SEC Filing | Canada Goose Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of February, 2022

Commission File Number: 001-38027

CANADA GOOSE HOLDINGS INC.

(Translation of registrant’s name into English)

250 Bowie Ave

Toronto, Ontario, Canada

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

EXHIBIT INDEX

Exhibits 99.1 and 99.2 to this report of a Foreign Private Issuer on Form 6-K are deemed filed for all purposes under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.



Exhibit No.						Description

99.1						Consolidated Interim Financial Statements as at and for the Third and Three Quarters Ended January 2, 2022
99.2						Management’s Discussion and Analysis of Financial Condition and Results of Operation for the Third and Three Quarters Ended January 2, 2022
99.3						Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
99.4						Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
99.5						Press release of Canada Goose Holdings Inc., dated February 10 , 2022

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Canada Goose Holdings Inc.

By:

/s/ Jonathan Sinclair

Name:

Jonathan Sinclair

Title:

Executive Vice President and Chief Financial Officer

Date: February 10, 2022

Document

Canada Goose Holdings Inc.

Condensed Consolidated Interim Financial Statements

As at and for the third and three quarters ended

January 2, 2022 and December 27, 2020

(Unaudited)

Condensed Consolidated Interim Statements of Income and Comprehensive Income

(unaudited)

(in millions of Canadian dollars, except per share amounts)


		Third quarter ended				Three quarters ended
	Notes	January 2, 2022		December 27, 2020		January 2, 2022		December 27, 2020
		$		$		$		$

Revenue	3	586.1		474.0		875.3		694.9
Cost of sales	6	172.3		157.6		295.8		279.5
Gross profit		413.8		316.4		579.5		415.4
Selling, general & administrative expenses		184.1		144.7		357.0		255.7
Depreciation and amortization		23.8		18.4		66.0		50.6
Operating income		205.9		153.3		156.5		109.1
Net interest, finance and other costs	10	7.6		10.0		32.0		22.7
Income before income taxes		198.3		143.3		124.5		86.4
Income tax expense		46.4		36.3		20.3		19.1
Net income		151.9		107.0		104.2		67.3

Other comprehensive (loss) income
Items that will not be reclassified to earnings, net of tax:
Actuarial (loss) gain on post-employment obligation		—		(0.5)		0.2		(0.3)
Items that may be reclassified to earnings, net of tax:
Cumulative translation adjustment (loss) gain		(9.9)		—		(10.1)		0.2
Net loss on derivatives designated as cash flow hedges	15	(0.7)		(2.7)		(2.6)		(3.6)
Reclassification of net loss on cash flow hedges to income	15	2.3		2.3		2.8		6.1
Net (loss) gain on derivatives designated as a net investment hedge	15	—		(0.6)		—		0.2
Other comprehensive (loss) income		(8.3)		(1.5)		(9.7)		2.6
Comprehensive income		143.6		105.5		94.5		69.9

Earnings per share
Basic	4	$	1.42	$	0.97	$	0.96	$	0.61
Diluted	4	$	1.41	$	0.96	$	0.95	$	0.61

The accompanying notes to the condensed consolidated interim financial statements are an integral part of these financial statements.


			Canada Goose Holdings Inc.			Page 1 of 29

Condensed Consolidated Interim Statements of Financial Position

(unaudited)

(in millions of Canadian dollars)


	Notes	January 2, 2022	December 27, 2020	March 28, 2021
Assets		$	$	$
Current assets
Cash		407.6	469.0	477.9
Trade receivables	5	108.0	118.2	40.9
Inventories	6	368.1	339.0	342.3
Income taxes receivable		0.5	5.4	4.8
Other current assets	14	38.1	25.0	31.0
Total current assets		922.3	956.6	896.9

Deferred income taxes		64.1	47.8	46.9
Property, plant and equipment		123.1	122.5	116.5
Intangible assets		154.7	156.1	155.0
Right-of-use assets	7	241.2	240.4	233.7
Goodwill		53.1	53.1	53.1
Other long-term assets	14	8.2	0.1	5.1
Total assets		1,566.7	1,576.6	1,507.2

Liabilities
Current liabilities
Accounts payable and accrued liabilities	8, 14	244.5	207.7	177.8
Provisions	9	43.2	45.0	20.0
Income taxes payable		36.9	21.0	19.1
Short-term borrowings	10	3.8	7.0	—
Current portion of lease liabilities	7	61.7	44.3	45.2
Total current liabilities		390.1	325.0	262.1

Provisions	9	30.5	19.5	25.6
Deferred income taxes		19.4	22.1	21.6

Term loan	10	370.8	376.1	367.8
Lease liabilities	7	208.5	216.6	209.6
Other long-term liabilities	14	22.5	16.4	20.4
Total liabilities		1,041.8	975.7	907.1

Shareholders' equity	11	524.9	600.9	600.1
Total liabilities and shareholders' equity		1,566.7	1,576.6	1,507.2

The accompanying notes to the condensed consolidated interim financial statements are an integral part of these financial statements.


			Canada Goose Holdings Inc.			Page 2 of 29

Condensed Consolidated Interim Statements of Changes in Shareholders' Equity

(unaudited)

(in millions of Canadian dollars)


		Share capital			Contributed surplus	Retained earnings	Accumulated other comprehensive (loss) income	Total
	Notes	Multiple voting shares	Subordinate voting shares	Total
		$	$	$	$	$	$	$

Balance at March 28, 2021		1.4	119.1	120.5	25.2	459.6	(5.2)	600.1
Normal course issuer bid purchase of subordinate voting shares	11	—	(8.0)	(8.0)	—	(179.3)	—	(187.3)


Exercise of stock options	11	—	9.9	9.9	(2.8)	—	—	7.1
Net income		—	—	—	—	104.2	—	104.2
Other comprehensive loss		—	—	—	—	—	(9.7)	(9.7)
Share-based payment	12	—	—	—	10.7	—	—	10.7
Deferred tax on share-based payment		—	—	—	(0.2)	—	—	(0.2)
Balance at January 2, 2022		1.4	121.0	122.4	32.9	384.5	(14.9)	524.9

Balance at March 29, 2020		1.4	113.3	114.7	15.7	389.4	0.4	520.2


Exercise of stock options	11	—	4.5	4.5	(1.4)	—	—	3.1
Net income		—	—	—	—	67.3	—	67.3
Other comprehensive income		—	—	—	—	—	2.6	2.6
Share-based payment	12	—	—	—	7.7	—	—	7.7
Balance at December 27, 2020		1.4	117.8	119.2	22.0	456.7	3.0	600.9

The accompanying notes to the condensed consolidated interim financial statements are an integral part of these financial statements.


			Canada Goose Holdings Inc.			Page 3 of 29

Condensed Consolidated Interim Statements of Cash Flows

(unaudited)

(in millions of Canadian dollars)


		Third quarter ended		Three quarters ended
	Notes	January 2, 2022	December 27, 2020	January 2, 2022	December 27, 2020
		$	$	$	$
Operating activities
Net income		151.9	107.0	104.2	67.3
Items not affecting cash:
Depreciation and amortization		27.2	24.5	76.5	61.8
Income tax expense		46.4	36.3	20.3	19.1
Interest expense	10	6.9	8.7	21.0	19.1
Foreign exchange (gain) loss		(2.2)	5.3	5.9	4.7
Acceleration of unamortized costs on debt extinguishment	10	—	1.1	9.5	1.1
Loss on disposal of assets		0.1	—	0.1	0.1
Share-based payment	12	3.8	3.0	10.7	7.7
		234.1	185.9	248.2	180.9
Changes in non-cash operating items	16	144.4	153.9	(25.0)	89.2
Income taxes paid		(5.9)	(2.9)	(18.1)	(6.7)
Interest paid		(11.0)	(4.3)	(24.7)	(14.1)
Net cash from operating activities		361.6	332.6	180.4	249.3

Investing activities
Purchase of property, plant and equipment		(8.7)	(11.1)	(22.5)	(18.1)
Investment in intangible assets		(3.1)	(1.5)	(7.8)	(3.3)
Initial direct costs of right-of-use assets	7	(0.3)	—	(0.8)	—
Net cash used in investing activities		(12.1)	(12.6)	(31.1)	(21.4)

Financing activities
Mainland China Facilities (repayments) borrowings	10	(23.5)	7.0	—	20.7
Term loan (repayments) borrowings	10	(1.9)	247.5	(3.8)	247.5
Revolving facility repayments	10	—	(234.9)	—	(13.6)
Transaction costs on financing activities	10	—	(10.3)	(0.9)	(10.7)
Subordinate voting shares purchased and cancelled under NCIB	11	(10.4)	—	(187.3)	—
Subordinate voting shares purchased and held for cancellation under NCIB	11	2.7	—	—	—
Principal payments on lease liabilities	7	(13.2)	(10.4)	(32.8)	(27.8)
Settlement of term loan derivative contracts	14	—	(4.9)	—	(4.9)
Exercise of stock options	12	1.3	2.7	7.1	3.1
Net cash used in financing activities		(45.0)	(3.3)	(217.7)	214.3
Effects of foreign currency exchange rate changes on cash		4.2	(4.0)	(1.9)	(4.9)
Increase (decrease) in cash		308.7	312.7	(70.3)	437.3
Cash, beginning of period		98.9	156.3	477.9	31.7
Cash, end of period		407.6	469.0	407.6	469.0

The accompanying notes to the condensed consolidated interim financial statements are an integral part of these financial statements.


			Canada Goose Holdings Inc.			Page 4 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Note 1. The Company

Organization

Canada Goose Holdings Inc. and its subsidiaries (the “Company”) design, manufacture, and sell performance luxury apparel for men, women, youth, children, and babies. The Company’s apparel collections include various styles of parkas, lightweight down jackets, rainwear, windwear, knitwear, footwear, and accessories for the fall, winter, and spring seasons. The Company’s head office is located at 250 Bowie Avenue, Toronto, Canada M6E 4Y2. The use of the terms “Canada Goose”, “we”, and “our” throughout these notes to the condensed consolidated interim financial statements ("Interim Financial Statements") refer to the Company.

Canada Goose is a public company listed on the Toronto Stock Exchange and the New York Stock Exchange under the trading symbol “GOOS”. The principal shareholders of the Company are investment funds advised by Bain Capital LP and its affiliates (“Bain Capital”), and DTR LLC ("DTR"), an entity indirectly controlled by the President and Chief Executive Officer of the Company. The principal shareholders hold multiple voting shares representing 47.7% of the total shares outstanding as at January 2, 2022, or 90.1% of the combined voting power of the total voting shares outstanding. Subordinate voting shares that trade on public markets represent 52.3% of the total shares outstanding as at January 2, 2022, or 9.9% of the combined voting power of the total voting shares outstanding.

Statement of compliance

The Interim Financial Statements are prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”). Certain information, which is considered material to the understanding of the Interim Financial Statements and is normally included in the annual financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the IASB, is not provided in these notes. These Interim Financial Statements should be read in conjunction with the Company's Annual Financial Statements.

The Interim Financial Statements were authorized for issuance in accordance with a resolution of the Company’s Board of Directors on February 9, 2022.

Seasonality

Our business is seasonal, and we have historically realized a significant portion of our Wholesale revenue and operating income in the second and third quarters of the fiscal year and Direct-to-Consumer ("DTC") revenue and operating income in the third and fourth quarters of the fiscal year. Thus, lower-than-expected revenue in these periods could have an adverse impact on our annual operating results.

Cash flows from operating activities are typically highest in the third and fourth quarters of the fiscal year due to revenue from the DTC segment and the collection of trade receivables from Wholesale revenue earlier in the year. Working capital requirements typically increase as inventory builds.

Note 2. Significant accounting policies and critical accounting estimates and judgments

Basis of presentation

The significant accounting policies and critical accounting estimates and judgments as disclosed in the Company’s March 28, 2021 annual consolidated financial statements have been applied


			Canada Goose Holdings Inc.			Page 5 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

consistently in the preparation of these Interim Financial Statements except as noted below. The Interim Financial Statements are presented in Canadian dollars, the Company’s functional and presentation currency.

The Company's fiscal year is a 52 or 53-week reporting cycle with the fiscal year ending on the Sunday closest to March 31. Each fiscal quarter is 13 weeks for a 52-week fiscal year. The additional week in a 53-week fiscal year is added to the third quarter. Fiscal 2022 is the first 53-week fiscal year, ending on April 3, 2022.

Certain comparative figures have been reclassified to conform with the current year presentation.

COVID-19 pandemic

Globally, public health officials have imposed restrictions and recommended precautions to mitigate the spread of the novel coronavirus pandemic ("COVID-19"), resulting in temporary closures of our retail locations as well as reduced traffic and store productivity, similarly impacting our wholesale partners. Store operations have largely resumed during the third quarter of fiscal 2022 across our global store network, however retail store traffic remains below pre-pandemic levels as at January 2, 2022. Trading days lost to temporary store closures due to COVID-19 did not materially impact results for the third quarter of fiscal 2022. In the comparative quarter, retail stores were significantly impacted by store closures, with 21% of our retail locations globally subject to store closures of over four weeks in response to government orders. All our manufacturing facilities were operating throughout the third quarter and as at January 2, 2022 at lower than pre-pandemic output levels to ensure appropriate distancing measures were in place.

In March 2021, the IASB issued an amendment to IFRS 16, Leases to extend the period over which the practical expedient is available for use. This amendment exempts lessees from determining whether COVID-19 related rent concessions for lease payments originally due on or before June 30, 2022 are lease modifications. The amendment is effective for annual reporting periods beginning on or after April 1, 2021 and earlier application is permitted. In accordance with the guidance issued, the Company adopted the amendment effective March 29, 2021 and elected not to treat COVID-19 related rent concessions as lease modifications. Rent concessions of $nil and $0.2m were recognized in the statement of income for the third and three quarters ended January 2, 2022, respectively (third and three quarters ended December 27, 2020 - $0.9m and $3.3m, respectively).

As a result of the temporary store closures, net costs of $nil and $0.2m were recognized in selling, general & administrative (“SG&A”) expenses, depreciation and amortization, and interest during the third and three quarters ended January 2, 2022, respectively (third and three quarters ended December 27, 2020 - $1.0m and $8.1m, respectively).

Management assessed whether indicators of impairment existed as at January 2, 2022 in accordance with IAS 36, Impairment of Assets, and no indicators were identified.

Principles of consolidation

The Interim Financial Statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated.


			Canada Goose Holdings Inc.			Page 6 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Operating segments

The Company classifies its business in three operating and reportable segments: DTC, Wholesale, and Other. The DTC segment comprises sales through country-specific e-Commerce platforms and its Company-operated retail stores located in luxury shopping locations.

The Wholesale segment comprises sales made to a mix of retailers and international distributors, who are partners that have exclusive rights to an entire market.

The Other segment comprises sales and costs not directly allocated to the DTC or Wholesale channels, such as sales to employees and SG&A expenses. The Other segment includes the cost of marketing expenditures to build brand awareness across all segments, corporate costs in support of manufacturing operations, other corporate costs, and foreign exchange gains and losses not specifically associated with DTC or Wholesale segment operations.

Within the Other segment, comparative information also includes sales of personal protective equipment ("PPE") in response to COVID-19 along with costs incurred as a consequence of COVID-19 including overhead costs resulting from the temporary closure of our manufacturing facilities.

Standards issued and not yet adopted

Certain new standards, amendments, and interpretations to existing IFRS standards have been published but are not yet effective and have not been adopted early by the Company. Management anticipates that pronouncements will be adopted in the Company’s accounting policy for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments, and interpretations is provided below.

In January 2020, the IASB issued an amendment to IAS 1, Presentation of Financial Statements to clarify its requirements for the presentation of liabilities in the statement of financial position. The limited scope amendment affected only the presentation of liabilities in the statement of financial position and not the amount or timing of its recognition. The amendment clarified that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period and specified that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability. It also introduced a definition of ‘settlement’ to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services. The amendment is effective for annual reporting periods beginning on or after January 1, 2023. Earlier application is permitted. The Company is assessing the potential impact of the amendment.

Standards issued and adopted

In April 2021, the International Financial Reporting Interpretations Committee (“IFRIC”) finalized an agenda decision which clarified the accounting of configuration and customization costs in cloud computing arrangements often referred to as Software as a Service ("SaaS") arrangements. As a result of the decision, costs that do not meet the capitalization criteria for intangible assets are required to be expensed as incurred. The Company is in the process of quantifying the impact of the decision and will finalize its assessment during the year ending April 3, 2022.

In August 2020, the IASB issued “Interest Rate Benchmark Reform – Phase II (amendments to IFRS 9, Financial Instruments; IFRS 7, Financial Instruments: Disclosures; IAS 39, Financial Instruments: Recognition and Measurement; IFRS 4, Insurance Contracts and IFRS 16,


			Canada Goose Holdings Inc.			Page 7 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Leases)”, which addresses issues that affect financial reporting once an existing benchmark rate is replaced with an alternative rate and provides specific disclosure requirements. The amendments introduce a practical expedient for modifications required by the Interbank Offer Rate (“IBOR”) reform. The amendments relate to the modification of financial instruments where the basis for determining the contractual cash flows changes as a result of the IBOR reform, allowing for prospective application of the alternative rate. A similar practical expedient exists for lessee accounting under IFRS 16. It also relates to the application of hedge accounting, which is not discontinued solely because of the IBOR reform. Hedging relationships, including formal designation and documentation, must be amended to reflect modifications to the hedged item, however, the practical expedient allows the hedge relationship to continue, although additional ineffectiveness may be required. The amendments are effective for annual reporting periods beginning on or after January 1, 2021. A broader market-wide initiative is underway to transition the various IBOR based on rates in use to alternative reference rates. The Company’s borrowing facilities, interest rate swaps, lease liabilities, and the trade accounts receivable factoring program will be impacted by the IBOR reform. As such, the reformed IFRS guidance has been adopted, however, accounting under the adopted standard will take place once IBOR related arrangements are modified, which constitutes as an accounting event. As no accounting events have occurred to date, the Company has determined there is no financial reporting impact as of January 2, 2022. The Company is in discussions with its lenders and is currently determining if any modifications will meet the requirements for the application of the practical expedient.


			Canada Goose Holdings Inc.			Page 8 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Note 3. Segment information

The Company has three reportable operating segments: DTC, Wholesale, and Other. The Company measures each reportable operating segment’s performance based on revenue and segment operating income, which is the profit metric utilized by the Company's chief operating decision maker, the President and Chief Executive Officer, for assessing the performance of operating segments. Our operating segments are not reliant on any single external customer.

The Company does not report total assets or total liabilities based on its reportable operating segments.


	Third quarter ended January 2, 2022
(in millions of Canadian dollars)	DTC	Wholesale	Other	Total
	$	$	$	$
Revenue	445.4	136.7	4.0	586.1
Cost of sales	101.8	68.1	2.4	172.3
Gross profit	343.6	68.6	1.6	413.8

SG&A expenses	69.9	19.0	95.2	184.1
Depreciation and amortization	18.0	0.9	4.9	23.8
Operating income (loss)	255.7	48.7	(98.5)	205.9

Net interest, finance and other costs				7.6
Income before income taxes				198.3

	Third quarter ended December 27, 2020
(in millions of Canadian dollars)	DTC	Wholesale	Other	Total
	$	$	$	$
Revenue	299.4	160.8	13.8	474.0
Cost of sales	66.1	78.0	13.5	157.6
Gross profit	233.3	82.8	0.3	316.4

SG&A expenses	54.4	13.0	77.3	144.7
Depreciation and amortization	14.2	0.8	3.4	18.4
Operating income (loss)	164.7	69.0	(80.4)	153.3

Net interest, finance and other costs				10.0
Income before income taxes				143.3


			Canada Goose Holdings Inc.			Page 9 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)


	Three quarters ended January 2, 2022
(in millions of Canadian dollars)	DTC	Wholesale	Other	Total
	$	$	$	$
Revenue	558.0	310.4	6.9	875.3
Cost of sales	131.7	159.6	4.5	295.8
Gross profit	426.3	150.8	2.4	579.5

SG&A expenses	108.5	40.8	207.7	357.0
Depreciation and amortization	50.2	2.7	13.1	66.0
Operating income (loss)	267.6	107.3	(218.4)	156.5

Net interest, finance and other costs				32.0
Income before income taxes				124.5

	Three quarters ended December 27, 2020
(in millions of Canadian dollars)	DTC	Wholesale	Other	Total
	$	$	$	$
Revenue	356.0	288.0	50.9	694.9
Cost of sales	78.6	147.3	53.6	279.5
Gross profit (loss)	277.4	140.7	(2.7)	415.4

SG&A expenses	79.8	31.4	144.5	255.7
Depreciation and amortization	38.0	2.6	10.0	50.6
Operating income (loss)	159.6	106.7	(157.2)	109.1

Net interest, finance and other costs				22.7
Income before income taxes				86.4

Geographic information

The Company determines the geographic location of revenue based on the location of its customers.


	Third quarter ended		Three quarters ended
(in millions of Canadian dollars)	January 2, 2022	December 27, 2020	January 2, 2022	December 27, 2020
	$	$	$	$
Canada	118.5	100.6	179.0	178.5
United States	164.7	129.9	233.2	170.2
Asia Pacific	177.1	134.8	258.0	186.3
EMEA(1)	125.8	108.7	205.1	159.9
Revenue	586.1	474.0	875.3	694.9

(1)EMEA comprises Europe, the Middle East, Africa, and Latin America.


			Canada Goose Holdings Inc.			Page 10 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Note 4. Earnings per share

The following table presents details for the calculation of basic and diluted earnings per share:


	Third quarter ended				Three quarters ended
(in millions of Canadian dollars, except share and per share amounts)	January 2, 2022		December 27, 2020		January 2, 2022		December 27, 2020

Net income	$	151.9	$	107.0	$	104.2	$	67.3

Weighted average number of multiple and subordinate voting shares outstanding	106,915,147		110,201,805		108,999,722		110,136,707
Weighted average number of shares on exercise of stock options and RSUs(1)	925,848		1,037,375		970,234		791,492
Diluted weighted average number of multiple and subordinate voting shares outstanding	107,840,995		111,239,180		109,969,956		110,928,199
Earnings per share
Basic	$	1.42	$	0.97	$	0.96	$	0.61
Diluted	$	1.41	$	0.96	$	0.95	$	0.61

(1) Applicable to dilutive and when the weighted average daily closing share price for the year was greater than the exercise price for stock options. For the three quarters ended January 2, 2022, there were 970,234 stock options (three quarters ended December 27, 2020 - 791,492 shares) that were not taken into account in the calculation of diluted earnings per share because their effect was anti-dilutive.

Note 5. Trade receivables


(in millions of Canadian dollars)	January 2, 2022	December 27, 2020	March 28, 2021
	$	$	$
Trade accounts receivable	83.2	70.9	21.9
Credit card receivables	12.7	24.4	2.1
Government grant receivable	—	16.9	4.4
Other receivables	13.3	8.0	14.3
	109.2	120.2	42.7
Less: expected credit loss and sales allowances	(1.2)	(2.0)	(1.8)
Trade receivables, net	108.0	118.2	40.9


			Canada Goose Holdings Inc.			Page 11 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Note 6. Inventories


(in millions of Canadian dollars)	January 2, 2022	December 27, 2020	March 28, 2021
	$	$	$
Raw materials	75.4	71.7	63.8
Work in progress	17.0	17.5	18.6
Finished goods	275.7	249.8	259.9
Total inventories at the lower of cost and net realizable value	368.1	339.0	342.3

Inventories are written down to net realizable value when the cost of inventories is estimated to be unrecoverable due to obsolescence, damage, or declining rate of sale. As at January 2, 2022, provision for obsolescence amounted to $21.4m (December 27, 2020 - $20.7m, March 28, 2021 - $23.4m).

Amounts charged to cost of sales comprise the following:


	Third quarter ended		Three quarters ended
(in millions of Canadian dollars)	January 2, 2022	December 27, 2020	January 2, 2022	December 27, 2020
	$	$	$	$
Cost of goods manufactured	168.9	151.5	285.3	268.3
Depreciation and amortization	3.4	6.1	10.5	11.2
	172.3	157.6	295.8	279.5


			Canada Goose Holdings Inc.			Page 12 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Note 7. Leases

Right-of-use assets

The following table presents changes in the cost and the accumulated depreciation of the Company’s right-of-use assets:


(in millions of Canadian dollars)	Retail stores	Manufacturing facilities	Other	Total
Cost	$	$	$	$
March 28, 2021	253.3	36.7	18.4	308.4
Additions	49.0	—	0.4	49.4
Lease modifications	1.9	—	(1.2)	0.7

Impact of foreign currency translation	(1.0)	—	—	(1.0)
January 2, 2022	303.2	36.7	17.6	357.5

March 29, 2020	191.5	36.6	18.0	246.1
Additions	64.4	—	3.0	67.4
Lease modifications	1.5	—	(1.5)	—
Impact of foreign currency translation	(6.1)	—	(0.8)	(6.9)
December 27, 2020	251.3	36.6	18.7	306.6


(in millions of Canadian dollars)	Retail stores	Manufacturing facilities	Other	Total
Accumulated depreciation	$	$	$	$
March 28, 2021	58.8	9.9	6.0	74.7
Depreciation	34.6	4.0	3.0	41.6

Impact of foreign currency translation	—	—	—	—
January 2, 2022	93.4	13.9	9.0	116.3

March 29, 2020	26.8	4.8	2.7	34.3
Depreciation	26.6	3.9	2.5	33.0
Impact of foreign currency translation	(1.0)	—	(0.1)	(1.1)
December 27, 2020	52.4	8.7	5.1	66.2

Net book value
January 2, 2022	209.8	22.8	8.6	241.2
December 27, 2020	198.9	27.9	13.6	240.4
March 28, 2021	194.5	26.8	12.4	233.7


			Canada Goose Holdings Inc.			Page 13 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Lease liabilities

The following table presents the changes in the Company's lease liabilities:


(in millions of Canadian dollars)	Retail stores	Manufacturing facilities	Other	Total
	$	$	$	$
March 28, 2021	211.0	29.9	13.9	254.8
Additions	48.2	—	0.4	48.6
Lease modifications	1.8	—	(1.2)	0.6
Principal payments	(25.8)	(4.0)	(3.0)	(32.8)
Impact of foreign currency translation	(1.0)	—	—	(1.0)
January 2, 2022	234.2	25.9	10.1	270.2

March 29, 2020	176.3	34.7	16.9	227.9
Additions	64.2	—	3.0	67.2
Lease modifications	1.5	—	(1.3)	0.2
Principal payments	(21.7)	(3.6)	(2.5)	(27.8)
Impact of foreign currency translation	(5.7)	—	(0.9)	(6.6)
December 27, 2020	214.6	31.1	15.2	260.9

Lease liabilities are classified as current and non-current liabilities as follows:


(in millions of Canadian dollars)	Retail stores	Manufacturing facilities	Other	Total
	$	$	$	$
Current lease liabilities	52.5	5.0	4.2	61.7
Non-current lease liabilities	181.7	20.9	5.9	208.5
January 2, 2022	234.2	25.9	10.1	270.2

Current lease liabilities	35.3	5.7	3.3	44.3
Non-current lease liabilities	179.3	25.4	11.9	216.6
December 27, 2020	214.6	31.1	15.2	260.9

Current lease liabilities	36.2	5.1	3.9	45.2
Non-current lease liabilities	174.8	24.8	10.0	209.6
March 28, 2021	211.0	29.9	13.9	254.8

Leases of low-value assets and short-term leases are not included in the calculation of lease liabilities. These lease expenses are recognized in cost of sales or SG&A expenses on a straight-line or other systematic basis.

For the third and three quarters ended January 2, 2022, $14.3m and $16.4m of lease payments, respectively, were not included in the measurement of lease liabilities (third and three quarters ended December 27, 2020 - $11.9m and $14.0m, respectively). The majority of these balances related to short-term leases and variable rent payments.


			Canada Goose Holdings Inc.			Page 14 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Note 8. Accounts payable and accrued liabilities

Accounts payable and accrued liabilities consist of the following:


(in millions of Canadian dollars)	January 2, 2022	December 27, 2020	March 28, 2021
	$	$	$
Trade payables	71.4	87.1	78.9
Accrued liabilities	103.6	74.7	49.9
Employee benefits	28.1	21.3	28.3
Derivative financial instruments	11.4	4.1	8.8
Other payables	30.0	20.5	11.9
Accounts payable and accrued liabilities	244.5	207.7	177.8

Note 9. Provisions

Provisions consist primarily of amounts recorded with respect to customer warranty obligations, terminations of sales agents and distributors, sales returns, and asset retirement obligations.

Provisions are classified as current and non-current liabilities based on management's expectations of the timing of settlement, as follows:


(in millions of Canadian dollars)	Warranty	Sales returns	Asset retirement obligations	Total
	$	$	$	$
Current provisions	5.8	37.4	—	43.2
Non-current provisions	22.8	—	7.7	30.5
January 2, 2022	28.6	37.4	7.7	73.7

Current provisions	6.4	38.6	—	45.0
Non-current provisions	14.2	—	5.3	19.5
December 27, 2020	20.6	38.6	5.3	64.5

Current provisions	6.3	13.7	—	20.0
Non-current provisions	20.1	—	5.5	25.6
March 28, 2021	26.4	13.7	5.5	45.6


			Canada Goose Holdings Inc.			Page 15 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Note 10. Borrowings

Revolving facility

The Company has an agreement with a syndicate of lenders for a senior secured asset-based credit facility consisting of a revolving credit facility in the amount of $467.5m, with an increase in commitments to $517.5m during the peak season (June 1 - November 30). The revolving facility matures on June 3, 2024. Amounts owing under the revolving facility may be borrowed, repaid and re-borrowed for general corporate purposes. The Company has pledged substantially all of its assets as collateral for the revolving facility. The revolving facility contains financial and non-financial covenants which could impact the Company’s ability to draw funds.

The revolving facility has multiple interest rate charge options that are based on the Canadian prime rate, Banker's Acceptance rate, the lenders' Alternate Base Rate, European Base Rate, LIBOR Rate, or EURIBOR rate plus an applicable margin, with interest payable the earlier of quarterly or at the end of the then current interest period (whichever is earlier).

As at January 2, 2022, the Company had repaid all amounts owing on the revolving facility (December 27, 2020 - $nil and March 28, 2021 - $nil) and related deferred financing charges in the amounts of $1.0m (December 27, 2020 - $1.9m and March 28, 2021 - $1.7m) were included in other long-term liabilities. As at and during the three quarters ended January 2, 2022, the Company was in compliance with all covenants.

The Company had unused borrowing capacity available under the revolving facility of $158.4m as at January 2, 2022 (December 27, 2020 - $256.2m, March 28, 2021 - $181.2m).

The Company had a first-in, last-out facility included in the revolving facility in the amount of $50.0m which matured on May 25, 2021. No amounts were outstanding at the time of maturity and the first-in, last-out facility has not been renewed. As the facility was not renewed, at the time of maturity the deferred financing costs of $0.4m were written off to the statement of income.

The revolving credit commitment also includes a letter of credit commitment in the amount of $25.0m, with a $5.0m sub-commitment for letters of credit issued in a currency other than Canadian dollars, U.S. dollars, euros or British pounds sterling, and a swingline commitment for $25.0m. As at January 2, 2022, the Company had letters of credit outstanding under the revolving facility of $4.8m (December 27, 2020 - $5.3m, March 28, 2021 - $5.0m).

Term loan

The Company has a senior secured loan agreement with a syndicate of lenders that is secured on a split collateral basis alongside the revolving facility. As a result of the Refinancing Amendment which took place on October 7, 2020, the aggregate principal amount owing increased to US$300.0m from US$113.8m.


			Canada Goose Holdings Inc.			Page 16 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

On April 9, 2021, the Company entered into an agreement with its lenders to reprice its term loan, referred to as the Repricing Amendment and Fifth Amendment to Credit Agreement ("Repricing Amendment"). The Repricing Amendment decreases the interest to a rate of LIBOR plus an applicable margin of 3.50% from LIBOR plus an applicable margin of 4.25%, payable quarterly in arrears. The Company elected to account for the Repricing Amendment as a debt extinguishment and re-borrowing of the loan amount. As a result, the acceleration of unamortized costs of $9.5m was included in net interest, finance and other costs in the statement of income. In connection with the Repricing Amendment, the Company incurred transaction costs of $0.9m which are being amortized using the effective interest rate method over the new term to maturity.

As a result of the Repricing Amendment, there were no changes to the following terms from the existing term loan: a) the aggregate principal amount of US$300.0m; b) the maturity date of October 7, 2027; c) LIBOR may not be less than 0.75%, and d) US$0.75m on the principal amount is repayable quarterly. The Repricing Amendment had no impact on the existing derivative contracts entered into on October 30, 2020.

Voluntary prepayments of amounts owing under the term loan may be made at any time without premium or penalty but once repaid may not be reborrowed. The Company began quarterly repayments of US$0.75m on the principal amount during the first quarter ended June 27, 2021. As at January 2, 2022, the Company had US$297.0m (March 28, 2021 - US$300.0m) aggregate principal amount outstanding under the term loan. The Company has pledged substantially all of its assets as collateral for the term loan. The term loan contains financial and non-financial covenants which could impact the Company’s ability to draw funds. As at and during the three quarters ended January 2, 2022, the Company was in compliance with all covenants.

As the term loan is denominated in U.S. dollars, the Company remeasures the outstanding balance plus accrued interest at each balance sheet date.

The amount outstanding with respect to the term loan is as follows:


(in millions of Canadian dollars)	January 2, 2022	December 27, 2020	March 28, 2021
	$	$	$
Term loan	375.5	385.9	377.3
Unamortized portion of deferred transaction costs	(0.9)	(6.0)	(5.8)
Original issue discount	—	(3.8)	(3.7)


	374.6	376.1	367.8

Mainland China Facilities

A subsidiary of the Company in Mainland China has two uncommitted loan facilities in the aggregate amount of RMB 310.0m ("Mainland China Facilities"). The term of each draw on the loans is one, three or six months or such other period as agreed upon and shall not exceed twelve months (including any extension or rollover). The interest rate on each facility is equal to loan prime rate of 1 year, plus 0.15% per annum, and payable at one, three or six months, depending on the term of each draw. Proceeds drawn on the Mainland China Facilities are being used to support working capital requirements and build up of inventory for peak season sales. As at January 2, 2022, the Company had no amounts owing on the Mainland China Facilities (December 27, 2020 - $7.0m, March 28, 2021 - $nil).


			Canada Goose Holdings Inc.			Page 17 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Short-term Borrowings

As at January 2, 2022, the Company has short-term borrowings in the amount of $3.8m. Short-term borrowings include $nil (December 27, 2020 - $7.0m, March 28, 2021 - $nil) owing on the Mainland China Facilities and $3.8m (December 27, 2020 - $nil, March 28, 2021 - $nil) for the quarterly principal repayments on the term loan. Short-term borrowings are all due within the next 12 months.

Net interest, finance and other costs consist of the following:


	Third quarter ended		Three quarters ended
(in millions of Canadian dollars)	January 2, 2022	December 27, 2020	January 2, 2022	December 27, 2020
	$	$	$	$
Interest expense
Mainland China Facilities	0.2	0.1	0.4	0.2
Revolving facility	0.1	0.6	0.8	2.9
Term loan	4.5	5.5	13.1	9.1
Lease liabilities	2.3	2.4	7.0	7.1
Standby fees	0.4	0.6	1.4	1.2
Acceleration of unamortized costs on debt extinguishment	—	1.1	9.5	1.1
Interest income	(0.1)	(0.2)	(0.4)	(0.5)
Other costs	0.2	(0.1)	0.2	1.6
Net interest, finance and other costs	7.6	10.0	32.0	22.7


			Canada Goose Holdings Inc.			Page 18 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Note 11. Shareholders' equity

Share capital transactions for the three quarters ended January 2, 2022

Normal course issuer bid

The Board of Directors has authorized the Company to initiate a normal course issuer bid ("NCIB"), in accordance with the requirements of the Toronto Stock Exchange, to purchase up to 5,943,239 subordinate voting shares over the 12-month period from August 20, 2021 to August 19, 2022. Purchased subordinate voting shares will be cancelled.

Further, the Board of Directors has authorized the Company to initiate an automatic share purchase plan ("ASPP") under which a designated broker may purchase subordinate voting shares under the NCIB during the regularly scheduled quarterly trading blackout period. The repurchases made under the ASPP will be made in accordance with certain purchasing parameters and will continue until the earlier of the date in which the Company has acquired the maximum limit of subordinate voting shares pursuant to the ASPP or upon the date of expiry of the NCIB.

During the three quarters ended January 2, 2022, the Company purchased 3,865,136 subordinate voting shares for cancellation for total cash consideration of $187.3m. The amount to purchase the subordinate voting shares has been charged to share capital, with the remaining $179.3m charged to retained earnings.

The transactions affecting the issued and outstanding share capital of the Company are described below:


(in millions of Canadian dollars, except share and per share amounts)	Multiple voting shares		Subordinate voting shares		Total
	Number	$	Number	$	Number	$
March 28, 2021	51,004,076	1.4	59,435,079	119.1	110,439,155	120.5

Purchase of subordinate voting shares	—	—	(3,865,136)	(8.0)	(3,865,136)	(8.0)

Exercise of stock options	—	—	341,799	9.9	341,799	9.9
Settlement of RSUs	—	—	49,968	—	49,968	—
January 2, 2022	51,004,076	1.4	55,961,710	121.0	106,965,786	122.4


			Canada Goose Holdings Inc.			Page 19 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Share capital transactions for the three quarters ended December 27, 2020

The transactions affecting the issued and outstanding share capital of the Company are described below:


(in millions of Canadian dollars, except share and per share amounts)	Multiple voting shares		Subordinate voting shares		Total
	Number	$	Number	$	Number	$
March 29, 2020	51,004,076	1.4	58,999,182	113.3	110,003,258	114.7


Exercise of stock options	—	—	262,067	4.5	262,067	4.5
Settlement of RSUs	—	—	13,386	—	13,386	—
December 27, 2020	51,004,076	1.4	59,274,635	117.8	110,278,711	119.2

Note 12. Share-based payments

Stock options

The Company has issued stock options to purchase subordinate voting shares under its incentive plans, prior to the public share offering on March 21, 2017, the Legacy Plan, and subsequently, the Omnibus Plan. All options are issued at an exercise price that is not less than market value at the time of grant and expire ten years after the grant date.

Stock option transactions are as follows:


	Three quarters ended
	January 2, 2022			December 27, 2020
(in millions of Canadian dollars, except share and per share amounts)	Weighted average exercise price		Number of shares	Weighted average exercise price		Number of shares
Options outstanding, beginning of period	$	38.32	2,498,973	$	32.97	1,794,377
Granted to purchase shares	$	48.92	739,420	$	37.19	1,244,975
Exercised	$	20.72	(341,799)	$	11.65	(262,067)
Cancelled	$	44.72	(129,007)	$	49.02	(103,533)

Options outstanding, end of period	$	43.03	2,767,587	$	36.40	2,673,752


			Canada Goose Holdings Inc.			Page 20 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Restricted share units

Under the Omnibus Plan, the Company has granted RSUs to employees of the Company. The RSUs are treated as equity instruments for accounting purposes. We expect that vested RSUs will be paid at settlement through the issuance of one subordinate voting share per RSU. The RSUs vest over a period of three years, a third on each anniversary of the date of grant.

RSUs transactions are as follows:


	Three quarters ended
	January 2, 2022	December 27, 2020
	Number	Number
RSUs outstanding, beginning of period	137,117	37,578
Granted	152,320	119,758
Settled	(49,968)	(13,386)
Cancelled	(17,373)	(6,284)

RSUs outstanding, end of period	222,096	137,666

Subordinate voting shares, to a maximum of 2,957,632 shares, have been reserved for issuance under equity incentive plans to select employees of the Company, with vesting contingent upon meeting the service, performance goals and other conditions of the Omnibus Plan.

Accounting for share-based awards

For the third and three quarters ended January 2, 2022, the Company recorded $3.8m and $10.7m, respectively, as contributed surplus and compensation expense for the vesting of stock options and RSUs (third and three quarters ended December 27, 2020 - $3.0m and $7.7m, respectively). Share-based compensation expense is included in SG&A expenses.

The assumptions used to measure the fair value of options granted under the Black-Scholes option pricing model at the grant date were as follows:


	Three quarters ended
(in millions of Canadian dollars, except share and per share amounts)	January 2, 2022			December 27, 2020
Weighted average stock price valuation	$	48.92		$	37.19
Weighted average exercise price	$	48.92		$	37.19
Risk-free interest rate	0.44		%	0.32		%
Expected life in years	5			5
Expected dividend yield	—		%	—		%
Volatility	40		%	40		%
Weighted average fair value of options issued	$	14.36		$	9.90

Fair value for RSUs is determined based on the market value of the subordinate voting shares at the time of grant. As at January 2, 2022, the weighted average fair value of the RSUs issued was $48.92 (December 27, 2020 - $33.97).


			Canada Goose Holdings Inc.			Page 21 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Note 13. Related party transactions

The Company enters into transactions from time to time with its principal shareholders and organizations affiliated with members of the Board of Directors by incurring expenses for business services. During the third and three quarters ended January 2, 2022, the Company incurred expenses with related parties of $0.8m and $1.4m, respectively (third and three quarters ended December 27, 2020 - $0.4m and $0.8m, respectively) from companies related to certain shareholders. Balances owing to related parties as at January 2, 2022 were $0.7m (December 27, 2020 - $0.9m, March 28, 2021 - $0.3m).

A lease liability due to the controlling shareholder of the acquired Baffin Inc. business (the "Baffin Vendor") for leased premises was $4.0m as at January 2, 2022 (December 27, 2020 - $4.8m, March 28, 2021 - $4.6m). During the third and three quarters ended January 2, 2022, the Company paid principal and interest on the lease liability, net of rent concessions, and other operating costs to entities affiliated with the Baffin Vendor totaling $0.4m and $1.1m, respectively (third and three quarters ended December 27, 2020 - $0.3m and $0.9m, respectively). No amounts were owing to Baffin entities as at January 2, 2022, December 27, 2020, and March 28, 2021.

Note 14. Financial instruments and fair value

The following table presents the fair values and fair value hierarchy of the Company’s financial instruments and excludes financial instruments carried at amortized cost that are short-term in nature:


	January 2, 2022
(in millions of Canadian dollars)	Level 1	Level 2	Level 3	Carrying value	Fair value
	$	$	$	$	$
Financial assets
Cash	407.6	—	—	407.6	407.6
Derivatives included in other current assets	—	5.2	—	5.2	5.2
Derivatives included in other long-term assets	—	8.2	—	8.2	8.2
Financial liabilities
Derivatives included in accounts payable and accrued liabilities	—	11.4	—	11.4	11.4

Derivatives included in other long-term liabilities	—	21.0	—	21.0	21.0

Term loan	—	374.6	—	374.6	391.3


			Canada Goose Holdings Inc.			Page 22 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)


	December 27, 2020
(in millions of Canadian dollars)	Level 1	Level 2	Level 3	Carrying value	Fair value
	$	$	$	$	$
Financial assets
Cash	469.0	—	—	469.0	469.0
Derivatives included in other current assets	—	1.7	—	1.7	1.7
Derivatives included in other long-term assets	—	0.1	—	0.1	0.1
Financial liabilities
Derivatives included in accounts payable and accrued liabilities	—	4.1	—	4.1	4.1
Mainland China Facilities	—	—	7.0	7.0	7.0
Derivatives included in other long-term liabilities	—	14.7	—	14.7	14.7

Term loan	—	376.1	—	376.1	385.9


	March 28, 2021
(in millions of Canadian dollars)	Level 1	Level 2	Level 3	Carrying value	Fair value
	$	$	$	$	$
Financial assets
Cash	477.9	—	—	477.9	477.9
Derivatives included in other current assets	—	5.9	—	5.9	5.9
Derivatives included in other long-term assets	—	5.1	—	5.1	5.1
Financial liabilities
Derivatives included in accounts payable and accrued liabilities	—	8.8	—	8.8	8.8

Derivatives included in other long-term liabilities	—	19.5	—	19.5	19.5

Term loan	—	367.8	—	367.8	377.3

There were no transfers between the levels of fair value hierarchy.

Note 15. Financial risk management objectives and policies

The Company’s primary risk management objective is to protect the Company’s assets and cash flow, in order to increase the Company’s enterprise value.

The Company is exposed to capital management risk, liquidity risk, credit risk, market risk, foreign exchange risk, and interest rate risk. The Company’s senior management and Board of


			Canada Goose Holdings Inc.			Page 23 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Directors oversee the management of these risks. The Board of Directors reviews and agrees upon policies for managing each of these risks which are summarized below.

Capital management

The Company manages its capital and capital structure with the objectives of safeguarding sufficient net working capital over the annual operating cycle and providing sufficient financial resources to grow operations to meet long-term consumer demand. The Board of Directors of the Company monitors the Company’s capital management on a regular basis. The Company will continually assess the adequacy of the Company’s capital structure and capacity and make adjustments within the context of the Company’s strategy, economic conditions, and risk characteristics of the business.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to satisfy the requirements for business operations, capital expenditures, debt service and general corporate purposes, under normal and stressed conditions. The primary source of liquidity is funds generated by operating activities; the Company also relies on the revolving facility and the Mainland China Facilities as sources of funds for short term working capital needs. The Company continuously reviews both actual and forecasted cash flows to ensure that the Company has appropriate capital capacity.

The following table summarizes the amount of contractual undiscounted future cash flow requirements as at January 2, 2022:


Contractual obligations by fiscal year	Q4 2022	2023	2024	2025	2026	2027	Thereafter	Total
(in millions of Canadian dollars)	$	$	$	$	$	$	$	$
Accounts payable and accrued liabilities	244.5	—	—	—	—	—	—	244.5


Term loan	1.0	3.8	3.8	3.8	3.8	3.8	355.5	375.5
Interest commitments relating to borrowings(1)	4.0	16.0	16.0	16.0	16.0	16.0	8.0	92.0
Foreign exchange forward contracts	—	6.2	—	—	12.7	—	—	18.9
Lease obligations	18.6	66.5	52.6	46.9	35.7	29.2	50.9	300.4
Pension obligation	—	—	—	—	—	—	1.9	1.9

Total contractual obligations	268.1	92.5	72.4	66.7	68.2	49.0	416.3	1,033.2

(1) Interest commitments are calculated based on the loan balance and the interest rate payable on the term loan of 4.25% as at January 2, 2022.

As at January 2, 2022, we had additional liabilities which included provisions for warranty, sales returns, asset retirement obligations, and deferred income tax liabilities. These liabilities have not been included in the table above as the timing and amount of future payments are uncertain.

Letter of guarantee facility

On April 14, 2020, Canada Goose Inc. entered into a letter of guarantee facility in the amount of $10.0m. Letters of guarantee are available for terms of up to twelve months and will be charged a fee equal to 1.2% per annum calculated against the face amount and over the term of the guarantee. Amounts issued on the facility will be used to finance working capital requirements through letters of guarantee, standby letters of credit, performance bonds, counter guarantees, counter standby letters of credit, or similar credits. The Company immediately reimburses the


			Canada Goose Holdings Inc.			Page 24 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

issuing bank for amounts drawn on issued letters of guarantees. At January 2, 2022, the Company had $5.6m outstanding.

In addition, during the third quarter ended January 2, 2022, a subsidiary of the Company in Mainland China entered into letters of guarantee in the amount of $9.4m. Amounts will be used to support retail operations through letters of guarantee, standby letters of credit, performance bonds, counter guarantees, counter standby letters of credit, or similar credits.

Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.

Credit risk arises from the possibility that certain parties will be unable to discharge their obligations. The Company manages its credit risk through a combination of third party credit insurance and internal house risk. Credit insurance is provided by a third party for customers and is subject to continuous monitoring of the credit worthiness of the Company's customers. Insurance covers a specific amount of revenue, which may be less than the Company's total revenue with a specific customer. The Company has an agreement with a third party who has insured the risk of loss for up to 90% of accounts receivable from certain designated customers subject to a total deductible of $0.1m, to a maximum of $30.0m per year. As at January 2, 2022, accounts receivable totaling approximately $36.4m (December 27, 2020 - $26.3m, March 28, 2021 - $5.7m) were insured subject to the policy cap. Complementary to third party insurance, the Company establishes payment terms with customers to mitigate credit risk and continues to closely monitor its accounts receivable credit risk exposure.

Trade accounts receivable factoring program

A subsidiary of the Company in Europe has an agreement to factor, on a limited recourse basis, certain of its trade accounts receivable up to a limit of €20.0m in exchange for advanced funding equal to 100% of the principal value of the invoice.

For the three quarters ended January 2, 2022, the Company received cash proceeds from the sale of trade accounts receivable with carrying values of $24.9m which were derecognized from the Company's statement of financial position (three quarters ended December 27, 2020 - $15.8m). Fees of less than $0.1m were incurred during the three quarters ended January 2, 2022 (three quarters ended December 27, 2020 - less than $0.1m) and included in net interest, finance and other costs in the statement of income. As at January 2, 2022, the outstanding amount of trade accounts receivable derecognized from the Company’s statement of financial position, but which the Company continued to service, was $10.3m (December 27, 2020 - $6.0m, March 28, 2021 - $nil).

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise foreign exchange risk and interest rate risk.


			Canada Goose Holdings Inc.			Page 25 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Foreign exchange risk

Foreign exchange risk in operating cash flows

The Company’s Interim Financial Statements are expressed in Canadian dollars, but a substantial portion of the Company’s revenues, purchases, and expenses are denominated in other currencies, principally U.S. dollars, euros, British pounds sterling, Swiss francs, Chinese yuan, and Hong Kong dollars. The Company has entered into forward foreign exchange contracts to reduce the foreign exchange risk associated with revenues, purchases, and expenses denominated in these currencies. Certain forward foreign exchange contracts were designated at inception and accounted for as cash flow hedges. On December 18, 2020, the Company initiated the operating hedge program for the fiscal year ending April 3, 2022. During the second quarter ended September 26, 2021, the Company initiated the operating hedge program for the fiscal year ending April 2, 2023.

Revenues and expenses of all foreign operations are translated into Canadian dollars at the foreign currency exchange rates that approximate the rates in effect at the dates when such items are recognized. As a result, we are exposed to foreign currency translation gains and losses. Appreciating foreign currencies relative to the Canadian dollar, to the extent they are not hedged, will positively impact operating income and net income by increasing our revenue, while depreciating foreign currencies relative to the Canadian dollar will have the opposite impact.

The Company recognized the following unrealized losses and gains in the fair value of derivatives designated as cash flow hedges in other comprehensive income:


	Third quarter ended				Three quarters ended
	January 2, 2022		December 27, 2020		January 2, 2022		December 27, 2020
(in millions of Canadian dollars)	Net loss	Tax expense	Net loss	Tax recovery	Net loss	Tax recovery	Net gain	Tax expense
	$	$	$	$	$	$	$	$
Forward foreign exchange contracts designated as cash flow hedges	(2.8)	(0.2)	(1.9)	0.4	(4.3)	0.3	1.2	(0.5)


			Canada Goose Holdings Inc.			Page 26 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

The Company reclassified the following losses and gains from other comprehensive income on derivatives designated as cash flow hedges to locations in the consolidated financial statements described below:


	Third quarter ended		Three quarters ended
(in millions of Canadian dollars)	January 2, 2022	December 27, 2020	January 2, 2022	December 27, 2020
Loss (gain) from other comprehensive income	$	$	$	$
Forward foreign exchange contracts designated as cash flow hedges
Revenue	2.1	1.9	2.0	1.9
SG&A expenses	(0.1)	0.1	(0.2)	0.1
Inventory	0.2	(0.2)	(0.8)	(0.2)

For the third and three quarters ended January 2, 2022, unrealized gains of $0.2m and $0.4m, respectively (third and three quarters ended December 27, 2020 - unrealized gains of $3.7m and $4.9m, respectively) on forward exchange contracts that were not treated as hedges were recognized in SG&A expenses in the statement of income.

Foreign currency forward exchange contracts outstanding as at January 2, 2022 related to operating cash flows were:


(in millions)	Aggregate Amounts		Currency
Forward contract to purchase Canadian dollars	US$	77.6	U.S. dollars
	€	90.1	euros

Forward contract to sell Canadian dollars	US$	44.0	U.S. dollars
	€	40.8	euros


Forward contract to purchase euros	CNY	528.3	Chinese yuan
	£	41.3	British pounds sterling
	HKD	18.4	Hong Kong dollars
	SEK	1.8	Swedish kronor
	CHF	2.1	Swiss francs

Forward contract to sell euros	CHF	12.0	Swiss francs
	CNY	0.9	Chinese yuan
	£	5.3	British pounds sterling


			Canada Goose Holdings Inc.			Page 27 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Foreign exchange risk on borrowings

The Company enters into derivative transactions to hedge a portion of its exposure to interest rate risk and foreign currency exchange risk related to principal and interest payments on the term loan denominated in U.S. dollars (note 10). The Company also entered into a five-year forward exchange contract by selling $368.5m and receiving US$270.0m as measured on the trade date, to fix the foreign exchange risk on a portion of the term loan borrowings.

The Company recognized the following unrealized gains and losses in the fair value of derivatives designated as hedging instruments in other comprehensive income:


	Third quarter ended				Three quarters ended
	January 2, 2022		December 27, 2020		January 2, 2022		December 27, 2020
(in millions of Canadian dollars)	Net gain	Tax expense	Net loss	Tax recovery	Net gain	Tax expense	Net (loss) gain	Tax recovery
	$	$	$	$	$	$	$	$
Swaps designated as cash flow hedges	2.1	(0.7)	(0.8)	0.2	1.7	(0.6)	(4.8)	0.8
Euro-denominated cross-currency swap designated as a net investment hedge	—	—	(0.6)	0.3	—	—	0.2	0.1

The Company reclassified the following losses from other comprehensive income on derivatives designated as hedging instruments to SG&A expenses:


	Third quarter ended		Three quarters ended
(in millions of Canadian dollars)	January 2, 2022	December 27, 2020	January 2, 2022	December 27, 2020
Loss from other comprehensive income	$	$	$	$
Swaps designated as cash flow hedges	0.2	1.0	0.7	5.3

For the third and three quarters ended January 2, 2022, unrealized gains of $0.3m and $0.4m, respectively (third and three quarters ended December 27, 2020 - unrealized losses of $14.7m and $16.4m, respectively) in the fair value of the long-dated forward exchange contract related to a portion of the term loan balance were recognized in SG&A expenses in the statement of income.

Interest rate risk

The Company is exposed to interest rate risk related to the effect of interest rate changes on borrowings outstanding under the revolving facility, the term loan and the Mainland China Facilities. Based on the weighted average amount of outstanding borrowings on our Mainland China Facilities during the three quarters ended January 2, 2022, a 1.00% increase in the average interest rate on our borrowings would have increased interest expense by $0.1m (three quarters ended December 27, 2020 - less than $0.1m). Correspondingly, a 1.00% increase in the average interest rate would have increased interest expense on the revolving facility and term loan by less than $0.1m and $2.8m, respectively (three quarters ended December 27, 2020 - $1.1m and $1.7m, respectively).


			Canada Goose Holdings Inc.			Page 28 of 29

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

The Company entered into five-year interest rate swaps by fixing the LIBOR component of its interest rate at 0.95% on notional debt of US$270.0m. The swaps terminate on December 31, 2025. Subsequent to the Repricing Amendment, the applicable interest rate on the interest rate swaps is 4.45%. The interest rate swaps were designated at inception and accounted for as cash flow hedges.

Interest rate risk on the term loan is partially mitigated by interest rate swap hedges. The impact on future interest expense as a result of future changes in interest rates will depend largely on the gross amount of borrowings at that time.

Note 16. Selected cash flow information

Changes in non-cash operating items


	Third quarter ended		Three quarters ended
(in millions of Canadian dollars)	January 2, 2022	December 27, 2020	January 2, 2022	December 27, 2020
	$	$	$	$
Trade receivables	2.1	(4.3)	(68.4)	(85.0)
Inventories	46.1	77.4	(28.6)	73.7
Other current assets	12.2	9.3	(7.9)	8.1
Accounts payable and accrued liabilities	57.9	43.6	54.6	62.9
Provisions	27.9	27.5	27.3	28.1
Other	(1.8)	0.4	(2.0)	1.4
Change in non-cash operating items	144.4	153.9	(25.0)	89.2


			Canada Goose Holdings Inc.			Page 29 of 29

Document

CANADA GOOSE HOLDINGS INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For the third and three quarters ended January 2, 2022

The following Management’s Discussion and Analysis (“MD&A”) for Canada Goose Holdings Inc. (“us,” “we,” “our,” “Canada Goose” or the “Company”) is dated February 9, 2022 and provides information concerning our results of operations and financial condition for the third and three quarters ended January 2, 2022. All figures are presented in Canadian (“CAD”) dollars, unless otherwise noted. You should read this MD&A together with our unaudited condensed consolidated interim financial statements as at and for the third and three quarters ended January 2, 2022 (“Interim Financial Statements”) and our audited consolidated financial statements and the related notes for the fiscal year ended March 28, 2021 (“Annual Financial Statements”). Additional information about Canada Goose is available on our website at www.canadagoose.com, on the SEDAR website at www.sedar.com, and on the EDGAR section of the U.S. Securities and Exchange Commission (the “SEC”) website at www.sec.gov, including our Annual Report on Form 20-F for the fiscal year ended March 28, 2021 (“Annual Report”).

CAUTIONARY NOTE REGARDING FORWARD‑LOOKING STATEMENTS

This MD&A contains forward-looking statements. These statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, and other future conditions. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “predict,” “project,” “potential,” “should,” “will,” “would,” and other similar expressions, although not all forward-looking statements contain these identifying words. These forward-looking statements include all matters that are not historical facts. They appear in many places throughout this MD&A and include statements regarding our intentions, beliefs, or current expectations concerning, among other things, our results of operations, financial condition, liquidity, business prospects, growth, strategies, expectations regarding industry trends and the size and growth rates of addressable markets, our business plan, and our growth strategies, including plans for expansion to new markets and new products, expectations for seasonal trends, and the industry in which we operate.

Certain assumptions made in preparing the forward-looking statements contained in this MD&A include:

•our ability to continue operating our business amid the societal and economic disruption caused by the novel coronavirus pandemic (“COVID-19”);

•our ability to implement our growth strategies;

•our ability to maintain strong business relationships with our customers, suppliers, wholesalers, and distributors;

•our ability to keep pace with changing consumer preferences;

•our ability to protect our intellectual property; and

•the absence of material adverse changes in our industry or the global economy.


			Canada Goose Holdings Inc.			Page 1 of 49

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those described in the “Risk Factors” section of our Annual Report and other risk factors described herein, which include, but are not limited to, the following risks:

•risks and global disruptions associated with the ongoing COVID-19 pandemic, which may further affect general economic conditions, including discretionary consumer spending;

•additional potential closures or traffic disruptions impacting our retail stores and the retail stores of our wholesale partners as a result of COVID-19;

•we may not open new retail stores or expand e-Commerce access on our planned timelines;

•we may be unable to maintain the strength of our brand or to expand our brand to new products and geographies;

•unanticipated changes in the effective tax rate or adverse outcomes from audit examinations of corporate income or other tax returns;

•our indebtedness may adversely affect our financial condition;

•global political events, including the impact of political disruptions and protests; which may cause business interruptions;

•our ability to procure high quality raw materials and certain finished goods globally;

•our ability to forecast our inventory need and to manage our product distribution networks;

•the success of our business strategy;

•our ability to manage our exposure to data security and cyber security events;

•fluctuations in raw material costs, interest rates and currency exchange rates; and

•we may be unable to maintain effective internal controls over financial reporting.

Although we base the forward-looking statements contained in this MD&A on assumptions that we believe are reasonable, we caution you that actual results and developments (including our results of operations, financial condition and liquidity, and the development of the industry in which we operate) may differ materially from those made in or suggested by the forward-looking statements contained in this MD&A. Additional impacts may arise that we are not aware of currently. The potential of such additional impacts intensifies the business and operating risks which we face, and these should be considered when reading the forward-looking statements contained in this MD&A. In addition, even if results and developments are consistent with the forward-looking statements contained in this MD&A, those results and developments may not be indicative of results or developments in subsequent periods. As a result, any or all of our forward-looking statements in this MD&A may prove to be inaccurate. No forward-looking statement is a guarantee of future results. Moreover, we operate in a highly competitive and rapidly changing environment in which new risks often emerge. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make.


			Canada Goose Holdings Inc.			Page 2 of 49

You should read this MD&A and the documents that we reference herein completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained herein are made as of the date of this MD&A, and we do not assume any obligation to update any forward-looking statements except as required by applicable laws.

BASIS OF PRESENTATION

The Interim Financial Statements are prepared in accordance with International Financial Reporting Standards (“IFRS”), specifically International Accounting Standard (“IAS”) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”), and are presented in millions of Canadian dollars, except where otherwise indicated. The Interim Financial Statements do not include all of the information required for Annual Financial Statements and should be read in conjunction with the Annual Financial Statements. Certain financial measures contained in this MD&A are non-IFRS financial measures and are discussed further under “Non-IFRS Financial Measures” below.

All references to “$”, “CAD” and “dollars” refer to Canadian dollars, “USD” and “US$” refer to U.S. dollars, “GBP” refer to British pounds sterling, “EUR” refer to euros, “CHF” refer to Swiss francs, “CNY” refer to Chinese yuan, ”RMB” refer to Chinese renminbi, and “HKD” refer to Hong Kong dollars unless otherwise indicated. Certain totals, subtotals and percentages throughout this MD&A may not reconcile due to rounding.

All references to “fiscal 2019” are to the Company’s fiscal year ended March 31, 2019; to “fiscal 2020” are to the Company’s fiscal year ended March 29, 2020; to “fiscal 2021” are to the Company’s fiscal year ended March 28, 2021; and to “fiscal 2022” are to the Company’s fiscal year ending April 3, 2022.

Certain comparative figures have been reclassified to conform with the current year presentation.


			Canada Goose Holdings Inc.			Page 3 of 49

SUMMARY OF FINANCIAL PERFORMANCE

The following table summarizes results of operations for the third and three quarters ended January 2, 2022 compared to the third and three quarters ended December 27, 2020, and expresses the percentage relationship to revenue of certain financial statement captions. Basis points (“bps”) expresses the changes between percentages. See “Results of Operations” for additional details.


CAD $ millions (except per share data)	Three quarters ended								Third quarter ended
	January 2, 2022			December 27, 2020			% Change		January 2, 2022			December 27, 2020			% Change
Statement of Operations data:
Revenue	875.3			694.9			26.0	%	586.1			474.0			23.6	%
Gross profit	579.5			415.4			39.5	%	413.8			316.4			30.8	%
Gross margin	66.2		%	59.8		%	640	bps	70.6		%	66.8		%	380	bps
Operating income	156.5			109.1			43.4	%	205.9			153.3			34.3	%
Net income	104.2			67.3			54.8	%	151.9			107.0			42.0	%
Earnings per share
Basic	$	0.96		$	0.61		57.4	%	$	1.42		$	0.97		46.4	%
Diluted	$	0.95		$	0.61		55.7	%	$	1.41		$	0.96		46.9	%
Non-IFRS Financial Measures:(1)
EBIT	156.5			109.1			43.4	%	205.9			153.3			34.3	%
Adjusted EBIT	162.8			127.1			28.1	%	206.9			157.9			31.0	%
Adjusted EBIT margin	18.6		%	18.3		%	30	bps	35.3		%	33.3		%	200	bps
Adjusted net income	115.8			85.0			36.2	%	152.6			111.9			36.4	%

Adjusted net income per basic share	$	1.06		$	0.77		37.7	%	$	1.43		$	1.02		40.2	%
Adjusted net income per diluted share	$	1.05		$	0.77		36.4	%	$	1.42		$	1.01		40.6	%

(1)See “Non-IFRS Financial Measures” for a description of these measures and a reconciliation to the nearest IFRS measure.


			Canada Goose Holdings Inc.			Page 4 of 49

Segments

Our reporting segments align with our sales channels: Direct-to-Consumer (“DTC”), Wholesale, and Other. We measure each reportable operating segment’s performance based on revenue and operating income. As at January 2, 2022, our DTC segment included sales to customers through our 56 national e-Commerce markets and 41 directly operated permanent retail stores across North America, Europe, and Asia Pacific. Through our Wholesale segment, we sell to a mix of retailers and international distributors. The Other segment comprises sales and costs not directly allocated to the DTC or Wholesale channels, such as sales to employees and selling, general & administrative (“SG&A”) expenses.

Factors Affecting our Performance

We believe that our performance depends on many factors including those discussed below.

•Growth in our DTC Channel. We plan to continue executing our global strategy through retail and e-Commerce expansion, though the scale of such expansion may be delayed.

•Growth investments. In the early stages of COVID-19 at the height of first wave retail closures, discretionary SG&A expenses spend was reduced significantly. As distribution and sales continue to recover, we have made significant SG&A investments ahead of revenue growth in certain areas, including brand and demand building. We will be guided by our view of opportunities to deliver on our growth strategy.

•COVID-19 pandemic. COVID-19 continues to impact the global economy and public health officials have imposed restrictions and recommended precautions to mitigate the spread of the virus. Notably, the sudden emergence of the Omicron variant in November 2021 resulted in significant travel and other restrictions being reimposed in several jurisdictions. We continue to monitor the impacts of COVID-19 on our operations.

As a result of the pandemic, our retail stores have been impacted by temporary closures and reduced traffic. During the third quarter of fiscal 2022, store operations have largely resumed across our global store network, however retail store traffic remains below pre-pandemic levels. Trading days lost to temporary store closures due to COVID-19 did not materially impact results for the third quarter of fiscal 2022. In the comparative quarter, retail stores were significantly impacted by store closures, with 21% of our retail locations globally subject to store closures of over four weeks in response to government orders.

Global supply chain disruptions continue from the ongoing challenges related to COVID-19, however these disruptions have not materially impacted our ability to fulfill demand and maintain sufficient inventory levels. All of our manufacturing facilities were operating throughout the third quarter and as at January 2, 2022 at lower than pre-pandemic output levels to ensure appropriate distancing measures were in place. We expect to return to more normal levels of production as restrictions and recommended precautions are lifted.

We received rent concessions in the form of abatements and deferrals and we recognized rent concessions of $nil and $0.2m in the statement of income for the third and three quarters ended January 2, 2022, respectively.

Future developments on COVID-19 are highly uncertain and out of our control. Restrictions and recommended precautions related to the Omicron variant have been weighing and may continue to weigh on ongoing demand improvement. Prolonged disruptions due to the


			Canada Goose Holdings Inc.			Page 5 of 49

pandemic, including the emergence of the new COVID-19 variants and mutants, may negatively impact our operations and result in temporary closures of our retail stores and manufacturing facilities, as well as our wholesale partners, lower retail store traffic, and continued impacts on our supply chain.

•Global political events and other disruptions. We are conscious of risks related to social, economic, and political instability, including geopolitical tensions, regulatory matters, market volatility, and social unrest that are affecting consumer spending in certain countries and travel corridors. We have been, and may in the future be, impacted by widespread protests and other disruptions. To the extent that such disruptions persist, we expect that operations and traffic at our retail stores may be impacted.

•New Products. We intend to continue investing in innovation and the development and introduction of new products across styles, uses, and climates. This includes Canada Goose footwear and Baffin branded footwear through Baffin’s own distinct sales channels. We expect that certain new products may carry a lower gross margin per unit relative to our long-standing styles which are produced in significantly higher volumes.

•Seasonality. We experience seasonal fluctuations in our revenue and operating results and have historically realized a significant portion of our annual wholesale revenue during our second and third fiscal quarters, and our annual DTC revenue in our third and fourth fiscal quarters. We generated 86.9% and 85.7% of our annual wholesale revenue in the combined second and third fiscal quarters of fiscal 2021 and fiscal 2020, respectively. Additionally, we generated 89.3% and 79.2% of our annual DTC revenue in the combined third and fourth fiscal quarters of fiscal 2021 and fiscal 2020, respectively. Because of seasonal fluctuations in revenue and fixed costs associated with our business, particularly the headcount growth and premises costs associated with our expanding DTC channel, we typically experience negative and substantially reduced net income and adjusted EBIT(1) in the first and fourth quarters, respectively. As a result of our seasonality, changes that impact gross margin and adjusted EBIT(1) among others can have a disproportionate impact on the quarterly results when they are recorded in our off-peak revenue periods.

(1) Adjusted EBIT is a non-IFRS measure. See “Non-IFRS Financial Measures” for a description of these measures.

Guided by expected demand and wholesale orders, we typically manufacture on a linear basis throughout the fiscal year. Net working capital requirements typically increase as inventory builds. We finance these needs through a combination of cash on hand and borrowings on the Revolving Facility (as defined below) and the Mainland China Facilities (as defined below). Historically, cash flows from operations have been highest in the third and fourth fiscal quarters of the fiscal year due to revenue from the DTC channel and the collection of receivables from wholesale revenue earlier in the year.

•Developments in international trade. We continue to monitor the impact on our operations in Europe as a result of the United Kingdom’s exit from the European Union (“Brexit”). We continue to build flexibility within our supply chain and leverage partners and technical resources to utilize duty savings under various Free Trade Agreements. Duty savings continue for U.S. shipments under the United States-Mexico-Canada Agreement. We monitor developments in international trade in countries where we operate that could have an impact on our business.


			Canada Goose Holdings Inc.			Page 6 of 49

•Foreign Exchange. We sell a significant portion of our products to customers outside of Canada, which exposes us to fluctuations in foreign currency exchange rates. In fiscal years 2021, 2020, and 2019, we generated 67.9%, 62.3%, and 58.0%, respectively, of our revenue in currencies other than Canadian dollars. Historically, most of our wholesale revenue was derived from orders made prior to the beginning of the fiscal year. This high degree of visibility into our anticipated future cash flows from wholesale operations is now significantly less certain given the COVID-19 disruptions. Most of our raw materials are sourced outside of Canada, primarily in U.S. dollars, and SG&A expenses are typically denominated in the currency of the country in which they are incurred. As part of our risk management program, we have entered into foreign exchange derivative contracts to manage certain of our exposures to exchange rate fluctuations for future foreign currency transactions, which is intended to reduce the variability of our operating costs and future cash flows denominated in local currencies. We continue to monitor our risk management program to take into account the prevailing global uncertainty of COVID-19.

We are exposed to translation and transaction risks associated with foreign currency exchange fluctuations on the Chinese renminbi denominated principal and interest amounts payable on the Mainland China Facilities and U.S. dollar denominated principal and interest amounts payable on our Revolving Facility and the Term Loan Facility (as defined below). The Company has entered into foreign exchange forward contracts to hedge a portion of the exposure to foreign currency exchange risk on the principal amount of the Term Loan Facility. See “Quantitative and Qualitative Disclosures about Market Risk - Foreign Exchange Risk” below.


			Canada Goose Holdings Inc.			Page 7 of 49

The main foreign currency exchange rates that impact our business and operations as at and for the third and three quarters ended January 2, 2022 and for the fiscal year ended March 28, 2021 are summarized below:


	Foreign currency exchange rate to $1.00 CAD
	Fiscal 2022
	Average Rate					Closing Rate
Currency	Q1	Q2	Q3	Q4	2022	January 2, 2022
USD/CAD	1.2280	1.2601	1.2600	—	1.2494	1.2678
EUR/CAD	1.4804	1.4852	1.4409	—	1.4688	1.4391
GBP/CAD	1.7170	1.7367	1.6991	—	1.7176	1.7132
CHF/CAD	1.3485	1.3723	1.3669	—	1.3625	1.3897
CNY/CAD	0.1902	0.1948	0.1971	—	0.1940	0.1995
HKD/CAD	0.1581	0.1620	0.1618	—	0.1606	0.1626


	Foreign currency exchange rate to $1.00 CAD
	Fiscal 2021
	Average Rate					Closing Rate
Currency	Q1	Q2	Q3	Q4	2021	March 28, 2021
USD/CAD	1.3859	1.3316	1.3030	1.2666	1.3218	1.2580
EUR/CAD	1.5256	1.5579	1.5537	1.5267	1.5410	1.4831
GBP/CAD	1.7203	1.7212	1.7207	1.7461	1.7271	1.7345
CHF/CAD	1.4378	1.4486	1.4417	1.4003	1.4321	1.3384
CNY/CAD	0.1955	0.1926	0.1967	0.1955	0.1951	0.1923
HKD/CAD	0.1788	0.1718	0.1681	0.1633	0.1705	0.1619

Source: Bank of Canada

Components of Our Results of Operations

Revenue

The DTC segment comprises sales through country-specific e-Commerce platforms and its Company-operated retail stores located in luxury shopping locations. Revenue through e-Commerce operations and retail stores is recognized upon delivery of the goods to the customer and when consideration is received, net of an estimated provision for sales returns.

The Wholesale segment comprises sales made to a mix of functional and fashionable retailers, including major luxury department stores, outdoor specialty stores, and individual shops, and to international distributors, who are partners that have exclusive rights to an entire market. Wholesale revenue from the sale of goods, net of an estimated provision for sales returns, discounts, and allowances, is recognized when control of the goods has been transferred to the reseller, which, depending on the terms of the agreement with the reseller, occurs when the


			Canada Goose Holdings Inc.			Page 8 of 49

products have been shipped to the reseller, are picked up from our third party warehouse, or arrive at the reseller’s facilities.

The Other segment comprises sales and costs not directly allocated to the DTC or Wholesale channels, such as sales to employees and SG&A expenses. The Other segment includes the cost of marketing expenditures to build brand awareness and demand across all segments, corporate costs in support of manufacturing operations, other corporate costs, and foreign exchange gains and losses not specifically associated with DTC or Wholesale segment operations.

Within the Other segment, comparative information also includes sales of personal protective equipment ("PPE") during the comparative periods in response to COVID-19 along with costs incurred as a consequence of COVID-19 including overhead costs resulting from the temporary closure of our manufacturing facilities.

Gross Profit

Gross profit is our revenue less cost of sales. Cost of sales comprises the cost of manufacturing our products, including raw materials, direct labour, and overhead, plus freight, duties, and non-refundable taxes incurred in delivering the goods to distribution centres managed by third parties or to our retail stores. Cost of sales also includes depreciation on our manufacturing right-of-use assets and plant assets as well as inventory provisions, and allowances related to obsolescence and shrinkage. The primary drivers of our cost of sales are the costs of raw materials (which are sourced in both Canadian dollars and U.S. dollars), manufacturing labour rates in the provinces of Canada, and the allocation of overhead. Gross margin measures our gross profit as a percentage of revenue.

SG&A Expenses

SG&A expenses consist of selling costs to support our customer relationships and to deliver our products to our e-Commerce customers, retail stores, and wholesale partners. It also includes our marketing and brand investment activities and the corporate infrastructure required to support our ongoing operations. Incurred product development costs, primarily employee salaries and benefits, are also recognized in SG&A expenses. Foreign exchange gains and losses are recorded in SG&A expenses and comprise the translation of assets and liabilities denominated in currencies other than the functional currency of the Company or its subsidiaries, including cash balances, a portion of our Revolving Facility, the Term Loan Facility, the Mainland China Facilities, mark-to-market adjustments on derivative contracts, gains or losses associated with our term loan hedges, and realized gains and losses on settlement of foreign currency denominated assets and liabilities.

Selling costs, other than headcount-related costs, generally correlate to revenue timing and would typically experience similar seasonal trends. As a percentage of sales, we expect these selling costs to change as our business evolves. This change has been and is expected to be primarily driven by the expansion of our DTC segment, including the investment required to support e-Commerce sites and retail stores. Retail store costs are mostly fixed and are incurred throughout the year.

General and administrative expenses represent costs incurred in our corporate offices, primarily related to marketing, personnel costs (including salaries, variable incentive compensation, benefits, and share-based compensation), technology support, and other professional service


			Canada Goose Holdings Inc.			Page 9 of 49

costs. We have invested considerably in this area to support the growing volume and complexity of our business and anticipate continuing to do so in the future.

Depreciation and amortization

Depreciation and amortization represent the economic benefit incurred in using the Company’s property, plant and equipment, intangible assets, and right-of-use assets. We expect depreciation and amortization to increase, primarily driven by the expansion of our DTC segment and information technology-related expenditures to support growth.

Operating Income

Operating income is our gross profit less SG&A expenses and depreciation and amortization.

Net interest, finance and other costs

Net interest, finance and other costs represents interest expense on our borrowings including the Revolving Facility, the Term Loan Facility, the Mainland China Facilities, and lease liabilities, as well as standby fees, net of interest income. In addition, corporate restructuring costs were recognized in fiscal 2021.

Income Taxes

We are subject to income taxes in the jurisdictions in which we operate and, consequently, income tax expense is a function of the allocation of taxable income by jurisdiction and the various activities that impact the timing of taxable events.


			Canada Goose Holdings Inc.			Page 10 of 49

RESULTS OF OPERATIONS

For the three quarters ended January 2, 2022 compared to the three quarters ended December 27, 2020

The following table summarizes results of operations and expresses the percentage relationship to revenue of certain financial statement captions. Basis points (“bps”) expresses the changes between percentages.


CAD $ millions (except share and per share data)	Three quarters ended						$ Change	% Change
	January 2, 2022			December 27, 2020
Statement of Operations data:
Revenue	875.3			694.9			180.4	26.0	%
Cost of sales	295.8			279.5			(16.3)	(5.8)	%
Gross profit	579.5			415.4			164.1	39.5	%
Gross margin	66.2		%	59.8		%		640	bps
SG&A expenses	357.0			255.7			(101.3)	(39.6)	%
SG&A expenses as % of revenue	40.8		%	36.8		%		(400)	bps
Depreciation and amortization	66.0			50.6			(15.4)	(30.4)	%
Operating income	156.5			109.1			47.4	43.4	%
Operating margin	17.9		%	15.7		%		220	bps
Net interest, finance and other costs	32.0			22.7			(9.3)	(41.0)	%
Income before income taxes	124.5			86.4			38.1	44.1	%
Income tax expense	20.3			19.1			(1.2)	(6.3)	%
Effective tax rate	16.3		%	22.1		%		580	bps
Net income	104.2			67.3			36.9	54.8	%
Other comprehensive (loss) income	(9.7)			2.6			(12.3)	(473.1)	%
Comprehensive income	94.5			69.9			24.6	35.2	%
Earnings per share

Basic	$	0.96		$	0.61		0.35	57.4	%
Diluted	$	0.95		$	0.61		0.34	55.7	%
Weighted average number of shares outstanding

Basic	108,999,722			110,136,707
Diluted	109,969,956			110,928,199
Non-IFRS Financial Measures:(1)
EBIT	156.5			109.1			47.4	43.4	%
Adjusted EBIT	162.8			127.1			35.7	28.1	%
Adjusted EBIT margin	18.6		%	18.3		%		30	bps
Adjusted net income	115.8			85.0			30.8	36.2	%

Adjusted net income per basic share	$	1.06		$	0.77		0.29	37.7	%
Adjusted net income per diluted share	$	1.05		$	0.77		0.28	36.4	%

(1) See “Non-IFRS Financial Measures” for a description of these measures and a reconciliation to the nearest IFRS measure.


			Canada Goose Holdings Inc.			Page 11 of 49

Revenue

Revenue for the three quarters ended January 2, 2022 increased by $180.4m or 26.0% to $875.3m from $694.9m for the three quarters ended December 27, 2020. On a constant currency(1) basis, revenue increased by 28.0% for the three quarters ended January 2, 2022 compared to the three quarters ended December 27, 2020. Revenue generated from our DTC channel represented 63.7% of total revenue for the three quarters ended January 2, 2022 compared to 51.2% for the three quarters ended December 27, 2020. The additional week in the third quarter ended January 2, 2022 provided $40.9m of revenue. Excluding $46.5m of temporary PPE sales in the comparative period, revenue increased by $226.9m or 35.0%.


	Three quarters ended		$ Change			% Change
CAD $ millions	January 2, 2022	December 27, 2020	As reported	Foreign exchange impact	In constant currency(1)	As reported		In constant currency(1)
DTC	558.0	356.0	202.0	7.5	209.5	56.7	%	58.8	%
Wholesale	310.4	288.0	22.4	7.0	29.4	7.8	%	10.2	%
Other	6.9	50.9	(44.0)	—	(44.0)	(86.4)	%	(86.4)	%
Total revenue	875.3	694.9	180.4	14.5	194.9	26.0	%	28.0	%

(1)Constant currency revenue is a non-IFRS financial measure. See “Non-IFRS Financial Measures” for a description of this measure.

DTC

Revenue from our DTC segment for the three quarters ended January 2, 2022 was $558.0m compared to $356.0m for the three quarters ended December 27, 2020. The increase of $202.0m or 56.7% was attributable to higher revenue from existing store sales complemented by e-Commerce growth of 31.3% and new retail expansion. The additional week in the third quarter ended January 2, 2022 provided $38.5m of revenue.

Wholesale

Revenue from our Wholesale segment for the three quarters ended January 2, 2022 was $310.4m compared to $288.0m for the three quarters ended December 27, 2020. The increase of $22.4m or 7.8% was attributable to an increase in orders globally relative to the comparative period.

Other

Revenue from our Other segment for the three quarters ended January 2, 2022 was $6.9m compared to $50.9m for the three quarters ended December 27, 2020. The decrease of $44.0m or 86.4% was mainly attributable to $46.5m of PPE sales in the comparative period, which were temporarily manufactured in support of COVID-19 response efforts.


			Canada Goose Holdings Inc.			Page 12 of 49

Revenue by geography


	Three quarters ended	$ Change		% Change
CAD $ millions	January 2, 2022	December 27, 2020	As reported	Foreign exchange impact	In constant currency(2)	As reported		In constant currency(2)
Canada	179.0	178.5	0.5	—	0.5	0.3	%	0.3	%
United States	233.2	170.2	63.0	6.3	69.3	37.0	%	40.7	%
Asia Pacific	258.0	186.3	71.7	2.3	74.0	38.5	%	39.7	%
EMEA(1)	205.1	159.9	45.2	5.9	51.1	28.3	%	32.0	%
Total revenue	875.3	694.9	180.4	14.5	194.9	26.0	%	28.0	%

(1)EMEA comprises Europe, the Middle East, Africa, and Latin America.

(2)Constant currency revenue is a non-IFRS financial measure. See “Non-IFRS Financial Measures” for a description of this measure.

Revenue increased in the United States, Asia Pacific, and EMEA during the three quarters ended January 2, 2022 compared to the comparative period resulting from an increase in both DTC and Wholesale revenue. Revenue in Canada grew by 35.6% excluding the $46.5m of PPE sales made in the comparative period. Including PPE, revenue in Canada increased by 0.3%. The increase in revenue in all regions was attributable to higher revenues from existing retail stores, e-Commerce growth and retail store expansion.

Gross Profit

Gross profit and gross margin for the three quarters ended January 2, 2022 were $579.5m and 66.2%, respectively, compared to $415.4m and 59.8%, respectively, for the three quarters ended December 27, 2020. The increase in gross profit of $164.1m was attributable to higher revenue as noted above. Gross profit in the comparative period included the impact of $46.5m of non-recurring PPE sales, $13.9m of COVID-19 related government payroll subsidies, $4.3m of manufacturing overhead costs during a period when production ceased due to COVID-19. Excluding the impact of these items, gross margin was 62.8% in the comparative period. Gross margin in the current period was favourably impacted by an increased proportion of DTC revenue from the comparative quarter, a lower proportion of sales to international distributors, and incremental benefits from pricing, which were partially offset by unfavourable impacts from product mix due to higher sales in non-parka categories, typically with lower margins.


			Canada Goose Holdings Inc.			Page 13 of 49


	Three quarters ended
	January 2, 2022			December 27, 2020
CAD $ millions	Gross profit	Gross margin		Gross profit (loss)	Gross margin		$ Change	Change in bps
DTC	426.3	76.4	%	277.4	77.9	%	148.9	(150)	bps
Wholesale	150.8	48.6	%