Good morning. My name is Jacklyn and I will be your conference operator today. At this time, I would like to welcome everyone to Canada Goose's First Quarter 2020 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Patrick Bourke, Senior Director, Investor Relations. You may begin your conference.

Thank you. Good morning and thank you for joining us today. With me are Dani Reiss, President and CEO; and Jonathan Sinclair, EVP and CFO. For today's call, Dani will begin with highlights of our first quarter performance and then update you on the progress against our key priorities. Following this, Jonathan will provide details on our financial results. After our prepared remarks, we will take your questions. Before we begin, I'd like to inform you that this call, including the Q&A portion, includes forward-looking statements. Each forward-looking statement made on this call is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Certain material factors and assumptions were considered and applied in making forward-looking statements. Additional information regarding these forward-looking statements factors and assumptions appears under the heading Cautionary Note Regarding Forward-looking Statements and Risk Factors in our Annual Report on Form 20-F which is filed with the SEC and the Canadian securities regulatory authorities and is also available on our Investor Relations website at canadagoose.com as well as the earnings press release that we furnished today. The forward-looking statements made on this call speak only as of today and we undertake no obligation to update or revise any of these statements. During the conference call, in order to provide greater transparency regarding Canada Goose's operating performance, we may refer to certain non-IFRS financial measures that involve adjustments to IFRS results. Any non-IFRS financial measures presented should not be considered an alternative to financial measures required by IFRS and are unlikely to be comparable to non-IFRS measures provided by other companies. Any non-IFRS measures referenced on this call are reconciled to the most directly comparable IFRS measures in the table at the end of our earnings press release issued this morning which is available in the Investor Relations section of our website. With that, I will turn the call over to Dani.

Thanks Patrick and good morning everyone. Fiscal 2020 is off to a great start. Our operational execution was outstanding and we continue to see strong demand globally from both consumers and from wholesale partners. We're moving the needle on a number of important strategic initiatives and here are some of the things that I am most excited about. On the supply side, our continued investment in building production capacity including our recently opened facility in Montreal are paying dividend giving us greater flexibility to ship wholesale orders earlier in the year and to put ourselves in the best possible position going into fall/winter. From a sales perspective, we grew significantly in all geographies compared to Q1 last year at levels that met or exceeded our expectations relative to the quarterly ebbs and flows of our business in each market. Starting with North America. In Canada revenue increased by 40.4% with Vancouver and Montreal putting up best-in-class performances in their inaugural first quarter. Our growth in the U.S. was 15.8% which we feel very good about as wholesale shipments were comparable to last year and we added a smaller local market in Short Hills, New Jersey. We also enjoyed the strong productivity online and in our existing stores which was in line with our other markets. In Europe and rest of world, we grew by 79.7% with earlier wholesale shipments making a significant impact. In Asia, our topline nearly tripled to $18.1 million from $6.6 million with wholesale growth in Japan and direct-to-consumer operations in Greater China being the two primary drivers. Building on the momentum of our spring collection performance in Q4, we reached a major milestone in the evolution of our offer of strong contributions from lightweight down, knitwear, and rainwear. Non-parka DTC revenue nearly doubled relative to Q1…

Thanks, Dani. Good morning, everyone and thanks for joining us. As you just heard, we started the year on a high in our smallest quarter. We were able to fully satisfy partner requests for earlier shipments and an exceptional in-season demand all while putting ourselves in the best possible position for the upcoming fall/winter season. This is a direct result of the scalability and flexibility of our in-house manufacturing and that's foundational to the power of our unique operating model. With that backdrop as a starting point, I'm going to walk you through our numbers for the quarter. As usual please remember that all the figures quoted are in Canadian dollars. Turning to revenue. Revenue grew by 59.1% to $71.1 million or 58.6% on a constant currency basis. Across all channels, geographies and products the diversity of our growth in the quarter was remarkable. Starting with wholesale. Revenue grew 68.8% to $36.3 million. Now that's obviously well above our expectations for annual wholesale growth. In response to stronger order book and customer requests, we were able to ship a greater proportion of our order book earlier. In our smallest revenue quarter of the year, timing had an outsized impact on our growth. Equally higher order values and the incremental contribution of Baffin were also positive contributors. DTC revenue grew 50% to $34.8 million. We continued with strong productivity from our established retail stores and e-commerce market and our five new retail stores also had great quarters in line with the new adds in comparable markets in previous years. We also experienced this with Tmall. Our unique ability to activate consumers and drive traffic for highly sought-after fall/winter product out of season together with the rising contributions of lightweight down knitwear and rainwear is a real testament to the year-round strength…

Thank you, Jonathan. As I said before, we were very pleased with our start to the year. I encourage you all to check out Live in the Open our new global ad campaign for our fall/winter season. It features three inspiring stories of artists Aliche Aswini [ph] [indiscernible]; expedition guide and actor, G.I. Jao and the first NHL player Jordin Tootoo, who have all bravely broken new ground and are driven to give back to the people and places who inspire them. The global 3-part series will begin its first leg shortly in Italy, which we're activating ahead of our Milan retail opening. And there's a lot more to come so please stay tuned. And with that, I'll turn it over to the operator to begin our Q&A session.

Thank you. [Operator Instructions] Your first question comes from Omar Saad from ISI. Your line is open.

Good morning. Thanks for taking my question. Congrats on the progress. We're a little surprised that China is already 25% of revenue. Can you talk a little bit about where you see that revenue by geography landing in the longer-term with China in mind? And I also wanted to ask about pricing. Anything you're doing in the pricing front given the continued really strong demand for the brand as we look ahead at the future seasons? Thanks.

Yeah. Thanks Omar. I think the thing to remember is first of all it's a small revenue quarter and there are significant shifts in timing in Europe and Asia. And on that basis, I wouldn't get too fixated on these percentages being representative. Where these numbers ultimately land is really an output of our strategy not the target in its own right. Now that said and if you look at luxury spending globally, it splits roughly one-third, one-third, one-third between the Americas, Asia and EMEA. Relative to Canada we're in an earlier stage of developing our international markets measured by addressable consumers and luxury apparel spend. They obviously represent larger long-term opportunities. Our international DTC expansion is central to unlocking this potential. Certainly over the long run and as an output of that you would expect sales outside of Canada therefore to grow to larger proportions. That said and as you can see, our Canadian business is also growing really healthily and we feel good about our runway. Canada is also becoming an increasingly important international shopping destination. I think in the end what matters to us is that we continue to grow our top line in all markets including at home and we're a truly global story and we're executing against that. I think when it comes to pricing and as we've said before, we do follow the international pricing matrix. We've been able to take pricing in the mid-single digits and that's something that we don't see changing.

Thank you.

Your next question comes from Kate Fitzsimons from RBC Capital Markets. Your line is open.

Yes, hi. Good morning guys. My question would be on the outlook for fiscal 2020. You reiterated for 40 basis points of EBIT margin improvement. Any sense of how we should frame the drivers between gross margin and operating expenses? Particularly as we see some of these mix shifts hitting on the gross margin line? And then secondly just on that gross margin if you could just dig in to how you see gross margin evolving this year by channel that would be helpful? Thank you.

Okay. I think within the guidance that we've given, which as you can see we're reiterating, now we're looking at EBIT margin expansion of at least 40 basis points. We're looking at revenue growth of at least 20%. We enjoy margins, which are very much -- gross margins very much where they should be over a 12-month period. So if you think about wholesale, last year we closed just a shade over 48.1 very happy with that. That's the sort of place it belongs. Similarly mid-70s is a good place for the DTC margins to be. It's very much in line with the sector and where we believe they should be. And that's -- I've talked before that there's forward momentum tailwinds that come from pricing tailwinds that come from efficiency and positive reinvestment as you've seen here in new product. That's something that we think will continue. I think shape-wise, if you look at last year you'll see that the margin was above where we ended the year in the first half and below in the second. I think you can see it's the other way around this year and I think that's fine. It doesn't alter our perspective on the year at all. I think when it comes to our expenditure we are consciously investing in the business both in capability and in marketing. And we're very clear that ahead of the key seasons, which is typically Q3 and Q4 from a consumer perspective we have -- invest heavily in marketing to make sure that we're ready for the stores as and when they open. And the reaction that we get when we open the new stores and as we develop our existing markets bears testament to that.

Great guys. Best of luck.

Thank you.

Your next question comes from Oliver Chen from Cowen & Company. Your line is open.

Hi. Thank you. We've definitely noticed a lot of the non-parka innovation across the knits and other categories. What are your thoughts on how you manage breadth versus depth? And also your thoughts on markdowns as there could be a different kind of fashion risk versus the parkas. I would love your longer-term thoughts on brand segmentation as you think about Black Label and international markets and how the brand may evolve as your product assortment broadens. Thank you.

Thanks, Oliver. It's Dani. How are you doing? We're really excited about the progress of our new styles and how our off-season contraseasonal styles and spring sales have done this quarter. And they've performed their best ever, and they were 30% of our sales across all channels, which is great. The way we think about it, we are very careful in how we manage our inventory. And as you know, our products are almost never marked down. We have no discount outlet stores and we have no strategy to ever have those, so, unlike most brands. And the way we achieve that is by making sure that we don't make too much stuff. We make the right stuff. We make the right products, the right amount of products. And when it comes to new products, we build the new categories slowly and responsibly, which is why it's great to see this quarter that continuation of that the growth of those categories. And then we go deeper in categories that are stable and where we have tried tested and true classics that we know that endure from season-to-season. And that's how we -- that is how we manage our new styles and that is how we avoid finding ourselves in a situation where we're too deep in styles that we don't want to be. In terms of segmentation and new styles going forward, I mean we're going to continue to diversify. Obviously, it's important to us that we always make styles that are authentic to Canada Goose. And every style we make and every product we make is very important, is a best-in-class product. That's always been something we believed. And that's why our pace of adding new stuff is very thoughtful and measured. Our -- the next -- of course, the categories we are already in, we're going to continue to develop into and design new products into. There's a lot of excitement around footwear. I'm certainly very excited around footwear. I think we really have a tremendous opportunity there. And we are going to make sure that we build it in the right way and do so at the right time. We've announced no timelines at this point. We're working on it diligently. Certainly adding someone like Woody to our team, who has deep experience in footwear, is going to be a really important piece to that puzzle and help us get there at the right time and in the right way.

Your next question comes from Michael Binetti from Credit Suisse. Your line is open.

Hey, guys. Thanks for all the help here and congrats on the quarter. Dani, can I just continue on the footwear? I know you don't want to get too close on timing, but it is the first time you kind of zeroed in on a Canada Goose brand for footwear. Is that something though that we should still not think about this calendar year, more of a long term maybe next winter? And then maybe just how you're initially thinking about the price points that you think your brand can exist at there to help us think about the competitive set and the TAM that you're looking at for that opportunity?

Yeah. You're right. We have not yet put out any time line on that, and we're not prepared to do that because we want to -- it's going to be at the right time, like, we'd like to do it as soon as we can, but that doesn't -- your question about next year. No, it's not going to be this year. We have nothing to announce, and there's certainly nothing imminent on the horizon. As I said in my remarks, there are a lot of commercial and strategic work that still has to be done, and it's really important that we don't compromise quality for speed. We are definitely on it. And I look forward to having want to tell you about it when the time is right and that includes price points. And I mean I think that -- you could look at the general profile of our brand and infer from that where our prices will be when it comes to footwear.

Got you. Jonathan, could I maybe ask a follow-up on -- a little bit of help on the model. Was there any way you could help us contextualize the size of the wholesale shift? And then also a little more detail on the gross margin question from earlier on DTC in particular. I think you said that it's kind of in an area where it should be, but it was down a bit in the first quarter. You did -- you're pretty helpful in telling us look a lot of this was coming from the success we're having in some of these non-parka categories that carry lower margin. It's a little tough for us to understand how that dynamic plays out. Obviously you'll be selling more parkas as we get into the colder weather. But it seems like those categories should be bigger as a percent of mix each quarter. But if you think the grosses in DTC are about where they should be or implied a flat, it also suggests that one of the quarters needs to go positive to offset the first quarter. I'm just trying to reconcile a few of the comments you made to help us with the modeling. Thank you.

Okay. I think the -- thanks, Michael. Taking the wholesale first. We are reiterating guidance. What does that mean? That means in reality that we have as one of our core assumptions in that, that we talk about, high single digits growth this year in wholesale. So, obviously, we're way, way ahead of that in the quarter. And therefore, you will expect that to reverse gradually, as we go through the year. But that's also a function of when customers take their inventory from us. So we'll see how that unfolds, as the years goes on. But as far as I'm concerned, we've made a good start and that's the important part. When it comes to the DTC gross margin, if you look at it over the course of the year, we've always said our gross margins don't and shouldn't move very much in any 12-month period. The fact that we happened to be a little bit lighter this period, with a big proportion of the business, a-third being non-parka allows you to derive sort of a margin mix and you would correctly assume that we will sell a greater proportion of parkas as we come into the colder season and as we move through the year towards Q3 and Q4 which is the peak consumer demand for cold-weather product.

Your next question comes from Alexandra Walvis from Goldman Sachs. Your line is open.

Hi. This is Rosalie on behalf of Alex. On tourist spend, you mentioned strong sales on existing stores. I wonder if you've seen any impact at all of softer tourist trends that are impacting some of the other brands, or are you not seeing that?

Thanks for the question. We're not seeing that. Were seeing our global tourist business is very strong and our traffic across our end markets and tourists from global tourists. And we're really happy with our ongoing performance of our DTC channel.

Thank you.

Your next question comes from Jonathan Komp from Baird. Your line is open.

Yes. Hi. Thank you. Just wanted to maybe follow up on your outlook for the DTC channel and I know there's some tendency to maybe look at the results relative to the store growth and assume that your DTC business at existing stores and e-commerce might be slowing and I'm just curious as you look to the year ahead and what you've embedded in guidance, how you think about kind of same-store like-for-like growth versus new contribution from the stores you're opening.

Yes. I think, we have a good fleet of stores that you're aware we have today, relatively immature stores in the sense that we've only opened stores in the last two, three years and we haven't announced an opening program this year which is greater than we have done in any previous year. So I think from that point of view it's -- we look to the impact of those new stores as being very significant this year, alongside the continued productivity of our existing fleet.

Yes. I agree with that. And I'd say that the fact that our DTC sales accelerated to 50% in this our smallest quarter, which is a great leading indicator. And to Jonathan's point, the stores that we're -- the stores and increased e-commerce presence and online presence online presence, is a really exciting prospect for us. And we're really looking forward to a great year.

Okay, great. And then, just for the overall business, when you look at, the year. I'm curious from a geographic standpoint, how you think, or if you have any insight, kind of from a shape perspective, how you expect North America growth versus, Asia and Europe and other countries to play out, when you look over the next few quarters?

I think, what you heard from us, here is that, we are enjoying the diversity of growth geographically with growth in every region. Clearly, where you open more stores, in a lot more largely wholesale, base you'll have a disproportionate, impact -- of the impact of the store openings. And on to that point, I like the fact that, we said, we're going to open three stores in Greater China this year. We've announced that, we're opening a store in Milan, a store in Paris. All of those openings are in regions outside of North America. And therefore, you would expect that impact, to be slightly more pronounced.

Yeah. I'll just add on to that, to what Jonathan's remarks are. I mean, -- and to the point of what we expect for the rest of the year. And we saw really strong global demand in our first quarter. That was really -- it was very encouraging, continued strong global demand from all geographies. We continue to see that, we're relevant year-round. And as mentioned earlier, the counter seasonal business being so strong, in this quarter was great. And we're excited to see the evolution of that as well. And that really points to the fact that, our manufacturing investments over the past years have paid off. And we're very optimistic about the rest of the year. And about our future for the long-term towards, becoming a $1 billion brand and more.

And your last question comes from Ike Boruchow from Wells Fargo. Your line is open.

Hey! Good morning, everyone.

Good morning.

Two questions, so just to stick with the, the wholesale and the gross margin. I guess Jonathan, is there any chance you can maybe just quantify what that shift was, that you're calling out on that distributor business? Just so we know how to think about wholesale growth for the second quarter, just trying to piece that apart? And then because -- the way you're describing it, which makes sense that it is a lower-margin business. Does that mean that inherently Q2, wholesale gross margins has some tailwind to it? Maybe should even -- should we expect some expansion, based on that sale shift, just trying to understand that dynamic quarter-to-quarter?

So I think, the way to look at the health of the first quarter, on the wholesale gross margin, is to consider what the margin looked like the last time. We had a strong distributor mix in Q1. And that's two years ago. And then, the margin was 35%. So you can see that, there is good underlying progression in wholesale gross margin, when you adjust for that mix. I think as we look to the year, as I said before, we are using the signposts of last year's wholesale gross margin, as a good indicator. But I just think, this year, it builds as the year, goes on rather than starts with a head of steam. And therefore you would not expect it to be as high as last year, in this quarter and frankly, or next -- because the compare was way above the full year.

Got it, thanks, Jonathan and just one quick one, is there -- can you give us some guidance on just inventory levels, just so, we know kind of what you guys are baking into your plan, in terms of how inventory should flow, for the remainder of the year?

I think when it comes to inventory, -- you've heard both from Dani and me this morning about our approach, to inventory. And why they simply don't line up with revenue trends. I think we are not going to change our strategy, in that we will efficiently build ahead of future growth in manufacturing, where we have a really high degree of confidence. And as we clearly, you'll see some seasonality, because as we get into larger sales quarters in Q2 and Q3. There is -- we're taking in less than, we're shipping out. Now that said if you compare us to other fast-growing seasonal businesses, in this sort of sector. And you adjust for the fact that we're in manufacturing, you also find that our stock turns are pretty much in line.

Yeah. I agree completely. I think that, it's important to highlight that our inventory is exactly where we want it to be. And we're not concerned, whatsoever about it. We're really excited with the position of it. And the opportunity it provides for us for the rest of the year and…

Thank you.

I will now turn the call back over to, Dani Reiss for closing remarks.

Great, well, thank you all for your questions. And thank you all for your time, and taking time to be here with us today. We appreciate your interest and support in, Canada Goose. I look forward to updating you on our progress when we report our second quarter results in the second quarter. Thank you.

This concludes today's conference call. You may now disconnect.