Canada Goose Holdings Inc. (NYSE:GOOS) Q3 2023 Earnings Call Transcript

Jonathan Sinclair: When it comes to inventory, and particularly when it comes to Mainland China, it takes us a reasonable while to get product into the country and ready for sale. So as a result, a lot of the product that we were expecting to sell in Q3 was already staged in China in that quarter. Therefore, actually, as we’ve come into Q4, the inventory is all there, we can respond to demand pretty immediately. And we’re not concerned, therefore, about our ability to meet demand in short order. And our numbers are proving that.

Dani Reiss: Yes. And just to speak to brand health for a moment. Sorry. Just to comment on brand health question, I think outside of China, Oliver, as I mentioned before and that we’ve seen in Q4 that our store sales have accelerated quite dramatically lineups outside of stores again, which is great. We continue to see great progress on our strategy. We continue to see our new products. We adopted a very — a new product with a — at a faster rate than our existing products. And the demand was here — from our consumers is there. And I’m just understanding the macro backdrop. We’re seeing lots of demand for our products that we are making.

Operator: Thank you. Please standby for our next question. Our next question comes from the line of Jonathan Komp with Baird. Your line is open.

Jonathan Komp: Yes. Hi, good morning. Thank you. I want to just follow up on inventory, if I could. Could you maybe just share a little more detail on the state and positioning of the current base, if you have any plans to reduce inventory, how you plan to do that? And then just a broader question. When you presumably reduce the utilization at your factory, does that have a material impact on the COGS of any new production? Just maybe if you could walk through the dynamics there?

Jonathan Sinclair: Yes. That’s no problem. I think that — let’s start with the macro. First of all, within the inventory number, just as a reminder, Japan is non-comparable because obviously, it wasn’t there as a JV a year ago, and that’s about $25 million of the balance. Obviously, we’ve got somewhat more inventory than you would have expected at this point in the year, probably a little bit more than we’d like. But the health of it is not our concern. So we — as a brand with a strong record of sell-through and the vast majority being continuous of core products that we’re able to carry that overseas on season. And so inevitably, therefore, and you rightly anticipate, we may tune our forward production volumes according that’s accommodated within our gross margin algorithm. And so it’s not something that we expect to cause a distortion to forward margins.

Operator: Thank you. Please standby for our next question. Our next question comes from the line of Mark Petrie with CIBC. Your line is open.

Mark Petrie: Hey, good morning. Thanks, a question around the strength in the non-parka categories. Just wondering if you could talk a bit more about that. Was that consistent by region? Consistent through the period? And is that sort of continuing into Q4? And then I also just wanted to ask about the performance in Japan and if there are any specific circumstances that drove the reduction in the expected contribution of some increase?