Canada Goose Holdings reported a 53 percent increase in net income to 144.3 million Canadian dollars (€95.5m-$107.5m) for the financial year ended on March 31. The company's operating margin (Ebit) improved by 0.3 percentage points to to 23.7 percent, while revenues jumped by 40.5 percent to C$ 830.5 million (€549.8m-$618.7m).
Revenue from the direct-to-consumer segment, which includes e-commerce, increased by 69.1 percent to reach a level of C$ 431.1 million (€285.3m-$321.1m), overtaking the wholesale business for the first time, following a business model that has been adopted by a similar Italian brand, Moncler (results in our previous issue), and by major luxury goods brands.
The gross margin improved by 3.4 percentage points to an honorable level of 62.2 percent. The margin on the company's own retail operations went up by 0.9 percentage points to 75.3 percent. The biggest gain occurred at the wholesale level, where the margin rose by 2.2 percentage points to 48.1 percent of sales, which rose by 18.7 percent to C$ 399.2 million (€264.3m-$297.3m).
The company reported sales increases for the year of 28.2 percent in Canada, 36.3 percent in the U.S. and 60.5 percent in the rest of the world. For the first time, the proportion of revenue generated by the company in the rest of the world (34.5%) was similar to the revenues generated in Canada. Canada Goose also launched its DTC operations in China, the largest luxury market in the world, where it will open three of the eight new physical stores planned for this year.
The higher revenues in the DTC segment were driven by the opening last year of five new directly operated retail stores as well as the launch of a new national e-commerce site. The growth at the wholesale level was attributed to higher orders from the company's existing partners as well as the acquisition of Baffin in November. The results in this segment were boosted by production efficiencies in the company's eight manufacturing plants in Canada, two of which were opened last year. The recent launch of rainwear and knitwear contributed to the overall sales growth.
Despite the good results for the year, the company's stock market price declined as the management of Canada Goose predicted a sales increase of only about 20 percent for the current financial year, adding that the future annual growth will slow down to an annual rate of “at least 20 percent” and that the adjusted net income will go up by at least 25 percent per year.
In the seasonally slow fourth quarter, the company's net income slipped by 10 percent to C$ 6.0 million (€4.0m-$4.5m) on 25 percent higher sales of C$ 152.6 million (€101.0m-$113.5m), including a 29 percent gain in direct-to-consumer (DTC) revenues to C$ 122.4 million (€81.0m-$91.1m). Excluding extraordinary items, net earnings rose by 11 percent to C$9.0 million (€5.95-$6.69m).