Good morning. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to Canada Goose first quarter fiscal 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 at this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. I would now like to turn the call over to Patrick Bourke, Senior Director, Investor Relations. You may begin.
Thank you. Good morning, and thank you for joining us today. With me are Dani Reiss, President and CEO, and Jonathan Sinclair, Executive Vice President and CFO. For today's call, Dani will begin with highlights of our first quarter performance and then update you on our progress against our key priorities. Following this, Jonathan will provide details on our financial results. 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. 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 these forward-looking statements.
Additional information regarding these forward-looking statements, factors, and assumptions appear under the heading Cautionary Note regarding forward-looking statements and risk factors in our annual report on Form 20-F, which is filed with the SEC and the Canadian Securities Regulatory Authorities and is also available on our investor relations section of our website at canadagoose.com, as well as the earnings press release that we furnished today under the heading Cautionary Note Forward-looking Statements. The forward-looking statements made on this call speak only as of today, 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 financial measures in the table at the end of our earnings press release issued this morning, which is also available at the investor relations section of our website at canadagoose.com. With that, I will turn the call over to Dani.
Good morning, everyone, and thank you so much for joining us today. We had a great start to fiscal 2019. I am happy to share some of those highlights with you. First, let me officially welcome our new Executive Vice President and Chief Financial Officer, Jonathan Sinclair, to his first Canada Goose earnings call. Since joining in late June, Jonathan has quickly immersed himself in the business and has become a valued business partner to me. He brings a wealth of financial and operational leadership to the table, it is great to have him on board as a key member of our executive team. Back to financial performance. Our results were exceptional in what is by far our smallest quarter. That said, I am really excited about the strength of our top line, which was driven by DTC, though not at the expense of wholesale, which grew as well.
Building on our momentum from the fourth quarter of fiscal 2018, we delivered great results in both channels, driving total revenue growth of 58.5%. In particular, DTC was a standout performer. In their second year of operation, Toronto and New York City stores continued to raise the bar in both financial performance and retail experience. The contributions of our 4 recently opened stores in Boston, Calgary, Chicago, and London also continue to be very strong. We have meaningful international tourist traffic at this time of year, as well as diehard local fans shopping pre-season who are determined to get their perfect fit and style in their favorite color from our fall/winter 2018 collection. To me, this is a direct result of how we build demand ahead of supply, it is a great indicator of the year-round viability of our retail stores.
Our DTC business increased to 51.9% of total revenue, compared to 28.5% last year. I am thrilled to see this make our smallest quarter even more meaningful than it has ever been. It also reduced the loss impact of our corporate SG&A as we generated an adjusted EBITDA loss of CAD 13.5 million, in line with last year, which was less than expected despite significantly larger overall investments. This is a great tailwind as we head into our busiest selling season. On the product side, while people are buying their parkas early, we also continue to see strong momentum in our lighter weight categories. Lightweight down continues to grow significantly and has come into its own as another cornerstone of our product offering.
It offers so much versatility in terms of style and usability, there is a clear connection to the functional DNA which makes our parkas so unique. Windwear and knitwear also performed well, these two worlds came together in our new WindBridge styles, which were particularly strong sellers. Innovative and expert craftsmanship, mixing nylon with ultra-fine Merino wool. These sweaters are a perfect articulation of our authentic and unique take on knitwear as performance luxury outerwear. That positioning is something I am happy to see resonate as we continue to grow and evolve. Recently, we were included in Deloitte's Global Powers of Luxury Goods Report as the first ever and only Canadian company to make it into their ranking of the top 100 luxury brands. We were also ranked as the fastest growing on that list.
I am personally particularly proud of this recognition and what it means for our brand. At the same time, I recently got back from a trip to Greenland and to Pond Inlet. Pond Inlet is a small community located above the 72nd parallel in the Canadian high Arctic. Seeing our products continue to be used and trusted in environments like this, which they were designed for and inspired by, reinforces to me how unique this brand is in its ability to live comfortably in both worlds. How many other apparel companies can say that they are loved in the coldest places on Earth and the world's biggest cities and most influential fashion capitals? We have cut through the noise by giving people something authentic to experience. That is at the heart of why we are loved in Canada and around the world.
This differentiates us and makes us special. We are ruthless about protecting that at all costs. Lastly, I am sure many of you are curious about how things are going in China. On the hiring front, we have made great progress. We are building out a world-class local team. Commercial preparations for our Tmall launch and store openings are also on track. In the near term, we will be ramping up market activation efforts. We have seen exceptional demand from Chinese consumers for years. We are very excited to bring our retail and e-commerce experiences directly to our fans there. More broadly, across all of our markets, I continue to believe we are in the early stages of fulfilling our global potential.
Our team is executing with passion and with discipline. We are resolutely focused on putting the right pieces in place for enduring long-term growth. With that, I will turn it over to Jonathan Sinclair to introduce himself and to go over our financial results with you in more detail.
Thank you, Dani. Good morning, everyone. Thank you for joining us. Before I get into the financials, I'd like to take the opportunity to introduce myself and to convey how excited take on this role. It's been such a pleasure getting to know our team since I started in late June. I'm looking forward to doing the same with our shareholders. As a career retailer with an extensive luxury fashion and direct-to-consumer background, I have long admired Canada Goose, a brand which is loved around the world and which Canadians are proud to call their own. Whether it is rebuilding made in Canada apparel manufacturing, becoming the first truly global Canadian luxury brand, or creating a world-class DTC business from fraction years. I am so impressed with what Dani and above all, they've done it the right way. Bold, long-term vision, disciplined investment.
When the offer to take this role came, it was a once-in-a-lifetime opportunity and one of the easiest decisions I've ever made. Despite all of the company's staggering accomplishments, this business is still just scratching the surface of its global potential. With a team of passionate people who are hugely committed, we have so much runway in front of us across all of our growth areas, I am thrilled to be part of the journey ahead. With that said, I'll now move on to our financials. Before I go through the numbers in detail, I'd like to remind you that they are stated in Canadian dollars. As Dani mentioned earlier, we start the year on a high note with exceptional performance, smallest quarter by value of the fiscal year. Revenue for the quarter increased 58.5% to CAD 44.7 million, 59.6% on a constant currency basis.
That's driven by strong execution across all of our channels. DTC was the standout performer, with revenue up to CAD 23.2 million from CAD 8.3 million last year. That represents 51.9% of business, compared to 29.5% last year. This was primarily attributable to strong performance across all existing and new retail stores, with particularly significant from our longer established boutiques in Toronto and New York City. Commerce also had a positive impact on the quarter year-over-year. Wholesale revenue grew to CAD 21.5 million, from CAD 19.9 million. Higher order volumes were the reason for our existing . Our consolidated gross margin expanded to 64% from 46.8% last year. This was primarily due to a higher proportion of DTC revenue and, to a lesser degree, wholesale gross margin expansion. DTC gross margin expanded by around 160 basis points to 76.3% from 74.7% last year. That's driven by product mix, partially offset by unfavorable .
DTC operating income was CAD six and a half million, operating margin of 20%. This is a standout achievement compared to last year's loss of CAD 0.3 million. Shift to a positive operating was driven by strong retail store productivity as well as gross margin expansion and a lower level of store pre-opening costs, given both the timing of our opening program this year and the fact that we are getting more used to this compared . In our wholesale channel, we saw gross margin expansion to 50.7% from 35.2% last year. This was primarily due to the mix of clients in the as well as accounting adjustments which had a disproportionate impact in a seasonally small quarter. We had a lower proportion of revenue from sales to international which carry materially lower margins direct sales to our other wholesale.
This dynamic reflects a shift in the timing of the order book fulfillment and deliveries for certain accounts relative to last. We also benefited from lower unit costs due to favorable foreign exchange fluctuations and a lower level of inventory . Wholesale operating income was CAD 2.9 million, operating margin of 13.5%. That compares with CAD 1.1 million or an operating margin of 5.5% at this stage last year. Gross margin expansion in the channel was partially offset by higher SG&A due to additions to headcount costs for sales and operations support quarterly. Unallocated corporate expenses were CAD 25.9 million, that compares with CAD 13.4 million last year. This was driven by planned SG&A growth investment, marketing and corporate headcount in IT, as well as higher professional fees and other costs relating to public company compliance.
Unallocated depreciation and amortization was CAD 3.4 million compared to CAD 2.2 million for this last year. That's driven by a larger retail store footprint. Combined, our channel operating incomes and corporate expenses resulted in operating loss of CAD 19.9 million compared to . Turning to our adjusted EBITDA, we delivered an adjusted EBITDA loss in the quarter of CAD 13.5 million, in line with last year's loss of CAD 13.6 million, despite significantly larger SG&A costs. This really speaks to how DTC growth and strong off-peak retail productivity have made our smallest quarter more meaningful. On an IFRS GAAP basis, we reported a net loss CAD 18.7 million or CAD 0.17 a share, compared to a net loss of CAD 12.1 million or CAD 0.11 a share last year. Adjusted net was CAD 17.1 million or CAD 0.16 a share compared to CAD 13.3 million or CAD 0.12 a share for this quarter last year.
Before I wrap up, I'd like to take a moment to thank Dani and the board for the partnership and trust that they have placed in me. Canada Goose is a brand like no other, with an amazing set of opportunities in front of it. It's truly an honor to be part of this world-class team. I look forward to our adventure together. Now I will turn the call back to Dani for some closing remarks.
Thanks, Jonathan. As I said before, we are very pleased with our start to the year. We are enhancing our corporate infrastructure, increasing our manufacturing capacity. Activating local markets and we are on track to deliver against all of our goals for. As we head into the upcoming fall-winter season, we are excited to inspire our fans in new ways and bring more Canada Goose to the world. We look forward to updating you on our progress on our next earnings call. With that, I will turn over to the operator to our Q&A.
Okay. At this time, if anybody would like to ask a question, press star one on your telephone keypad. Again, that would be star one on your telephone keypad. Your first question comes from Brian Tunick from Royal Bank of Canada. Your line is open.
Thanks. Good morning, guys. A nice start to the year. Curious, two questions. One, was your SG&A growth spend in China significant in Q1? How does that ramp up through the rest of the year? The second question is, I think last year, Q1 and Q2 both benefited from wholesale timing shifts. Just curious about anything we should consider regarding timing shifts in wholesale for this year's first half. Thank you very much.
This is Jonathan Sinclair. I think from a financial perspective, the China build-out really wasn't a factor in our SG&A base in Q1. That's not in any way a reflection of us being behind. It's simply a function of the timing of expense. As Dani Reiss said in his remarks, we're on track with our hiring, our office opening, and our commercial preparation. In Q2, there will be significantly higher marketing, higher expense in terms of headcounts, facilities, and store opening costs, reopening costs flowing through our P&L. That's going to be ahead of the revenue from Tmall and our two retail stores, which come online three. When we look at wholesale, at timing versus last year, overall, we're very much in line with what we experienced last.
As I said, there's something of a mix going on. That's just how the customers want to take it. There's no underlying shift in demand.
All right, great. Thanks. Good luck. Welcome aboard.
Thank you.
Your next question comes from Michael Binetti from Credit Suisse. Your line is open.
Hey, guys. Thanks for taking my question here, and congrats on a nice quarter. Can we get a little bit of guidance on the gross margin by channel for this year? Longer term, I guess, Dani, within the framework of the longer range guidance that you gave us last call, which channel from here do you see the most gross margin opportunity in from these already high levels? Maybe just some thoughts on the puts and take drivers from here in the two different channels.
I think if we talk about the drivers of gross margin in the quarter, first of all, and then sort of look forward from there. We've seen good improvement in our DTC gross margin in the quarter, 150 basis points. They're driven largely by product mix, but fundamentally, it's a good set of . I think if you look at wholesale gross margin, I would say that the shift in the period is something that is not representative of what you'd expect to see over time. Relative to last year, we had a smaller proportion of channel revenue coming from lower margin distributor sales, and that's a function of later plan deliveries for certain accounts, but not a shift in demand. We have favorable FX movements there. We have lower inventory provisions.
All of those play a role, but in the optic of a very small quarter, it doesn't take a lot to disrupt the margin number. They're really quite temporary factors. There's not a fundamental step change in our wholesale gross margin. Recognizing that there are moving parts and variability over time, you should look to fiscal 2018's wholesale gross margin of 46.9% as a much more relevant starting point to frame your expectations 2019.
Go ahead.
As we look at the margin opportunity for the business, I think you'll see as we see the development of the DTC channel continue, that will alter the mix somewhat in favor of DTC, therefore there will be a mechanical shift in the reported gross margin beyond the natural improvement that one might expect through scale and product.
In the DTC business in particular, as you just look at it on its face, we're well into the mid-70s on the gross margin, we're launching new categories that probably are going to have a different gross margin mix. I know you guys are trying to stay focused on that. How should we think about what the natural limits are for that business and where you think that settles out longer term based on the product planning you have?
I'll jump in. Our intention as we develop new products and bring the newer products to market is to keep them in line with where we're at right now. At this point, there are no new products like our spring line, our knitwear line. We're happy with our margins, and they're also not material enough to really affect the overall gross margin at this point in time. Our objective as we grow those businesses where we are today. I hope that answers that question. I think back to your previous question where you were asking me about the DTC shift. I think, our direct-to-consumer business has really performed extraordinarily well. We're really happy with it. As we've said since day one, wholesale is still a very important part of our business.
That said, we continue to feel that we've a long way to go in terms of increasing our DTC business, and I'm confident we're able to do that, and continue to grow that as a percentage of our sales while also growing wholesale at a modest rate. That'll increase our overall margins and-
Thanks. Okay. Thanks a lot, guys.
Your next question comes from the line of Ike Boruchow from Wells Fargo. Your line is open.
Hi. Good morning, everyone. Patrick, Dani, and welcome, Jonathan. I guess question for Dani. Does the strong performance of the stores, especially from a profitability and productivity standpoint in this off-peak period in Q1, does it change your perspective at all on maybe how many stores you'd like to open and operate for the Canada Goose brand when you think about the business longer term?
Hey, Ike. Thanks for the question. Yeah, no, it doesn't at all change our perspective. To me, actually, it reaffirms how effective our plan has been, and our approach has been. It's been very important to us to pick the right stores in the right locations and take advantage of great opportunities, to be really disciplined in doing that. I think that one of the reasons why our stores have been as productive as they have been is because we've executed that strategy really well. I think it's important to us that we continue to execute that strategy. That's our plan.
Got it. Then, I'm sure the answer is yes to both of these questions. If you had to frame up your ability to maintain the levels of profitability that you have in this seasonally low period, are you more happy with that piece of the DTC business, with these incremental stores you're opening, or are you more happy with the comp sales or the productivity you're seeing? It's very good to see that you're seeing the operating profit kind of stabilize, even though you have an extra four or five fixed cost stores in the business in a really low volume period. Just curious how you balance the view on sales and profitability.
I think that you're right, that the answer is yes to both of those. They're both exciting, encouraging, and great leading indicators of what we hope is to come.
Got it. Congrats, everyone.
Your next question comes from Mark Petrie from CIBC. Your line is open.
Hey, good morning. I wanted to ask about the strength in Canada. Once again, the growth leader on a dollar and percentage basis, and understand that it's a small quarter, but we also saw that trend last year. I guess two things. First, what does that growth tell you about the brand, how consumers mature through the brand, given that it's your most mature market and most deeply penetrated market? What do you see in your product mix? I guess second and sort of related, you called out strength in your well-established stores, specifically Yorkdale. How has the shopper evolved in Canada? I guess, I know those stores see significant spending from tourists. Do you see some of that at risk as you expand access in China later this year?
Yeah. Thank you for the question. I think in a way, you answered your own question in that our customer in our stores and our profit in our stores and why Canada is growing so strongly in particular is because of tourist business. Canada, any home market, in our case, Canada is usually the most economical place to purchase product, and so that's why we see lots of tourist traffic here, and there's no doubt that's contributing to the strength of the marketplace. Insofar as do we expect that to change at all, we don't, actually. I think that as we continue to grow our awareness globally, and especially as we continue to build into markets like China, which are so huge with so much white space, I certainly don't expect traffic to slow down, and I've heard stories of that type of traffic increase going up.
Do you see any difference in adoption of Windwear or Knitwear or some of your newer products? Do you see any different adoption of those products in Canada versus other geographies?
By and large, no. There are small differences regionally, both across regions here and there, but nothing dramatic or material. I think that for us, we are very disciplined with how we grow new product categories. I think that's very important. We don't want to make huge bets in one year or year one or year two of a new product. We've seen all of our new products grow year-over-year for a number of years, all of our new categories, and that's what we want to see. When you look back at something like Lightweight Down, which today is a material pillar of our business, seven years ago is when we started building, and it took us six years to build that business into anything close to what it is today.
We look at Knitwear, we look at spring products in the same way as we looked at Lightweight Down back then.
Okay. That's helpful. Thank you very much.
Your next question comes from James Allison from Barclays. Your line is open.
Thanks. Good morning. My understanding from your commentary in the MD&A is that you made a decision to allocate more Q1 shipments to North America versus the rest of world compared to last year. Is that related to the lower distributor sales you've spoken about, or is there something else driving that?
No, it's purely a factor of when the clients, the wholesale and distribution partners want to take the inventory. There's nothing else driving it. That's what's behind it.
And-
Very much. We supply as soon as they're ready.
Do you feel like that's because they ended last year with a higher inventory position? I know there was some strong restocks in fiscal Q4.
Yeah, no, not at all. That's not the reason. I think it's important to remember, we try and always emphasize we're a seasonal business, and we need to be looked at on an annual basis, quarterly basis. There's nothing that you're trying to read into there. There's nothing to be read into that.
Okay, thanks. Just quickly on the DTC gross margin, can you provide a little bit more color around the favorable product mix? My understanding was that the spring wear held a lower margin. Was that because I know you'd mentioned in the commentary you'd sold more winter wear earlier ahead of the key buying season in some of your DTC stores. Is that the primary driver there?
The key thing behind the mix is just around the fact that we continue to sell jackets and a mixture of lightweight down and through the period. That helps the margin alongside the introduction of the spring season.
Yeah, for sure. We're going to add to it. We're really selling all of our products through all of our stores, and there's a lot of fans trying, and our brand who are coming in early to make sure they get their fall 2018 style of choice before it's sold out, because they've probably been burned before. At the same time, there's lots of tourist traffic. At the same time, there's spring season and great new spring product as well. I think that all of those reasons speak to why the stores have been performing really well.
Great. Thank you so much.
Your next question comes from Oliver Chen from Cowen and Company. Your line is open.
Hey, good morning. This is Ross on for Oliver. Thanks for taking our question. Just thinking about the off-season composition of your sales by category. I guess, are there any category call-outs that you would have for this past quarter? Then as a corollary, we'd love to just hear any thoughts on the non-outerwear categories, so like knitwear and accessories from here in terms of product innovation pipeline looking forward. Thanks.
We continue to innovate and create new products, certainly our spring is going to continue to evolve, and we're going to create great new styles, and we have great new stuff coming up in next spring season. The same goes for knitwear as well. All of those product categories are performing well and growing as each to themselves as categories. Our stores are certainly helping drive that growth.
Your next question comes from Jonathan Komp from Baird. Your line is open.
Yeah. Hi, thank you. Dani, I want to follow up on your comment, which you always make about viewing the business annually and not quarterly. I wanted to ask, I know Q1 is such a small portion of the year, but is there anything that you take away from the results that changes your confidence at all for the full year? Maybe said differently, is there anything, the inverse of that, is there anything that concerns you about the upside potentially, just given the open nature of your guidance when you look out for the year?
Hey, Jonathan. Thanks for the question. No. Nothing changes my confidence in it. In our year, I am extremely confident. In our year, I remain extremely confident. It's hard for a quarter to make me more confident because I'm excited about the year, and I think that we have a lot of great things to come. It's great to see our carefully selected retail stores perform as well as they did in our weakest period. That's a very encouraging sign, and I fully expect our brand to continue to be strong. There's a lot of demand for our brand. Yeah. I'm feeling very good.
Okay, great. Maybe just to follow up, related to the inventory position. I know at least on a year-over-year basis, you've ramped the growth rate in the inventory a little bit the last few quarters, including Q1, at the end of Q1. Just how should we read that? Is that a function of being light on inventory last year, or is it more a reflection of your sales outlook or are other factors at play?
I think the way to look at the inventory is, we're coming out of a quiet quarter. It's our lowest quarter of the year. We're getting ready for the wholesale shipments that come in Q2 and Q3, and eventually peak of the business in Q3 and Q4 from a DTC point of view. To be honest, it's an entirely natural process. What's different is that we have more stores coming on stream this year versus last year. Ultimately, beyond the business growth, what we're also doing is making sure that the inventory is there to meet demand.
Understood. Makes sense. Thank you.
Yes, Jon.
Your next question comes from Simeon Siegel from Nomura Instinet. Your line is open.
Thanks. Hey, guys. Good morning, and congrats on the strong start to the year. Dani, nice to hear about the ongoing strength in the Toronto and U.S. stores. Any color you can share on your go-forward site selection for anything new in the U.S.? Maybe thoughts on city locations versus malls. I know you had mentioned Short Hills last quarter. Then, as the sales strength continues in the business, essentially as demand continues to outpace supply, does anything change in terms of how you're thinking about allocating product between either direct and wholesale, or geographies? Thanks.
With regards to stores, we have nothing new to announce beyond the stores we've already announced. You mentioned Short Hills, and we've also announced Vancouver, Montreal, and the two stores in China for this year. We continue to have our target cities beyond there where we'd like to be, and we have a large funnel of cities. As we find and identify the right real estate locations, we'll plan those into our strategy for future years. I think there's a lot of great opportunities out there. I think that in terms of product and allocation, internally we have a long-term planning process, and we marry our expected growth with our supply chain and our ability to produce products. I feel confident that we have the production capacity to make the units that we're going to need to meet the demand.
We're in a great position where we do have the ability to pull different levers to put the products where we feel is the most appropriate place to put them. We've always done that, and that's been one of the strengths and one of the benefits of having a global brand and global demand.
Great. Thanks a lot. Best of luck for the rest of the year.
Thank you. Thanks for your question.
Your next question comes from Meaghan Annett from TD Securities. Your line is open.
Thank you. Good morning. I'm just going back to the lightweight down offering. Dani, you'd mentioned that the category is growing as another cornerstone of the product offering. Can you just talk to maybe the penetration of that category as a % of sales, and also your plans for further expansion, just within your three-year outlook? Just as kind of a follow-up, is there any kind of target you'd have in mind for the size of the category, just given where you are now six years into building that business? Thank you.
yeah, indeed, we are very excited about lightweight down. Yes, I think that over the coming seasons, you'll see us continue to build that category and with some new exciting styles and innovations, for sure. In terms of a percentage of sales, we don't break out a percentage of sales by product category, and nor do we really get into target size specifics. I think that we certainly see it growing. We see it growing quickly, and our customers, it's really resonating with them. I'd say that rather than look at specific targets, the sky's the limit, and we're looking to continue to make best-in-class product and continue to grow the category with strength and with responsibility.
Your next question comes from Alexandra Walvis from Goldman Sachs. Your line is open.
Good morning, and thanks for the question. You called out lower jacket costs per unit. I wanted to dig into that a little more. How much of that was coming from mix, or are there some impacts there on supply chain efficiencies and on like-for-like products? I wonder if you could give us a little bit more color on that one.
I think you'll find that the gross margin's being driven on the one hand by efficiency in the product development, but also by extra helping to drive lower unit. I think whilst we don't break it out, you can assume that there's a good contribution.
Thank you. On the higher SG&A in the wholesale business, you talked about higher headcount as being among the investments you were making there. Can you help us to understand some of the decision making that went behind those investments?
As we scale the business and as we make sure that the infrastructure, if you like, is future-proof, this is something we're doing in wholesale alongside DTC, alongside the rest of the organization to make sure that we are in a strong position to maintain the growth momentum that we're seeing, and obviously to drive the operating leverage that's in line with our EBITDA margin guidance. It's quite a broad thing. It's nothing specific to wholesale. It's a general investment that goes on to make sure the business is fit for the size it's going to be.
Fantastic. Thank you.
The next question comes from Robert Ohmes from Bank of America. Your line is open.
Hey, Dani and Jon. Welcome. Good to have you. Already your comments have been really helpful. I just had a question really on, Dani, you mentioned that people buying parkas early. I was hoping you could maybe, I don't know if you can help us, but how should we think about how that affects the seasonality of the business over time? For example, could you see first half D2C continue to grow at this much higher rate than back half D2C for several more years? Do you foresee a time where you're going to see your D2C business growing at similar rates in the first versus the back half?
I think that I'm not going to speculate on what is going to happen in future quarters and what those percentages are going to be. What I can tell you, anecdotally, is that people have been buying Canada Goose products early for years, and that's part of why people have come to know that if they wait too long, they won't get what they're looking for. I think that I've got you to look at previous years to try and come up with any sort of what you think is going to happen in the future.
Just to follow up, just structurally on the e-commerce side of the D2C business, are you guys, as that business grows, do you have a backlog because there is such high demand, and you run out of products? Are you guys able to sort of see that, oh, we have orders that are put in that we haven't fulfilled yet, and those are building on the online business, and we're going to ship those out. It's almost, even though it's D2C, there's a little bit of a wholesale timing?
Yeah, for sure. As you know, we're not afraid to be sold out, and we don't think that's a bad thing for our business. Our e-commerce business is performing very well, and continues to do so. We are watching everything appropriately and so far.
All right, great. Thanks so much, great quarter.
Thank you.
Your final question for today will come from Camilo Lyon from Canaccord Genuity. Your line is open.
Thank you. Good morning, gentlemen. Dani, clearly great results on the D2C, but this question is on wholesale, and more specifically on the orders that you received earlier in the year. Given the strength that you've already seen in this quarter, is there any change to that initial order pattern that you've received from your wholesale partners?
Thanks, Camilo, thanks for the question. No, there's no change. I think there's some small timing differences. Obviously, a very small quarter, and the numbers we're looking at, the base is small. No, I don't think that's indicative of any future quarters. As you know, we don't look at our business quarterly, that we patience for wholesale growth are the same as they were.
Okay. All right. That's great. My second question is really on the experiential components that you've started to implement in your store, specifically the cold room. I know that it's early days in that initiative, but it certainly creates this experiential offering that's pretty unique. I was wondering if you could share any sort of early reads that have come out of that. Has it driven increased traffic or conversion or basket size or anything you could share from a metrics perspective on what that strategy has done or what you hope it will do?
I think experience is very important. I think that, and I have heard, and I know anecdotally that the cold rooms that we have and the stores that we have them in and the reactions people have had to them have been great. That they've been a great addition to the experience that we provide in store. We hopefully we're going to look to create more of that kind of an experience as we go forward. In terms of direct metrics, we don't have any direct metrics that I can share today about what that drives. I'd say that, yeah, the experience has to be a great experience for the sake of being a great experience. I think that if we create that great experience, then the brand will remain strong, and the metrics will continue to be strong as well.
Is it fair to say there, think that that could help de-seasonalize the business to some degree in these earlier non-core quarters?
Sorry, I didn't quite catch that. That could help what?
Take the seasonality out of the business. Have these first quarter and fourth quarter be bigger quarters because you're creating that winter-like sort of environment in these rooms.
Yeah, I wouldn't attribute our sales any given quarter to cold rooms or any of our experiential features in our stores. I would attribute them to the strength of our brand.
Got it. Good luck, Dani. Thanks very much.
Yeah, thank you.
I have no further questions.
Great.
I turn the call back over to the management for closing remarks.
Great. Well, thank you all again so much for joining us on our call today. We very much look forward to speaking with you when we report our second quarter results down the road. Thanks again. Great rest of the summer.
Thanks, everyone. This will conclude today's conference call. You may now disconnect.