pay future dividends both in future Snow Goose capsules. But more importantly, we're taking a lot of those learnings about how to be more nimble into the mainline to joining with the additional investments thinking in line development resources our capabilities there are only going to grow.

Neil Bowden, CFO

As far as traffic goes just on the sort of second theme Oliver I'll start with e-commerce. I think that dovetails nicely with the answer Dani gave around how much interest there has been from the Snow Goose moment and sort of the rest of it particularly digital marketing spend that we've had. We're way up on traffic to the e-commerce site over in the third quarter, which is exciting. If I carve out a little bit of that, there's some benefit to Douyin, which I'm sure you understand has maybe a much higher sort of number of obsessions. But that's also encouraging that new channel, new type of commercial experience, new type of new way to touch our customers has also been met with some real interest. I think as it relates to the store traffic, it's maybe a little bit more of an indication of the macro environment that we experienced throughout the quarter. So, traffic was down a little bit across the entire portfolio. Within the individual regions, U.S. and Canada, in particular, as the quarter wore on, much improved and over the quarter was up. In Asia, flat on the quarter, but again early part of the quarter challenged and good in markets like Japan where there continue to be an influx of tourism, a little bit softer in China. And again, as January, as the calendar started in January has unfolded it's been pretty good as well. Europe is a market where it's sort of the tale of two halves. The U.K. is a spot where we have experienced and seen more macro headwinds than we have in Continental Europe where our traffic is up and we're really happy with the performance. I think the U.K. is a market that continues to be challenged. And that's not a surprise, I don't think given the news. I'll just sneak a real quick comment on the pricing. I think we haven't really done a lot of different things on pricing. We continue to look at it across the categories, across the world, but mainly focused on what the consumer value proposition is and exactly what we are delivering for the consumers. And as Judit gets her arms around what the merchandising plan looks like, and we're introducing more things from the Snow Goose collection, we'll continue to evolve what that pricing looks like.

Carrie Baker, President of Brand & Commercial

Let me quickly comment on pricing. One encouraging aspect is that it isn't serving as a limitation. During key moments such as Black Friday and the holiday season, price is not a concern. This is an important factor. Snow Goose is already at the top tier, and that will continue. As Neil mentioned, we are researching this further. Our focus remains on fulfilling consumer demand with the right price point and the right product.

Oliver Chen, Analyst

Very helpful, thanks. Best regards.

Neil Bowden, CFO

Thank you. And that concludes our question-and-answer session. And I will now turn the call back over to management for closing comments.

Dani Reiss, CEO

Thank you, Operator. And thank you everyone for your continued interest in Canada Goose. To the extent that there may be additional questions, we're always here, either myself or the IR team to handle those. Take care. And have a great day.

Operator, Operator

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