Good morning. My name is Lisa, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Canada Goose second quarter 2019 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, press the pound key. Please limit yourself to one question and one follow-up, and then please re-queue. Thank you. I would now like to turn the call over to Patrick Bouriat, Senior Director of Investor Relations. Please go ahead.
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 second quarter performance. Following this, Jonathan will provide details on our financial results and our updated outlook for fiscal 2019. After our prepared remarks, we will take your questions. Before we begin, I would like to inform you that this call, including the Q&A portion, includes forward-looking statements, including plans for our business and our updated outlook for fiscal 2019. 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 appear under the headings "Cautionary Note Regarding Forward-Looking Statements and Risk Factors" in our annual report on Form 20-F, which is also filed with the SEC and the Canadian Securities Administrators. It is also available on the investor relations section of our website at canadagoose.com, and in the earnings press release that we furnished today under the heading "Cautionary Note Regarding Forward-Looking Statements." 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 refer to certain non-IFRS financial measures that involve adjustments to IFRS results.
Any non-IFRS financial measures presented should not be considered to be an alternative to financial measures required by IFRS and are unlikely to be comparable to non-IFRS financial measures provided by other companies. Any non-IFRS financial 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 also available on the investor relations section of our website, canadagoose.com. With that, I will turn the call over to Dani.
Thank you, Patrick. Good morning, everybody. Thank you for joining us today. I have always believed that a great idea without great execution is just someone else's success story. At Canada Goose, execution is a core competency. This quarter was no exception. When I say that, I'm not only talking about executing in the here and now. Truly great execution also means setting ourselves up for wins down the road, and we are. We are delivering incredible results today while also making real progress on initiatives that will carry us well into the future. This duality is at the heart of our success and how we manage our business. It's only been three months since we spoke last, but our team has accomplished a staggering amount in a short period of time, and here are some of the highlights. Our financial performance was outstanding.
Continuing our momentum from the first quarter, we increased total revenue by 33.7% to CAD 230.3 million. We delivered strong earnings growth while also making significant growth investments. In terms of products, we continue to strike a great balance between heritage and newness. The reception to new styles has been very strong, with the Olympia Parka leading the pack. Long-standing icons, which are the foundation of our business, also grew significantly. We have made great progress on our retail store opening program for FY 2019, with three of our five new locations open, and we are excited to be bringing our world-class retail experience to these markets. The fourth location in Montreal will be opening later this week. We're up and running in Greater China, telling our story and building the foundation for a successful business for decades to come.
Our products are now available in our flagship store in Tmall's luxury pavilion and our first retail location at the IFC Mall in Hong Kong. Just last week, we also opened a pop-up store in Beijing at the luxury hotel Opposite House in Sanlitun to activate and seed the market ahead of the opening of our fifth store in that city. To meet growing consumer demand, our manufacturing team continued to aggressively invest in Canadian manufacturing and scale our in-house capacity. We officially opened our third factory in Winnipeg in September and were joined by Prime Minister Trudeau for the opening event. Through a staged expansion, this will become the largest of our seven wholly owned production facilities. We've hit the ground running with over 300 employees now working, and we expect to add an additional 700 in the city over the next three years.
We are proud of our role in creating manufacturing jobs in Canada and to be doing it in Winnipeg, a place we think of as our second home. Our team continues to work diligently to identify other opportunities to further increase our in-house manufacturing capacity. Lastly, we took our first step into the exciting global footwear category with the acquisition of Baffin. This is a dream acquisition for me as I've been watching and admiring Baffin for many years, and I know them very well. I believe this is the right move for us to be able to start exploring the category as I look to ultimately launch Canada Goose footwear. Looking more closely at our results, we continue to significantly grow our wholesale business alongside the great success of our direct-to-consumer channel.
This is the biggest sales quarter of the year for the wholesale channel. We increased our revenue to CAD 179.9 million from CAD 152.1 million. Beyond the surface of this achievement, I think how we are achieving it is the most important thing to take away. In assortment and merchandising, we have made a concentrated effort to add newness and depth to drive momentum going into our peak season. We delivered and strategically placed new fall and winter styles in seasonally relevant colors earlier in the season. Our successful lightweight down line is now a core part of our wholesale offering year-round. As an experiential brand, our team is also doing great work elevating our presentation and storytelling around the world.
Exploring and talking for Canada Goose with a retail partner is naturally different to our own stores or e-commerce sites. The quality of the experience must be the same. We are not just putting jackets on racks. We are working closely with our true partners to raise our game. We are also going deeper through retail theater and experiential events. To drive awareness and affinity and to support specific product initiatives, we executed a number of new consumer activations. These include high-impact windows and visual installations, strategically placed pop-up environments, and engaging events, often outdoors, with Goose people and friends of the brand such as polar explorer Ben Saunders. As a brand built on real stories and products, the work we do with our partners in these areas is an effective way to differentiate ourselves and reinforce our unmatched authenticity.
That focus in Q2 on delivering exceptional experiences also applies to our D2C channel. The response to our first two cold rooms in Short Hills and Boston stores has been phenomenal. Our fans are truly our best brand ambassadors. These fun moments become personalized stories shared online, amplifying our reach and driving awareness. This is also a natural extension of what a brand is built on, an authentic product that works. People tell me all the time, trying on a Canada Goose jacket was the first time that they ever truly felt warm in cold climates. With our cold rooms, we are creating that moment even before they purchase. It's strategic and highly effective in reinforcing that we make the best and warmest jackets that work in the coldest places on Earth. An authentic product that works is also at the heart of our decision to acquire Baffin.
We are building an enduring brand for generations to come. Getting footwear right is an important part of that vision. We also recognize that it is a distinct business to apparel. It is difficult to cross over. Many others have chosen the faster and easier path of licensing or other ways but struggle to find relevance. We would not be where we are today if we had followed someone else's playbook. It is so important that we continue to chart our own course with best-in-class product. Buying the company that makes the best and warmest boots is the right first step for Canada Goose in this exciting journey. Baffin is the Snow Mantra footwear in the coldest places on Earth. Our products have lived alongside each other for decades.
We will leverage Baffin's innovative technology and infrastructure, as well as the world-class expertise of Baffin President Paul Hubner, to inform our strategy and ultimately launch Canada Goose footwear. When it comes to operating structure, what we are not doing with Baffin is also important to take away. This is not a merger. We are not turning Baffin into Canada Goose or vice versa. We are distinct brands with different distribution channels and different customers. That is not going to change. Paul and his team have built a thriving business and reputation in the marketplace, and they will continue to manage Baffin on a standalone basis. Of course, we will make sure that Baffin has access to the right resources it needs to continue its success and to realize its full potential.
Before I turn it over to Jonathan, I want to reiterate that our execution in the first half of fiscal 2019 was exceptional. We are in an amazing position going into our peak selling season. Operational and financial performance in both channels has been outstanding, and we have done this while also making major progress on key longer-term initiatives. With that, Jonathan will now go over our financial results with you in greater detail.
Thanks, Dani. Good morning, everyone, and thank you for joining us. Before I go through the numbers in detail, I'd like to remind you that they're stated in Canadian dollars. I shall comment on the quarter and then update you on guidance. As Dani mentioned just now, our execution in the second quarter was exceptional across the business. Revenue increased by 33.7% to CAD 230.3 million, 31.5% ahead on a constant currency basis. Relative to last year, the Canadian dollar depreciated in comparison to the U.S. dollar, EUR, and GBP, and that benefited our reported top line. Our wholesale channel was a standout performer in our largest quarter for wholesale shipments in the fiscal year. Revenue grew to CAD 179.9 million from CAD 152.1 million due to higher order values from existing partners and earlier shipment timing.
In response to customer requests, we fulfilled a higher proportion of our total seasonal fall-winter order book in this quarter relative to last year. DTC revenue increased to CAD 50.4 million from CAD 20.2 million, or 21.9% of total revenue, compared to 11.7% last year. The strong performance of well-established retail stores and e-commerce sites in Canada and the U.S., and incremental revenue from recently opened stores in Calgary, Chicago, Boston, and London were all significant factors. In terms of retail experience, it's also been great to see the very positive guest feedback we've received on our two very cold rooms in Boston and in Short Hills. Our consolidated gross margin expanded to 55.8% from 50.6% last year. This was primarily due to a higher proportion of DTC revenue, as well as underlying gross margin expansion in each respective channel.
In our wholesale channel, we saw gross margin expansion to 50.4% from 47.5%. This was driven by production efficiencies from manufacturing and a reduction of duties on goods sold due to the CETA trade agreement between Canada and the EU. In DTC, our gross margin expanded to 75.2% from 73.8% last year, primarily due to the same production efficiencies which benefited our wholesale margin. Wholesale operating income was CAD 80.1 million, an operating margin of 44.5%. This compares with CAD 60.1 million, or an operating margin of 39.5% last year. SG&A has also decreased as a percentage of revenues on a significantly larger quarterly revenue base. DTC operating income was CAD 22.7 million, an operating margin of 45%. This compares to CAD 6.6 million last year, or an operating margin of 32.4%.
Building on the momentum from the first quarter, this still off-peak retail productivity in both well-established and new retail stores continued to accelerate, driving lower total SG&A channel costs as a percentage of revenue. We continue to be very pleased with the performance of each of our stores. Unallocated corporate expenses were CAD 34.2 million, up from CAD 16.2 million last year. This was driven by planned growth investments in marketing, corporate headcount, and IT, including the expected build-out of our Greater China business unit and the commercial launch of our DTC channel in that region. We also incurred higher professional fees and other costs relating to public company compliance. Unallocated depreciation and amortization was CAD 3.6 million, compared to CAD 2.3 million last year, driven by the retail opening program and upgrades to our manufacturing capability and capacity.
Combined, our channel operating incomes and corporate SG&A resulted in a total operating income of CAD 65 million, compared to CAD 48.2 million last year. On a non-IFRS basis, adjusted EBITDA was CAD 70.9 million compared to CAD 46.3 million. Net income was CAD 49.9 million or CAD 0.45 per diluted share, compared to CAD 37.1 million or CAD 0.33 a share last year. Adjusted net income was CAD 51 million or CAD 0.46 per diluted share, compared to CAD 32.8 million or CAD 0.29 a share last year. Now turning to our revised guidance for FY 2019. Based on the strength of performance across the business, with a particularly significant contribution from the DTC channel, we are raising our FY 2019 financial guidance.
We currently expect annual revenue growth of at least 30%, adjusted EBITDA margin expansion of at least 150 basis points, and annual growth in adjusted net income per diluted share of at least 40%. This compares to our previous guidance of at least 20%, 50 basis points, and 25%, respectively. Our revised guidance assumes annual wholesale growth in the high single digits, as well as the opening of five new retail stores, as mentioned previously. In terms of adjusted EBITDA margin expansion, we continue to expect a positive but less pronounced increase relative to last year. This is due to the SG&A growth investments in IT and our Greater China business unit, as well as variable SG&A fees that we pay to our operating partners on incremental revenue from both Tmall and our retail stores in Hong Kong and Beijing.
As a reminder, this guidance incorporates the impact of the Baffin acquisition, which is not expected to have a material impact on our adjusted earnings in FY 2019. In summary, our financial performance and progress on our key strategic initiatives has been outstanding in the first half of fiscal 2019. Strong growth and profitability in both channels has funded and more than offset a planned program of significant growth investments, which we have delivered on time, on budget, and with results above management expectations. Financially and operationally, we are entering our peak selling season from a real position of strength, and we are excited, optimistic, and confident about the remainder of the year. I will turn the call back to Dani for some closing remarks.
Thank you, Jonathan. As I said before, we delivered exceptional results today, and we are building a very strong foundation for the future. I am truly extremely proud of what our team has accomplished, and I could not be more excited about what is coming next. I will turn it back over to the operator to begin our Q&A session.
Thank you. At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. As a reminder, please limit yourself to one question and one follow-up, and then place yourself back in the queue. We will pause for just a moment to compile a Q&A roster. Our first question comes from the line of Michael Binetti from Credit Suisse. Your line is open.
Hey, guys. Congrats on a nice quarter. Let me start with just a quick math question. Jonathan, on your numbers, it looks like you are guiding wholesale flat to even slightly lower year-over-year in the second half compared to up mid-teens in the first half. I know you mentioned the shift. Would you mind helping us size the wholesale shipment timing shift on 2Q and how that impacts the second half of the year?
As I was saying before, we delivered a significantly higher proportion of the order book in Q2 relative to last year, and obviously that's a function of delivery timing. It's a shift to the left, and there is a lower level of unfulfilled orders going into the third quarter, whereas Q4 is primarily driven by late-season replenishment and indeed the shipments of spring/summer in good part. We've satisfied a larger amount of our wholesale obligations compared to last year, but it's a temporary timing factor. That's why we encourage you to look at the channel annually in line with our guidance, which we have increased on wholesale in this update.
Okay. Just, Dani, thinking a little more bigger picture, maybe you could help us with what you're learning so far in China as you get into that. I guess, is that any sign-- I know initial concern, as you guys announced that, was we were all able to witness the tourist business you have at the U.S. and Canada stores from a Chinese tourist customer. Is there any signs of cannibalization there, or how you're thinking about planning for cannibalization, and then maybe just your level of involvement with Baffin and how you see that rolling forward?
Yeah, sure. Thanks, Michael. China is going according to plan, at a high level, it's definitely reaffirmed our conviction that we have the right strategy and that we're getting the local execution right, and that doing so is so important. We are definitely over-indexing on that. Our team there is great. It's on the ground. Our office is open, and things are moving very much in the right direction. We're not running China from Canada. We're running China from China, and that's really important. Observations I can share, we knew going in the brand awareness and demand were very high. Now that we are in the market, we see significant potential to further move the needle and spread our authentic message and build our brand there. Our local marketing team was working hard to share our story and our heritage and build that brand.
We since opened in both Tmall and our Hong Kong store have performed well, we're very happy with how things are going in that marketplace. I think that to speak to cannibalization, from all anecdotal evidence that I have and people I've spoken to, the building of a brand in China and the greater brand awareness we build there does not cannibalize tourist business in the rest of the world. In many cases, it has the opposite effect. That's it addresses the China question. In terms of Baffin, can you restate your question on that, exactly? Just so I can-
Yeah, it sounds like you've known the brand for a while. I'm just curious what your level of involvement is on Baffin and I guess how you see transitioning from learning with that brand into bringing your own capabilities to market it with Canada Goose.
Sure. Yeah. I mean, I think that. To be very clear about my role, my role and my time will continue to be dedicated to Canada Goose. We have so much brand power here and so much runway, my focus is on building the Canada Goose brand. Like I've said before, this is not a merger, Canada Goose and Baffin have distinct channels. We sell different customers. We have distinct products, that's not going to change. They built a great business, Paul Hubner is a great footwear visionary. I'm very happy that he's joined our team, he's going to help us inform our strategy for Canada Goose footwear. I'm really excited that this is the first step in us being able to bring to market the best-in-class footwear products for Canada Goose, which I think this is the right way of doing that.
Of course, at the same time, we're also going to make sure Baffin has resources that it needs to continue to thrive and to become the best version of itself.
Thanks a lot, guys.
Our next question comes from the line of Ike Boruchow from Wells Fargo. Your line is open.
Hi. Good morning, everyone. Dani, Jonathan. Congratulations. Great quarter. Two questions I wanted to ask on the DTC segment. I'll throw it out there for the team. I know you guys don't talk to specific store performance until they get that. Given the upcoming openings in the third quarter, especially in Shanghai and Hong Kong, that market's very different relative to North America. In some cases, for a lot of other brands, much more productive. I guess, could you just give us an assumption at a high level? Are those doors assumed to come in at lower productivity versus what you already have for the average fleet, higher productivity in line? I'm just curious how you're thinking about those openings and what you're thinking about how it impacts the P&L.
The stores that we're opening, we've opened Hong Kong already. We've got Beijing coming online initially as a pop-up, as Dani said. Remember the two things about them. One, they're cold starts in those markets in the sense that we are going to be opening our first monobrand presence in each of Hong Kong and PRC with those stores. In the early days, it's probable, and it's natural that there will be a slightly lower level of revenue productivity out of the gate. On the other hand, the thing to remember is we do have variable costs as a percentage of revenues payable to our partners in that market as well, which means that the early stage EBITDA from those stores won't be at the same level that they might be in another market.
We're right at the opening gate, very confident about our position in those markets, very confident in the stores.
Got it. Very helpful, Jonathan. Thank you. The follow-up is, just the DTC commentary in the release. I think you talk about sales productivity further accelerating and strong performance at well-established retail stores. I assume this means that your comp sales performance is compelling and strong. Any chance you could elaborate on some of those comments you have in the press release?
I think you understand that there's a limit to what we do talk about on this. However, what I would say is we're looking at the DTC channel holistically. In the quarter, both top line and the profitability metrics were just outstanding. We've seen revenue grow by CAD 30 million in the period and generate an operating margin of 45% in what frankly is still not a peak quarter. It's really an outstanding performance in an off-peak period and a significant improvement from last year's 32.4%.
Got it. Congrats.
Thank you.
Dani.
Our next question comes from the line of Brian Tunick from the Royal Bank of Canada. Your line is open.
Great. Thanks. I'll add my congrats as well. I guess a couple here. First, we were curious about the wholesale gross margins. I think originally you had said you think this a below 50% gross margin business longer term. We were just wondering, I guess, given the margin progress you talked about today, year-to-date, do you think that this new rate is potentially a new level for the business, or is there more transitory issues around duties? The first question is, what do you guys think about the wholesale gross margin potential? Second question is, you guys talked about a 26% EBITDA margin, I think target by, I think FY '21, and it looks like you'll be above that this year. Just maybe some puts and takes on what you think Jonathan, maybe the margins can look like beyond this year.
Then our final question on inventory. I think last year at this time, entering the second half, inventories were only up 8%, and I think this year they're up 46%. Just wondering if that changes your ability to chase demand at all, Dani, into the back half, or is that more just timing shifts on store openings? Thank you very much.
Okay. I'll deal with the first of those two and then run into the inventory point with Dani. On the wholesale, gross margin has clearly increased, and we've been very pleased with how that's gone. Partly that's due to increased in-house manufacturing efficiency. I've also called out the lower import duties on goods sold into CETA. You also get a lot of natural variability due to shifts in FX rates, geographic mix, input costs, and so on. So far this year, those have all lined up to our benefit. I think we're very happy with how that's tracked. Remember, there can be mix factors around sales to different customers which have different margin profiles, and that's all factored into the guidance we've provided. Okay? That's the first point. I think we've been very pleased with how our EBITDA margins have evolved this year.
I can see why you're asking for longer term sort of perspective on it. It's not really a consideration or a conversation for this point in time. We're only two fiscals into a three-year outlook. I think at this stage it's a bit too soon to say. I think expect us to update that in due course. When it comes to inventory, we do have a very healthy level of inventory. We also have 11 stores by the end of this quarter compared to five last year, 12 websites compared to 11 last year. There is a natural level of growth in the inventory. I think that's consistent with the sorts of levels of revenue growth and network growth that we're talking about.
Super. Thanks very much. Very helpful and good luck for the holiday season.
Thank you.
Our next question comes from the line of Omar Saad from Evercore ISI. Your line is open.
Good morning. Thanks for taking my question. Great quarter. As you stand on the precipice here entering the Chinese market, it would be great if you could help give us a sense what % of your existing business, you have a sense, is the Chinese customers already? Is it single-digits, double-digits? I also was wondering if you could give us some insight on the performance in your product lines, logo versus non-logo. I know you have the black and the no disc options with the logos now. My third question is production capacity. With the new plant coming online, when that ramps up fully, what % will you be own manufacturing at that point, and how much capacity does it increase in terms of your ability to produce products for consumers? Thanks.
Thanks for your questions. To answer the last one first, from a production capacity point of view, we have been consistently increasing our capacity, not only our overall capacity, but also our % of in-house capacity. We have plans to continue to do that. As we do that, it is going to have the expected positive impacts on our business. I believe that is one of our core competencies, and the opening of our factory in Winnipeg recently reaffirms that. We continue to look for other opportunities there. With regards to China, perhaps end of the year, we will break out %s in terms of what % of sales are in what market. It is still only halfway through the year. I would say that we are very happy with our progress in China. We are very happy with our execution against our strategic plan.
We are very optimistic about how that is going to roll out and how the excellent execution our team has provided will lead to the results that we are looking for.
On the logo versus non-logo black, no disc?
I think that it's great that we have a variety of products. That's why we do. Different people, it's a personal choice, and we're happy that we're able to provide that sort of choice for all sorts of different people and customers. All of the product lines are doing well. Our Fusion Fit does very well in Asia, Black Label does well, the classic red, white, and blue disc as well. There is no one dominant style, let's say, or logo choice in that marketplace.
Thanks, Dani.
Thank you.
As a reminder, please limit questions to one question and one follow-up. Our next question comes from the line of Mark Petrie from CIBC. Your line is open.
I guess we're just over a year in terms of the second wave of stores. Wondering if you can just sort of talk about the performance of that tranche versus the first tranche and maybe just your latest thinking in terms of how quickly you want to add stores and potentially alternate kind of store models to maybe accelerate the ability to interact with consumers in a bit of a different way. I guess related to that, how do you balance or think about sort of going deeper in established and successful markets as opposed to continuing to add stores in new markets?
I think if we start this by sort of the beginning of your question, which is around the store performance. We've been really pleased with the performance, as I said, of all of our stores. Each of them comes out of the gate with great economics, and we are seeing all of our stores meet and beat expectations. We are very pleased with how that's developing. I think the other thing that I'd remind you is that we've talked about sort of moving towards 20 stores in FY 2020. That's not something that we're changing in terms of our direction of travel. The beauty of being where we are in the cycle is we can pick really excellent space in each locale where we choose to situate a store.
We remain very excited about the prospects for the development of retail, physical retail, where we're really just at the beginning of the journey.
Sorry, just in terms of the potentially alternate models. In Shanghai, you started with a pop-up, presumably, that evolves quickly to a full-blown store. Is that something you want to consider or would be potentially a bigger part of the strategy going forward?
We continue to look at all sorts of different strategies, and I'm really, really happy that the initial strategy has been as successful as it is. Naturally, any company would want to pursue other things that might work for our brand. I think that the pop-up in Beijing was a great way to introduce that market to our bricks and mortar presence. The opening of the permanent stores in the near future is going to be even more powerful. We're an innovative company, and we like to think ahead. We have lots of plans that we look forward to sharing with you in the future. At the moment, we shouldn't tell you enough about how excited and happy we are with where we are at today.
Okay, thanks for that. I'll get back in the queue.
Our next question comes from the line of James Allison from Barclays. Your line is open.
Good morning. Dani, in your opening remarks, you talked a little bit about experiential ambiance that you're trying to elevate with your retail partners. Can you talk a little bit about how you see this materializing? Are you thinking it's more shop within shops, a higher density of media fixtures or kind of pop-up activations? Any color there would be great.
Yeah. I think that it's important that in any environment in which Canada Goose exists, whether it be a wholesale environment or our own direct retail environment, that we show up in a way which is representative and reflective of our brand and where our consumers can have a great experience. I think that that's really important, especially for our brand, especially for our fans where they want to know and learn and interact with the real stories and the authenticity that our brand offers in a way that I believe is unmatched. I think that things like cold rooms and the way we've innovated and put those experiential factors into our stores have really elevated the game.
I know anecdotally that consumers in our stores, a very high percentage of consumers that go into our stores with cold rooms, use our cold rooms, and that the experiences, they've not only enjoyed it, but they've also shared it, and that's helped build brand awareness for us at the same time. I think that you should expect us to continue to look at ideas like that, and we're really, really happy with how that one has performed for us, for example.
Okay. Just quickly on Baffin, are you able to provide any financial metrics on where Baffin is currently, just revenues, margins, et cetera?
This is Jonathan. I think, in relative terms, Baffin is a much smaller business than Canada Goose. As a result, it's not material to the financial outlook for the three metrics that we guide on. That said, we've fully accounted for it in the revised increased guidance that we provided. Contextually, relative to Canada Goose, it does have a much higher proportion of wholesale revenue, which implies a lower margin profile.
All right. Thank you.
Our next question comes from the line of Alexandra Walvis from Goldman Sachs. Your line is open.
Good morning. Thanks for taking the question. We were wondering if you could give us a little color on the differential in growth rate between the different regions, so USA growing a little bit faster than Canada. As a follow-up on the international business, there's been some movement in the growth rate over the last few quarters. I wonder if you could give us a sense of the underlying growth rate in that region, given I know there's been some timing shifts there as well. Thank you.
Remember that in each of our regions, we have a different blend of wholesale and DTC. If we look at Canada, for example, the growth rate that you see this quarter is a function of the wholesale shipment timing because in Q1 we shipped a greater proportion of our orders to Canadian accounts relative to last year, and that naturally reverses in the following quarter. As a result, for example, if you look there, you look at the six-month growth rate, it's 25.7% in Canada, which is much more representative of the underlying growth demand. What you see quarter-to-quarter is typically distorted or there's noise level in it from shipment typing as well as from the underlying level of growth in the business. What we are seeing is strong underlying growth, both in comparable and total terms in each of our regions.
What we do enjoy in this business is very strong brand salience around the world.
Great, thank you. One more question from me. As you look at product availability at your retail partners and how that's expected to trend through the season, what are your expectations for that? I'm thinking here of how, last year, some of your retail partners had insufficient product as we got through to the end of the holiday season. Are you planning to ensure that that isn't the case this year, or is some degree of scarcity likely again?
I think that the scarcity factor that exists with our brand is because of the demand that exists in the marketplace. We're very happy with the growth rates and the rate at which our business is growing. Top line and bottom line, we're happy with all of that. Surely there's more inventory available this year. As Jonathan mentioned earlier, we also have more of our own bricks and mortar stores this year, and we have more inventory available for those stores. We are not afraid to be sold out. I think that's a really important message that I'm happy to reinforce. I think that being sold out is a good thing for business, and I think that sometimes businesses have lost sight of that and have had too much inventory. I think that it's getting cold out there. I'd go grab your parka pretty soon.
Thanks, guys. Thanks so much.
Our next question comes from the line of Camilo Lyon from Canaccord Genuity. Your line is open.
Hi, guys. My congrats as well on a fantastic quarter. Just following up on the last question, maybe asked it a little differently. Within the wholesale guidance of high single digits for the year, Jonathan or Dani, can you talk about what level of reorders you're baking into that assumption, whether it's any level of reorders given the earlier shipments or are going to normalize levels of reorders? If there's some sort of quantification you could put around that'd be great.
There are three data points that are really relevant here. First is we've got a lot more inventory than we had a year ago. The second is that we've raised our total revenue guidance. The third is we've raised our wholesale guidance. We're clearly moving into this coming quarter and the fourth quarter in good shape.
Yeah, for sure. If I could add one thing to that is just that we are in the great position of being able to pull the levers of where we place the inventory, right? To the extent that we can make that choice and whether that be wholesale or retail, and of course, our retail stores are very important to us as our wholesale partner.
Got it. My second question, Dani, as we sit here, look back over the last year or so, you've had the successful launch of Knitwear. You're now adding Baffin to the portfolio, certainly gets you an entry into a different category. Do you think that you are in the major categories that you want to be and will want to be in for the next couple of years, or are there other categories that you would consider entering? If so, what are those?
There are certainly other categories. Even going back to the prospectus that we issued more publicly, we listed other categories there. I think that for the time being, we're very happy with the categories that we have on our plates to develop. As you know, we are only interested in producing best-in-class products in any category that we enter. We're really focused on the ones on our plate. I think that those opportunities themselves are significant. Footwear is a category that we've been asked about and that we've wanted to get into for such a long time, and the opportunity to be relevant in that category in a meaningful way is really exciting. I think we want to focus on those for the moment. Beyond that, there's for sure still other opportunities, and we'll get to those when the time is right.
Got it. If I could just sneak one more in on wholesale door expansion. If you could just update us on your views on door expansion in the U.S. on the wholesale side versus growing within the existing doors that you're currently selling.
We continue to be happy to go deeper with the doors that we have. Although there are plenty of opportunities to expand doors, that's not the way that we look to grow our business, and that's not the way we're looking to grow our business at the moment.
Perfect. Good luck in the holiday season.
Thank you.
Our final question today will come from the line of Jonathan Komp from Baird. Your line is open.
Yeah. Hi, thank you. I wanted to ask about some of the newer categories and maybe first if there's any updates or metrics you can share around knitwear and the performance there. Then also, Dani, just on footwear, any additional thoughts on the early vision you have there for the brand and even whether or not that would be a product that you would see yourself manufacturing as a company or just any initial thoughts there?
Sure. Our new categories, knitwear, our spring products, Windwear, Rainwear, continue to resonate with our consumers and continue to grow. We're very happy with the rate at which they're growing. They're growing off of small bases, and we're happy that that's the way we built it, and they keep growing. Really happy with that. Footwear, like I said earlier, it is a super exciting category. It's a large global category. It's something that is a natural complement to our brand, and I think that we can produce some phenomenal industry-leading boots, and that's our objective. That's the plan, and we're gonna put together a strategic plan to back that up, and we're gonna execute against that the way that we are all so proud of being able to do.
Understood. Maybe just one product-related follow-up. I know globally, some of the other luxury brands have shifted stances a little bit recently on their use of animal products and fur, and I'm just wondering if there's been any change in your customer appetite or product mix or anything like that, or any kind of change in your attitude, or maybe not.
No. Canada Goose, we're a first brand, and we use fur for function first. The most important thing to us is that all of our raw materials are sourced ethically and responsibly, and they are. That's what's important to our consumers as well, and it continues to resonate with them, too. All of our policies are available on our website.
Understood. Thank you.
I would now like to turn the call back over to Dani Reiss for closing remarks.
Awesome. Well, thanks again, guys, for joining us for today's conference call. Appreciate the time. I'd like to say Happy Thanksgiving to all of our American friends listening today and very much look forward to catching up again when we report our third-quarter results in a few months. Have a great morning, great day.
This concludes-
Thank you
today's conference call. You may now disconnect.