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 20 19 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Thank you. I would now like to turn the call over to Patrick Bork, Senior Director of Investor Relations. Please go ahead.
Thank you. Good morning, and thank you for joining us today. With me are Danny Reese, President and CEO and Jonathan Sinclair, EVP and CFO. For today's call, Danny will begin with highlights of our Q2 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 and 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 Regulatory Authorities.
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 Danny.
Thank you, Patrick. Good morning, everybody, and 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 3 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 Q1, we increased total revenue by 33.7% to $230,300,000 And 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 Parcel 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 fiscal 2019 with 3 of our 5 new locations open, and we are excited to be bringing our world class retail experience to these markets. The 4th location in Montreal will be opening later this week. And 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 and 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 Office and House in Sanlituan to activate and seed the market ahead of the opening of our 5th 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 3rd factory in Winnipeg in September, and we're joined by Prime Minister Trudeau for the opening event. Through a staged expansion, this will become the largest of our 7 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 3 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 2nd 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 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, and we increased our revenue to $179,900,000 from 152 $100,000 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 drive 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, and 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 shopping for Canada Goose with a retail partner is naturally different to our own stores or e commerce sites, but the quality of the experience must be the same.
We are not just putting jackets on racks, and 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 DTC 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 and 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're creating that moment even before they purchased. It's a strategic and highly effective in reinforcing that we make the best and warmest jackets to 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 and getting footwear right is an important part of that vision. We also recognize that it is a business, a distinct business to apparel and 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, and it is so important as we continue to chart our own course with best in class products. Buying the company makes that makes the best and warmest boots is the right first step for Canada Goose in this exciting journey. Baffin is the snowmantro of footwear in the coldest places on earth, and 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 Hoeppner 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 stand alone 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 twenty nineteen 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.
And with that, Jonathan will now go over our financial results with you in greater detail.
Thanks, Danny. 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 Danny mentioned just now, our execution in the Q2 was exceptional across the business.
Revenue increased by 33.7% to $230,300,000 31.5 percent ahead on a constant currency basis. Relative to last year, the Canadian dollar depreciated in comparison to the U. S. Dollar, euro and pound, 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 $179,900,000 from $152,100,000 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 fallwinter order book in this quarter relative to last year. DTC revenue increased to $50,400,000 from $20,200,000 or 21.9 percent 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 United States 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 2 very cold rooms in Boston and in Short Hills.
Our consolidated gross margin expanded to 55.8 percent 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 for manufacturing and a reduction of duties on goods sold due to SETA, the SETA 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 $80,100,000 and operating margin of 44.5%. This compares with $60,100,000 or an operating margin of 39.5% last year. SG and A has also decreased as a percentage of revenues on a significantly larger quarterly revenue base. DTC operating income was $22,700,000 at operating margin of 45%. This compares to $6,600,000 last year or an operating margin of 32.4%.
Building on the momentum from the Q1, this still off peak retail productivity in both well established and new retail stores continued to accelerate, driving lower total SG and 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 34 point $2,000,000 up from $16,200,000 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 $3,600,000 compared to $2,300,000 last year, driven by the retail opening program and upgrades to our manufacturing capability and capacity. Combined, our channel operating incomes and corporate SG and A resulted in a total operating income of $65,000,000 compared to $48,200,000 last year. On a non IFRS basis, adjusted EBITDA was $70,900,000 compared to $46,300,000 Net income was $49,900,000 or $0.45 per diluted share compared to $37,100,000 or $0.33 a share last year. And adjusted net income was $51,000,000 or $0.46 per diluted share compared to $32,800,000 or $0.29 a share last year. So now turning to our revised guidance for fiscal 2019.
Based on the strength of performance across with a particularly significant contribution from the DTC channel, we are raising our fiscal 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 5 the opening of 5 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 and A growth investments in IT and our Greater China's business unit as well as variable SG and 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 twenty nineteen. 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.
Now I will turn the call back to Danny for some closing remarks.
Thank you, Jonathan. As I said before, we delivered exceptional results today, and we're building a very strong foundation for the future. I'm truly and extremely proud of what our team has accomplished, and I could not be more excited about what's coming next. And with that, I will turn it back over to the operator to begin our Q and A session.
Thank
you.
Our first question comes from the line of Michael Binetti from Credit Suisse. Your line is open.
Hey, guys. Congrats on the nice quarter. And let me start with just a quick math question, Jonathan. On your numbers, it looks like you're 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?
So as I was saying before, we delivered a significantly higher proportion of the order book in Q2 relative to last year. And that 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 Q3, whereas Q4 is primarily driven by late season replenishment and indeed the shipments of spring summer in good part. We've satisfied 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. And then just, Danny, 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? And I guess is that any sign I know initial concern as you guys announced that was we are 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?
Yes, sure. Thanks, Michael. We don't China has been China is a growing corn plant, and at a high level, it's definitely reaffirmed recognition that we have the right strategy and that we're getting the local execution right and that doing so is so important and that 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. First, observations I can share. We knew going into brand awareness and demand were very high.
And 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. And our local marketing team was working hard to share our story and our heritage and build that brand. We since opened both Tmall and our Hong Kong store have performed well, and we're very happy with how things are going in that marketplace. And I think that to speak to cannibalizations, I don't from all anecdotal evidence that I have and people have 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 and in many cases has the opposite effect. So that's to address the China question.
In terms of Baffin, can you restate your question on that, exactly? Just so I Yes.
Just curious what your 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 with Canada Goose?
Sure. Yes. I mean, I think that just 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 with runway and my focus is on building Canada Goose brand. As I've said before, I mean, this is not a merger and Canada Goose and Baffin have distinct channels.
We sell different customers. We have distinct products and that's not going to change. They built a great business and then Paul Hovner is a great footwear visionary. I'm very happy that he's joined our team and he's going to help us inform our strategy for Canada Goose Footwear. And 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 is I think this is the right way of doing that.
And 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. Danny, Jonathan, congratulations, great quarter. Two questions I wanted to ask on the DTC segment, and I'll throw it out there for the team. So I know you guys don't talk to specific store performance until they get that. But given the upcoming openings in the Q3, especially in Shanghai and Hong Kong, that market is 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? Just I'm just kind of curious how you're thinking about those openings and what you're kind of thinking about, how it impacts the P and L?
So the stores that we're opening, we've opened Hong Kong already. We've got Beijing coming online initially as a pop up, as Stanley said. Remember the two things about them. 1, they're going to be they're cold starts in those markets in the sense that we are going to be opening our first monogram presence in each of Hong Kong and PRC with those stores. So 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 as at the same level that they might be in another market. But it's 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. And then the follow-up is, just the DTC commentary in the release. I think you talked 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. And in the quarter, both top line and the profitability metrics were just outstanding. We've seen revenue grow by $30,000,000 in the period and generate an operating margin of 45 percent in what frankly is still not a peak quarter. So it's really an outstanding performance in an off peak period and a significant improvement from last year, 32.4%.
Got it. Congrats.
Thank you.
Our next question comes from the line of Brian Tunic 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 is a below 50% gross margin business longer term. And 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? So first question is what do you guys think about the wholesale gross margin potential? Talked about a 26% EBITDA margin, I think, targeted by, I think, FY 2021. And it looks like you'll be above that this year.
So just maybe some puts and takes on what you think, Jonathan, maybe the margins can look like beyond this year? And 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%. So just wondering if that changes your ability to chase demand at all, Danny, into the back half? Or is that more just timing shifts on store openings? Thank you very much.
Okay. So I'll deal with the first of those 2 and then run into the 3 points with Danny. So on the wholesale, gross margin has clearly increased and we've been very, 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 SITA.
You also get a lot of natural variability due to shifts in FX rates, geographic mix, input costs and so on. And so far this year, those have all lined up to our benefit. So I think we're very happy with how that's tracked. But remember, there can be mixed factors around sales to different customers, which have different margin profiles. And that's all factored into the guidance we've provided.
Okay. So that's the first one. I think we've been very pleased with how our EBITDA margins have evolved this year. And I can see why you're asking for longer term sort of perspective on it. But it's not really a consideration or conversation for this point in time.
We're only 2 fiscals into a 3 year outlook. And I think with at this stage, it's probably a bit too it's a bit too soon to say. I think it expects 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 5 last year, 12 websites compared to 11 last year.
And so there is a natural level of growth in the inventory. But I think that just 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. And as you stand on the precipice here entering the Chinese market, it would be great if you could help give us a sense, what percentage of your existing business, you have a sense, is the Chinese customers already, is it single digits, double digits? And 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. And then my third question is production capacity. What with the new plant coming online, when that ramps up fully, what percentage will you be on manufacturing at that point? And how much capacity does it increase in terms of your ability to produce products for consumers? Thanks.
Yes. Thanks for your questions. To answer the last one first from a Prussian capacity point of view, I mean, we've been consistently increasing our capacity on not only our overall capacity, but also our percentage of in house capacity. And we have plans to continue to do that. And as we do that, it's going to have the expected positive impacts on our business.
And I believe that's one of our core competencies. And the opening of our factory in Winnipeg recently reaffirms that, and we continue to look for other opportunities there. So with regards to China, I mean, we don't perhaps end of the year, we'll break out percentages in terms of what percentage of sales growth are in what market, still only halfway through the year. I'd say that China is doing we're very happy with our progress in China. We're very happy with our execution against our strategic plan.
We're very optimistic about how that's going to roll out and how and how the excellent execution our team has provided will lead to the results that we're looking for.
And on the logo and versus Don logo, black, no disc?
I think that it's great that we have a variety of products, that's why we do and different people. It's a personal choice and that we're happy that we're able to provide that sort of choice for all sorts of different people and customers and all of the product lines are doing well. Our Fusion Fit is doing it 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, Danny.
Thank you.
Our next question comes from the line of Mark Petrie from CIBC. Your line is open.
Hey, good morning. I guess we're just over a year in terms the second wave of stores. Wondering if you can just 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? And then 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. So we are very pleased with how that's developing. I think about the other thing that I'd remind you is that we've talked about sort of moving towards 20 stores in FY 'twenty. So that's not something that we're changing in terms of our direction of travel and 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.
So 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.
And sorry, just in terms of the potentially alternate models, I mean, in Shanghai, you started with a pop up, presumably that evolves quickly to a full blown store. But 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 and the the pop up in Beijing was a great way to introduce that market to our bricks and mortar presence and the opening of the permanent stores is in the near future is going to be even more powerful. Any we're an innovative company, and we like to think ahead. So there's a lot we have lots of plans that we look forward to sharing with you in the future.
But at the moment, we couldn't tell you enough 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. Danny, 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 shopper than shops, higher density of media fixtures or kind of pop up activations? Any color there would be great.
Yes. I mean, I think that it's important that in any environment in which Canada Goose exists, whether it be a wholesale environment or our own retail environment that we show up in a way which is representative and reflective of our brand and where our consumers are going to 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 real 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. And I know anecdotally that consumers in our stores I mean, a very high percentage of consumers that go into stores into our stores with cold rooms, use our cold rooms and that they've the experience of 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.
So I think that you could you should expect us to continue to look at ideas like that, and we're really happy with how that one has performed for us, for example.
Okay. And then just quickly on Baffin. Are you able to provide any financial metrics on where Baffin is currently, just revenues, margins, etcetera?
I think the so 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 3 metrics that we guide on. And that said, we 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.
Great. 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. And then 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 shift there as well.
Remember that in each of our regions, we have a different blend of wholesale and DTC. So 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, if you for example, if you look there, you look at the 6 month growth rate, it's 25.7% in Canada, which is much more representative of the underlying growth demand. So what you see quarter to quarter is typically distorted or there's noise level in it from sort of shipment typing as well as from the underlying level of growth in the business. So what we are seeing is strong underlying growth, both in comparable and total terms in each of our regions because what we do enjoy in this business is very strong brand salience around the world.
Great. And then 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. And we're very happy with the growth rates that and the rate at which our business is growing. Top line and bottom line, we're happy with all of that. And 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.
And we are not afraid to be sold out. I think that's a really important message that I'm happy to reinforce. Being sold out is a good thing for business. And I think that sometimes people are businesses lost sight businesses have lost sight of that and have had too much inventory. And I think that it's getting cold out there.
I'd go grab your park 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. And my congrats as well on a fantastic quarter. Just following up on the last question, maybe I asked it a little differently. Within the wholesale guidance of high single digits for the year, Jonathan or Danny, 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 going to normalized levels of reorders and if there's some sort of quantification around that, that would be great?
There were 3 data points that are really relevant here. First is, we've got a lot more inventory than we had a year ago. Second is that we've raised our total revenue guidance. And the third is, we've raised our wholesale guidance. So we're clearly moving into this coming quarter and the 4th quarter in good shape.
Yes, for sure. If I could add anything to that one thing to that is just that we have the we are in the great position of being able to pull the levers of where we place the inventory, right? And 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. And my second question, Danny, as you sit here, look back over the last year or so, you've had successful launch of knitwear. You're now adding DAFIN 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?
And if so, what are those?
There are certainly other categories. I mean, even going back to the prospectus that we issued when we went public, we list other categories there. I think that for the time being, we're very happy with the categories that we have on our place to develop. And as you know, we are only interested in producing best in class products in any category that we enter. And we're really focused on the ones on our plate.
I think that those opportunities themselves are significant for where it's something that is the 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. And I don't think that I think we want to focus on those for the moment. But beyond that, there's for sure still are opportunities, and we'll get to those when the time is right.
Got it. And 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 happier happy to go deeper with the doors that we have. And we 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.
And our final
I 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, Danny, just on footwear, any additional thoughts on kind of 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 kind of initial thoughts there?
Sure. Our new categories, knitwear, spring products, windwear, rainwear continue to resonate with our consumers and continue to grow. And we're very happy with the rate at which they're growing and they're growing off a small basis. And that's the way we're happy that that's that's the way we built it, and they keep growing. So really happy with that.
Footwear, as I said earlier, I mean, I should not be it's 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 our that's the plan and we're going to put together a strategic plan to back that up and we're going to execute against that the way that we are also proud of being able to do.
Understood. And 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. Ken, we use for a function first randomly. We use for function first. The most important thing to us is that I've written that all of our raw materials are sourced ethically and responsibly and they are. And that's what's important to our consumers as well and it continues to resonate with them too.
And so all of our policies are available on our website.
Understood. Thank you.
I would now like to turn the call back over to Danny Reese for closing remarks.
Awesome. Well, thanks again guys for joining us for today's conference call. I 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 Q3 results in a few months. Have a great morning or day.
This concludes today's conference call. You may now disconnect.