Canada Goose Holdings Inc at Goldman Sachs Global Retailing Conference

Sep 07, 2017 AM EDT
GOOS.TO - Canada Goose Holdings Inc
Canada Goose Holdings Inc at Goldman Sachs Global Retailing Conference
Sep 07, 2017 / 02:35PM GMT 

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Corporate Participants
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   *  Dani Reiss
      Canada Goose Holdings Inc. - Chairman, President & CEO

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Conference Call Participants
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   *  Lindsay Drucker Mann
      Goldman Sachs Group Inc., Research Division - MD

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Presentation
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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [1]
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 Great, thanks, everyone. We're ready to begin our next presentation. My name is Lindsay Drucker Mann. I cover the Apparel and Accessories stocks for Goldman Sachs. We're really delighted to welcome our next presenter to the stage. We have Dani Reiss, who is the CEO, Chairman and founder of Canada Goose. This is Canada Goose's debut at the Goldman Sachs Retailing Conference after having IPOed earlier this year. Welcome, it's great to have you.

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [2]
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 Thank you. It's great to be here. Thank you for everybody for coming out for this session.

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Questions and Answers
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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [1]
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 Dani, just to start it off. I was hoping we could take a step back and have you talk about the premium outerwear category. It wasn't really on the map 10, 15 years ago. Now it's emerged as a critical driver. So can you talk about your perspective on the origin and the future of the category and the role that Canada Goose plays in it?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [2]
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 Yes, for sure. Thanks. I -- the premium, the luxury outerwear category, as you say, wasn't a category that existed 10 years ago. And certainly when I started this business and selling -- trying to sell products that were more expensive, it was more difficult. And we committed at that time to taking a different path than a lot of others did, and not to go offshore to manufacture and not to chase margins by hitting price points but by, in fact, selling our products for the price that they should be sold at. I think that there has been -- we've been able to -- we've participated in this shift. We've been able to help create this category. I think that one of the reasons that this category exists today and why it's growing and why it's still compelling is because outerwear has become a part of the wardrobe in a way that it never really was a part of the wardrobe before. And I think that, back in the day, people would have a jacket and they would be cold at every wintertime where they just have it in their closet, and they'd only have one. And I think today, and we see this from data that we -- and we see this from consumer data with the market research study that we do. And just anecdotally, people own many different pieces of outerwear. Pieces of outerwear today is like a pair of shoes. It's like a sports jacket. I make that analogy a lot. I probably buy 5 or 6 sports jackets a year because I want the latest versions, I want the newest ones from my favorite brands. And we find that our consumers are coming back to us. We have many repeat customers buying either a different weight jacket or the latest style or a different category. Now we're -- for example, we're just going to a knitwear and so they'll buy a piece of knitwear, they'll buy a spring jacket. And so the category in general is one which is not just a utilitarian category anymore. It's a category that is part of the wardrobe. And I think that, that's a fundamental shift that has happened in the last 10 years, and that's why the category is growing and there's a number of important brands in there. I think that we're one of those leading brands.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [3]
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 When we sort of think about 10, 15 maybe even more years ago where you had within outerwear the establishment of the performance jacket from a Patagonia or a North Face at $200, $300 became this big sort of momentum. And had -- you had a very strong product cycle within that area. Are you seeing people trace out of these performance types of jackets and into more high-end luxe type of outerwear styles? And why is that happening?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [4]
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 Well, first of all, we are a function-first brand. And I think that's one of the most important elements of Canada Goose, is that everything we make is made with function first in mind. And so our origins are in the Canadian high arctic, where we started where people use our products to -- everybody -- people who live and work in the coldest places on earth use our products. And we still put function first. And I think that said, I think function -- I think the fashion or lifestyle marketplace, I think that functional products have become fashionable products. And I often talk about Canada Goose as being the Land Rover of clothing. And I think that we're a brand -- we call ourselves a performance luxury brand. And I actually think Land Rover or a brand like that is perhaps -- is the closest comparison to who we are, even though we don't make cars and they don't make jackets.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [5]
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 Is Canada Goose a fad?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [6]
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 I think that -- I've had that question before. I think that...

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [7]
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 We talked about this question ahead of time, just so you know I didn't surprise him with that one.

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [8]
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 Yes, no. It's not a surprising question. And I think that it's hard -- we're a 60-year-old company. We've been around for a long time. There's very few companies in any apparel category that have the history and that have the -- has a history and the reputation that have been built over time in the way that we do. And I think that, that -- I think that for that reason, Canada Goose is a very -- has a very sustainable business model. And I think also that -- I think that -- and I'll come back to the function part as well. Because we are a function-first brand, people and our fans and our customers, they buy our products because they work. And I think we look around -- you look around at other brands, even other categories, being a -- it's important to retain product leadership, thought leadership of a category. And so if you look at -- as you look at smartphones, you look at cars, you see brands in those categories that are ubiquitous, that are in many places and the customers continue to return to time and again. And they aren't fads, right? And further to that point, you look at some of the world's largest luxury brands, many of which come from France and Europe, that also have the same kind of history that we do. And they're -- these are companies that are much, much bigger than we are. And so to me, that just shows to me, it gives me -- I'm very encouraged by the size of the market and where we are on our trajectory relative to a lot of other global luxury brands, and we're just getting started. And I feel that as long as our product remains the best product in the market and we're committed to making sure that every product we make is a best-in-class product, that -- I think that -- I don't -- we don't use the word fad in our vernacular. We have so much white space.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [9]
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 Are there safeguards you have in place though, to make sure that the brand, maybe its distribution or how you think about marketing or price points or availability? What are some of the safeguards you have in place to make sure the brand and the product endures?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [10]
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 We have a lifetime warranty on all our products. We make a best-in-class product. We're committed to making all of our down filled jackets in Canada, and we've been building out our manufacturing infrastructure in Canada. And today, we -- it was hard to imagine anybody having as big of a manufacturing infrastructure as we have in Canada. And we've -- so in terms of safeguards, I think I'll always come back to function and we have to make the best product in every category. Right? We're not the kind of company that puts logos on products, we don't just make stuff and we don't -- we won't just make stuff. So for example, when we got into -- I'm sorry, I'll start -- let me back up for a second. When I started working in this company, we are a 60-year-old company. It's a third generation family business, and we had 20 styles. And today, we have well over 200 styles in our collection. So when we've gone into -- and so we explained, our outerwear range quite extensively from our heavyweight jackets into lighter weight -- midweight, lightweight down jackets, our HyBridge collection, our HyBridge Lite collection. I kind of wish I had a HyBridge Lite jacket right now. It would be perfect for this occasion. I think it's a bit chilly in this room. And then we go into spring, our spring products, we also were very committed to making sure that we made a best-in-class product. And our spring products this season performed very well for us, and we're very happy with that. And similarly with knitwear. Knitwear is a new category for us, which just launched about 2 weeks ago. We launched it in our own channels and in some select wholesale partners as well. And so that is a safeguard. We're very measured in our distribution. We only work with the best wholesale partners or through our own channels as well. So I think that discipline is the word, and discipline applies to both our distribution, applies to the quality of our products and the craftsmanship that goes into them in making sure that we make a best-in-class product in whatever new category we choose to enter at whatever time.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [11]
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 You guys came public a couple quarters ago. I'm curious how your approach as CEO has changed running a public company rather than a private company if at all.

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [12]
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 Yes, it really has not changed. I was very committed and very -- it was very important to me that no -- as we were going public, that we were not going to change our approach. The way we ran this company, this company has been run as a private company. It was very successful for us, and we are looking to build and we're building a long-term enduring legacy. We want this brand to continue to thrive for generations to come. And so we have not changed, and I have not changed my approach to how we run the business. And that's why when we communicate with investors and with the marketplace, which is of course a new aspect for us, but not that new. We've had private equity partners before then, and we've always been interested in being -- not only interested but it's very important that we're profitable. And I've always -- running a profitable business is obviously a very important thing. So we look at our business on an annual basis. We're a seasonal business, and I feel it's important that our investor community understands and why we look at our business on an annual basis. And that it's important that we do look at it on an annual basis as opposed to breaking it down quarterly and being more focused on the quarters.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [13]
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 Got it. So you -- maybe this answers that question. You just reported your June quarter, you beat expectations, why didn't you raise guidance?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [14]
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 Well, in our -- we've provided high-level 3-year guidance, and we've said in our first-ever public conference call that we were going to update guidance on an annual basis. And we feel that, for us, that's the right way of communicating our business. So obviously, if there were to be anything material that need to be communicated, we would. I think that it's important -- what's important to me and what's important for the investment community to understand is that because we didn't do that -- first of all, we said we weren't going to do that. And the fact that we didn't do that, I -- the business is going really well. We're really happy with where things are going and there's nothing to be read into by the fact that we didn't do that other than that's exactly what we said we were going to do and we're going to communicate on an annual basis. And we feel that for our business, that's the right way of doing it. Business -- we were very happy with our quarterly results. It's a small quarter, and we're very -- I'm very, very optimistic about the year ahead. And things are going really well.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [15]
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 What can you tell us about back-to-school?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [16]
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 My kids are back to school. Business has been really good. I'm very happy with where business is going. I read our -- from our own channels, we get daily store reports, which I read from both of the 2 stores that we now have opened. Keep in mind, we haven't even had a store open for a full 12-month cycle yet, but -- so that makes budgeting interesting. But we've certainly been exceeding our own expectations, which has been fantastic. And yes, from -- it seems like that our business is responding well to the back-to-school shopping, return from vacation mentality.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [17]
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 Great. Let's drill a little bit deeper and talk about U.S. wholesale, which has been a huge growth driver for your business. But if we were to strip out adding new doors or incremental distribution, can you talk to us about how the U.S. wholesale business has been growing on a same-store basis?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [18]
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 Yes, U.S -- so our -- obviously, the U.S. -- there's a lot of talk about the U.S. wholesale business in general, and it's not doing that well in general. Fortunately for us, U.S. wholesale is very strong, and we're focused on growing our U.S. -- we consider wholesale to be a very important part of our business today and in the future. And we have some very strong relationships with the best wholesalers in the States, I mean, around the world. But specifically to your question, in the States. We're focused on growing our business through the same-store sales. We definitely have opportunity to add doors if we wanted to grow that way. Throughout our business, we've always been -- as we've built this company, we've always been very disciplined. So we've had opportunities to take orders from companies that we have chosen not to take orders from. We've had opportunity to increase our doors, but we've chosen not to do that. We've also had opportunities to take more orders from existing doors, but we -- that we have not taken because they may have had strings attached to them, and we're very disciplined in that way. And all that said, we're still growing our business in the U.S. wholesale on a same-store basis. One of the things, which I want to talk about is our shop-in-shop strategy. I think that the market -- our investors often ask us about shop-in-shops. So they often ask us like so what percentage lift do you get off of a shop-in-shop? And why do you put in shop-in-shops? And how is that going to drive sales? And there's no question, it does increase our sales. Our reason for activating shop-in-shops and for partnering with our wholesale partners on shops is really -- it's strategic. It's not out of, I'm going to say, desperation, "What do we next? How do we grow sales? Let's put in some shops because that's going to grow our business." I mean, I do think it does enhance our sales, but I think it also creates a destination for our fans and for our customers. We have a lot of the very broad, global base of demand and tourist business from all over the world. Our wholesale partners are looking at us as -- we drive -- we help them drive traffic into their stores, right? And so they're looking to partner with us to put shops in the stores, and the consumers are responding to that.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [19]
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 So could you help us paint the picture in kind of like Nordstrom where you've been in for a number of years, how your display, on the floor side of Canada Goose product, looks different today versus maybe 3 years ago?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [20]
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 Yes, I think -- I mean, obviously, putting in a shop will change that. I think that also 3, 5 years ago, more often than not, we would have been in the coats section or we would have been in the outerwear section. Whereas today, they're putting our brand in the contemporary section. They're -- they have a much broader product assortment because of -- not only the shops but because we have more floor space. And our products continue to sell very well. We're continuing to see ourselves swim upstream, which we've always been proud to do. And we're -- our -- we're seeing our wholesale partners pull orders forward and ask us to deliver stuff earlier as we saw recently, and this is a trend that we see continuing. So -- but yes, we definitely look different today. I mean, we never enjoyed being on a rack that says, coats or Canada Goose. And these days we have a much more enhanced offering, and it looks more appropriate for our brand.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [21]
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 And it presumably includes more than just the Arctic program or more than just parkas but a broader product set?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [22]
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 For sure. We've -- in the last few years, we've added -- one of the most important changes that we have made internally is our planning department. Our planning department plans assortments for all of our global retailers, every retailer around the world. And so we'll go with a buy plan to the retailers, backed with data from our own channels, backed with data from other retailers, so we know what products are selling. And we'll present that to them and partner with them on what they should put in their stores. So our full assortment is being sold through not only our own channels but also all of our wholesale partners.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [23]
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 So the $800 to $1,000 price point is a big part of your outerwear business. What's your strategy for outerwear at lower price points? Is it a meaningful part of the business yet? How is it growing?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [24]
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 Really, we've -- we don't really have a strategy with that market. We've always -- even from the early days, it was -- I always said it was more fun to go up than to go down. And we feel that we have a great amount of value embedded in our products. I mean our jackets are made in Canada. We have the largest manufacturing infrastructure of its kind there. One of our core competencies is building Canadian and building manufacturing capacity for our core products. And so there really isn't a decision strategy or a strategy to go down market as much as, on the contrary, like we -- $800 to $1,000 is a sweet spot for us and a lot of our products are priced in there. And as we know, they're selling very well. We also have opportunities to put -- to create new products with added features at higher price points, over $1,000. And we've been doing that successfully, and we intend to continue to do that. And we feel that we'll be -- we'll continue to be successful at that.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [25]
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 But you have some, for example, lighter weight styles in the $500, $600, $700 range?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [26]
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 Yes, well as -- sure. As we get into the -- our lightweight down program or HyBridge Lite -- HyBridge program, some of those styles are priced -- they're less expensive because they're less expensive to make. Even our...

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [27]
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 Right. In the down market per se, it's just a different price level with still a lot of functionality for the consumer?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [28]
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 Yes, 100%. I mean, like, the Hybridge Lite is one of my favorite jackets. That's the one I just said I wish I had right now. I mean, it weighs less than 0.5 pounds. It is a very, very functional piece, and it's been very successful for us. And yes, it doesn't sell for -- I think it's $595 for retail or thereabouts.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [29]
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 Could you talk about what proportion of your business those kinds of styles make up? And maybe even help us understand what the distribution difference might be between your core sort of $900 style versus those in a more accessible price range?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [30]
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 Yes. I find that -- so whereas, let's say, 5 years ago to pick a number, our range would have been more concentrated on the -- per our offering, retail would have been more concentrated on the Arctic parkas and the heavier weight parkas. I'd say that, that has shifted to maybe 70, 30-ish nonscientific number. But I think that -- and I think that's because we're now addressing -- we have -- it's not just a price point issue, but it's also a geographic issue. And we have products for all parts of the world and for geographies that aren't as cold. And alluding back to the store reports that I mentioned earlier, like I read a lot of comments about people from parts of the world saying, I love your lighter stuff and this is more suitable for where I'm from. That said, we've -- we are -- we have been successful at selling heavy jackets and very warm jackets in climates that you wouldn't think require those or that don't require those. Tokyo is one of our best global markets in the world, and it almost never goes below 0. And it almost never snows there. So I feel that the reason for us being able to be successful, both in our lighter weight products but also in our classic iconic products, is because of our authenticity. Because of the fact that people want to buy the best, people want to own the icon. And in a place like Tokyo, for example, we find that to be -- that to hold true as well. So we can sell the full product range in all sorts of environments.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [31]
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 You talked about the knitwear launch for this fall. What can you tell us about what you're seeing so far and maybe the strategy for that going forward?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [32]
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 Knitwear is a very exciting category. I mean, the size of the category in general in the market is huge. And we know anecdotally, we know from market research that we've done that our consumers were very open to seeing knitwear from us. And so early signs, we launched this -- launched 2 weeks ago now. But early signs are really, really strong. Really good -- people are responding well. People love the product. We're getting lots of great feedback on it in-store and it's -- we call it a capsule collection. It's a small and measured launch this year. It's only with 4 wholesale partners in North America and to our own channels, and there's also some partners in Europe as well. North America, there's only 4. And I absolutely see it growing over time. I think that -- I think it's important that our -- we are an outerwear company, and so I don't -- I think it's important. I don't think it's a problem that, for example, I don't expect knitwear to be 50% of our sales. I don't want knitwear to be 50% of our sales. I think that we need to retain our strength as an outerwear company. But knitwear can be a very significant part of our sales, and we're going to continue to grow it step-by-step. And as the marketplace responds well to it and we sell through, we'll continue to grow that category in the same sort of way that we're continuing to grow our spring collection.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [33]
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 What about a category like fleece? Is that something that you would be interested? And other outerwear companies have built pretty big businesses there.

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [34]
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 Sure. We look at all categories. There's no imminent plans for fleece at the moment. I would say that, of course, it's an option for us. And when we find the right expression of that category for us, and we can be -- we can put into the marketplace a product that we believe is a best-in-class product, then it absolutely is a very interesting category.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [35]
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 You touched on your stores, on your physical stores. It's a pretty new business for you, a large contributor. We know that they're doing better than expected. Your recent quarterly result, you had some nice upside out of retail generally. What else can you tell us about how your stores are performing? And to the degree that they're surprising you, in what ways are they surprising you?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [36]
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 Well, yes. We have yet to have the store open for a full year. We opened 10 months ago, I believe, in retail.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [37]
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 So everything is kind of a surprise?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [38]
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 Yes. I mean, it's hard to budget for a store that you've never had before when you've never even had any stores before. But fortunately, they've far and away exceeded our expectations. I think that the feedback that I read is that our consumers really appreciate the experience that they have in the store. The fact that we have a full assortment there is important, and we're selling out sometimes faster than we thought we would, which is a good problem to have. And then -- and we continue to replenish the stores. I think that the numbers that we're seeing are really, really strong and both from our Toronto location and New York location.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [39]
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 And how about the 5 new stores that you're opening?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [40]
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 We're really excited. We're also opening in Chicago, London, both very important global cities, very excited about those. Boston is a very strong market for us, and Calgary is a strong market for us in Canada. So we're excited about all those stores, and we feel that -- we have a -- the way we choose our stores and our locations for our stores, we have a formula internally that we've come up with, which balances out and we take inputs from website traffic so we know where people are coming to our site from. We take info from the marketplace and how we're selling at wholesale so we know what markets are strong for us. We factor in the global nature of the city, that's an important attribute. So there's a bunch of different factors that we put into this formula and we rank cities based on desired store locations. And we've stated that our plans are to open between 15 and 20 stores through 2020, and so we have this ranking of where we want those stores to be. And we're always looking for real estate in all of those locations. We're -- it's hard to predict until we find the right piece of real estate in any given city where we're going to end -- what stores are going to open in the following year because we're not going to sign any leases that we're going to have to -- every lease we sign, we want to make sure that we're going to be happy with many years from now, right? And so -- and that's almost -- again, it actually goes back to the discipline that we've showed for the last 20 years as we've built Canada Goose into a consumer brand whereas before then, it really wasn't. And we're very disciplined in choosing our locations as well. So we do have a good sense of where we'd like those stores to be in. We'll open those stores in those locations as we find the right real estate to sign up for it.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [41]
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 And then as far as anything you can give us on -- I know you don't have a lot of experience running stores to reference. But as you think about planning store openings, how you think about first year productivity, maturity curve, payback, 4-wall margins, cost to build-out, any sort of the detail on that math?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [42]
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 Yes. I mean, our stores cost us between $3 million and $5 million a store. And our payback period is 1 to 2 years. The first 2 stores that we opened has -- have been much faster than that. And our stores are all -- they're all -- are planned to be profitable within a year. And our -- both of our stores so far have exceeded that as well. One thing that's important to us and that we've just made a decision on is that we're never going to open a store for marketing purposes. A lot of companies have in the past opened stores just to build brand awareness, and we don't feel that opening a store -- if it happens to have that as a byproduct, that's great, but that's not a good justification for opening a retail store.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [43]
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 We have -- if there's any questions from the audience, just raise your hand. We have some microphones. I see one right up here. While we're waiting for a mic -- is there a mic coming? Great. Let me sneak one in while we're waiting for the mic. Price increases has been an ongoing tailwind for your business. Where do you see the opportunity to take pricing higher? And what's your approach -- and I'm sort of referencing the idea that you can be -- you've been taking pricing for many years, but the approach feels more scientific today than it has historically.

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [44]
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 Yes, for sure. It is more scientific than it has been historically. And today, we have a global pricing architecture so we know where our prices will be by market, and the variance between market is one that we have selected. And we also have benchmarked our products against other companies that make down jackets as well and other products similar to the other products that we make. So I mean, it's interesting, because first of all, the outerwear market, in general, is a very fragmented market globally. There's not -- there really are not a lot of global outerwear brands. There's some, but mostly there's regional brands. There's a lot of brands in North America that aren't in Europe or Asia. There's are also lots of European brands that haven't made it to North America. There's lots of Asian brands that haven't made it either. So we look at them all in their respective marketplaces and benchmark them relative to our styles and their styles and we do see that we have room to continue to take price and we can do that on like-for-like styles. And another very compelling way to do that is by introducing new styles into the market that we chatted about briefly earlier, north of $1,000 price point. And they have added features and added benefits, and that has been very successful for us so far. And we intend to continue to do that as well.

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 Unidentified Analyst,    [45]
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 I was just wondering what you're seeing with your online sales as it relates to when you open a store or announce a store in a market. Are you seeing a pickup in your online business in those markets specifically? Do you have any data on that?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [46]
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 Yes, we -- so from an overall -- there you are back there. I didn't see where you were at first. We don't break out our numbers between e-commerce and bricks and mortar. We just DTC in general. But we see a very strong demand online from all regions. So even -- so New York and Toronto are the 2 places that we now have retail stores, and we have not -- we continue to see very strong demand from both marketplaces for our products, both online and in-store. And I think that we're in a time right now where there is a lot of demand for our product in general, and so it's coming through all channels. And I -- so we haven't -- so no, we haven't really seen opening a store negatively impact e-commerce, and probably if anything positively impacted.

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 Unidentified Analyst,    [47]
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 G-III, an apparel manufacturer, reported yesterday, and they have a pretty heavy outerwear presence. They spoke to a pull-forward of some receipts, they started seeing it 2 weeks ago. You guys had a pull-forward of receipts into your June quarter, which probably had less to do with weather. I'm curious your ability to chase if demand is there? And how would you allocate that to your DTC business relative to the wholesale partners?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [48]
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 Thank you. Yes, we definitely have a -- because we manufacture our own product with a very flexible business model, and we certainly are able to draw on inventory if we find that there is more demand for it. How do we balance it between the wholesale and direct-to-consumer? I mean, I think that our wholesale partners are important. And obviously, we look -- and the way we look at our direct-to-consumer business is as if it's our most important retailer, right? We are our most important retailer. And so we'll definitely allocate -- anything our direct-to-consumer business needs, we'll make sure we allocate that to ourselves.

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 Unidentified Analyst,    [49]
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 Do you sign that you want a (inaudible) city value on the wholesale side of things so that the product does sell out in October, November and there's a need for them to go to the stores to buy the product?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [50]
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 Yes, we find that a lot of our newer styles do sell out earlier. Historically, they have always done that, and they continue to do that. I even hear today or like these days that there's styles that are already sold out. And consumers that -- our fans know that if you want to get your size and your color and style that you want for the season, typically, if you wait until November, December, it's going to be hard to find the right style. And I think that sets some -- that just speaks to the velocity and the pent-up demand for our products, and I feel like it's a very positive thing.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [51]
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 Could you talk about your -- you don't have a business established yet directly in China or via a partner so -- and yet the Chinese consumer is seeking you out in the markets where you are. What's your approach to China and the Chinese consumer at this stage?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [52]
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 Yes. We're very, very excited about the opportunity in China. We see a lot of demand there, and we see that we have strong brand awareness there. We also see other companies that sell down jackets doing tremendous volumes of business there. So we're working diligently on our market interest strategy, and there's different things to consider. There's the amount of wholesale we want to have, the amount of direct-to-consumer we want to have, how we go about if we're going to open stores, how many stores are going to partner with people or not and e-commerce. Basically, we just have to make our decisions around those 3 things. And we're going to -- at the right time, we'll announce what those are, and we're working through that diligently at the moment. And it's really an exciting growth opportunity for us.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [53]
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 On the topic of other outerwear companies, another large publicly traded outerwear company has operating margins that are meaningfully higher than yours. Now you've laid out in your guidance a path towards sustainable margin improvement. But I'm curious if we should be thinking about any structural reasons why that benchmark of profitability would be out of reach, maybe your internal manufacturing, maybe other things that would keep you from achieving those types of profit levels?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [54]
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 Yes, I think that we have a lot of levers and a lot of opportunities to increase our margins. That in mind, I don't know who you could be possibly talking about. But I'll point out, our -- one of our -- we've a lot -- well, one of our most compelling levers I believe is that today -- 3 years ago, we were strictly a wholesale business. We were not in the direct-to-consumer space at all. And that -- and today or at the end of last year, we were -- 28.5% of our sales were direct-to-consumer. And we're focused on taking that and continuing, as you know, by opening select stores and by opening and enabling new e-commerce sites in new territories by driving that number higher. And I think that as that number grows, we're definitely going to drive our margins higher. Our pricing power that we have and the pricing in existing opportunities that we have is another way that we can and will increase margins. And also in-sourcing manufacturing, right? Today, we have 6 facilities in which we manufacture approximately 30% of our own -- of our product, and the rest is manufactured by contract manufacturers across Canada. And so as we are able to either fire contractors and make them more efficient and grow the output from those companies as we have done in the past or open greenfield sites as we've also done in the past, we're going to be able to take that 30% number and drive that much higher. And that's also another way we can increase our margin. So I see a lot of upside opportunity for our margin. I've always been focused on our margins. But going back 20 years, margin has been everything. So I see a lot of -- I continue to believe that -- I don't see there's any barrier to us competing with anybody on margin.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [55]
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 But the fact that you are manufacturing in Canada, which is presumably a higher-cost region, does that limit the degree of profitability? Or do you feel like you can price up or get more efficiency to fully offset that?

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 Dani Reiss,  Canada Goose Holdings Inc. - Chairman, President & CEO   [56]
------------------------------
 Yes, I feel that we can absolutely -- I think that the pricing architecture that we have allows us to get the margins that we need to get and to continue to increase our margins. That was a problem. That was the issue that we were facing way back in the early days when we're a $3 million company and half of it was private label and we were in the initial stages of turning Canada Goose into a consumer brand. And we -- people said, Dani, you can't -- unless we can sell a jacket for $399, then we can't -- we're not -- we can't sell at the prices you want to sell it at. So we had to start building the business overseas first. We've built them in Europe first and eventually as a consumer brand, and then brought it back to North America. And we're able to do so in this new -- right back to the beginning, the category of premium luxury outerwear and the fact that this category exists is what allows us to continue to make our stuff where it should be made, which is -- and allow us to remain authentic, which I think is really important. And I think that a lot of -- if you look at a lot of the strongest luxury brands in the world, they manufacture most of their products and all their product in their home country. And we feel that our business model out of Canada -- it's extremely unique that we have a similar business model out of Canada.

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 Lindsay Drucker Mann,  Goldman Sachs Group Inc., Research Division - MD   [57]
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 Okay. Well, that's probably a good place for us to end. Thank you so much, Dani for -- and Canada Goose for coming and joining us. Up next, Casper is in this room. Costco is in the big room upstairs and Hibbett is also upstairs. Thank you.




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