[caption id="attachment_94701" align="aligncenter" width="700"] Source: Company reports/Coresight Research.[/caption] 1Q20 Results

Canada Goose reported adjusted EPS of C$(0.21), in line with last year and beating the consensus estimate of C$(0.24). Total revenue for the quarter was up 59.1% to C$71.1 million, beating the consensus estimate of C$55.1 million.

Wholesale revenue increased 14.8% to C$36.3 million, driven by the higher order value from existing partners, incremental revenue from Baffin and earlier order shipments in Europe and Asia relative to last year. Direct-to-consumer (DTC) revenue was up 11.6% to C$34.8 million, driven by incremental revenue from five new retail stores and one new e-commerce market opened during fiscal 2019.

The US saw sales growth of 15.8%, reflecting a comparable level of shipments to last year and one additional store in Short Hills, New Jersey. Revenue in Canada grew 40.4%. Sales in Asia almost tripled to C$18.1 million, driven by the addition of DTC operations in Greater China. Revenue grew 79.7% in Europe and the rest of the world.

The gross margin declined by 650 bps to 57.5%, reflecting a greater proportion of wholesale revenue. The gross margin shift was offset by positive operating leverage with lower channel SG&A as a percentage of revenue. The operating loss increased to C$27.5 million from C$19.9 million. The operating margin was (38.7)%, compared to (44.5)% in the year-ago period.  At the end of March 2019, the company recorded C$366.1 million of inventory, up from C$239.5 million a year-ago. The company opened five new retail stores this quarter, including one in a premier shopping mall in northeast China.  Outlook The company reiterated its fiscal 2020 outlook:

• Revenue growth of at least 20% from this year’s C$830.5 million.
• At least 40 bps expansion in adjusted EBIT margin from fiscal 2019’s 24.9%.
• Capital expenditure of C$75 million.
• Adjusted EPS growth of at least 25% from this year’s C$1.36.
• The company sees materially larger losses in adjusted EBIT and adjusted net income per diluted share in 1Q20 due to a larger number of retail stores operating during off-peak periods and higher corporate SG&A investments to support growth, including local market activation ahead of planned retail openings, new product and Greater China operations.

Over the next three fiscal years, relative to fiscal 2019, the company expects: 

• At least 20% average annual revenue growth.
• At least 100 bps expansion in adjusted EBIT margin in 2022 from this year’s 24.9%.
• At least 25% average annual adjusted EPS growth.