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 August, 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 for the First Quarter Ended July 3, 2022
99.2						Management’s Discussion and Analysis of Financial Condition and Results of Operation for the First Quarter Ended July 3, 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 August 11, 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: August 11, 2022

Document

Canada Goose Holdings Inc.

Condensed Consolidated Interim Financial Statements

As at and for the first quarter ended

July 3, 2022 and June 27, 2021

(Unaudited)

Condensed Consolidated Interim Statements of Loss

(unaudited)

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


		First quarter ended
	Notes	July 3, 2022		June 27, 2021
				Restated (Note 2)
		$		$

Revenue	4	69.9		56.3
Cost of sales	7	27.2		25.6
Gross profit		42.7		30.7
Selling, general & administrative expenses		123.4		92.5
Operating loss		(80.7)		(61.8)
Net interest, finance and other costs	11	7.4		16.5
Loss before income taxes		(88.1)		(78.3)
Income tax recovery		(24.5)		(20.8)
Net loss		(63.6)		(57.5)

Attributable to:
Shareholders of the Company		(62.4)		(57.5)
Non-controlling interest		(1.2)		—
Net loss		(63.6)		(57.5)

Loss per share attributable to shareholders of the Company
Basic and diluted	5	$	(0.59)	$	(0.52)

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 30

Condensed Consolidated Interim Statements of Comprehensive Loss

(unaudited)

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


		First quarter ended
	Notes	July 3, 2022	June 27, 2021
			Restated (Note 2)
		$	$

Net loss		(63.6)	(57.5)

Other comprehensive loss


Items that may be reclassified to earnings, net of tax:
Cumulative translation adjustment loss		(8.1)	(1.8)
Net gain on derivatives designated as cash flow hedges	16	1.3	0.1
Reclassification of net loss on cash flow hedges to income	16	1.6	0.1

Other comprehensive loss		(5.2)	(1.6)
Comprehensive loss		(68.8)	(59.1)

Attributable to:
Shareholders of the Company		(67.5)	(59.1)
Non-controlling interest		(1.3)	—
Comprehensive loss		(68.8)	(59.1)

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 30

Condensed Consolidated Interim Statements of Financial Position

(unaudited)

(in millions of Canadian dollars)


	Notes	July 3, 2022	June 27, 2021	April 3, 2022
			Restated (Note 2)
Assets		$	$	$
Current assets
Cash	3	81.8	305.9	287.7
Trade receivables	6	48.2	39.2	42.7
Inventories	3, 7	504.7	404.5	393.3
Income taxes receivable		4.8	6.6	1.1
Other current assets	3, 15	52.4	34.4	37.5
Total current assets		691.9	790.6	762.3

Deferred income taxes		73.9	61.5	53.2
Property, plant and equipment	3	110.5	119.9	114.2
Intangible assets	3	134.7	124.4	122.2
Right-of-use assets	3, 8	253.2	240.8	215.2
Goodwill	3	64.7	53.1	53.1
Other long-term assets	15	17.8	4.4	20.4
Total assets		1,346.7	1,394.7	1,340.6

Liabilities
Current liabilities
Accounts payable and accrued liabilities	9, 15	165.6	149.6	176.2
Provisions	10	16.2	13.4	18.5
Income taxes payable		13.2	10.4	24.5
Short-term borrowings	3, 11	30.8	10.9	3.8
Current portion of lease liabilities	3, 8	59.9	49.6	58.5
Total current liabilities		285.7	233.9	281.5

Provisions	3, 10	30.2	25.4	31.3
Deferred income taxes		18.3	7.7	15.8

Term loan	3, 11	377.1	363.2	366.2
Lease liabilities	3, 8	230.6	214.7	192.2
Other long-term liabilities	3, 15	52.9	27.6	25.7
Total liabilities		994.8	872.5	912.7

Shareholders' equity	12	351.9	522.2	427.9
Total liabilities and shareholders' equity		1,346.7	1,394.7	1,340.6

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 30

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	Total attributable to shareholders	Non-controlling interest	Total
	Notes	Multiple voting shares	Subordinate voting shares	Total
		$	$	$	$	$	$	$	$	$

Balance at April 3, 2022		1.4	117.1	118.5	36.2	290.4	(17.2)	427.9	—	427.9

Initial recognition of non-controlling interest on business combination	3	—	—	—	—	—	—	—	10.8	10.8
Put option for non-controlling interest	3	—	—	—	—	(20.7)	—	(20.7)	—	(20.7)
Exercise of stock options	12	—	2.6	2.6	(2.6)	—	—	—	—	—
Net loss		—	—	—	—	(62.4)	—	(62.4)	(1.2)	(63.6)
Other comprehensive loss		—	—	—	—	—	(5.1)	(5.1)	(0.1)	(5.2)
Share-based payment	13	—	—	—	2.7	—	—	2.7	—	2.7
Balance at July 3, 2022		1.4	119.7	121.1	36.3	207.3	(22.3)	342.4	9.5	351.9

Balance at March 28, 20211		1.4	119.1	120.5	25.2	437.1	(5.2)	577.6	—	577.6

Exercise of stock options	12	—	2.7	2.7	(1.5)	—	—	1.2	—	1.2
Net loss1		—	—	—	—	(57.5)	—	(57.5)	—	(57.5)
Other comprehensive loss1		—	—	—	—	—	(1.6)	(1.6)	—	(1.6)
Share-based payment	13	—	—	—	2.7	—	—	2.7	—	2.7
Deferred tax on share-based payment		—	—	—	(0.2)	—	—	(0.2)	—	(0.2)
Balance at June 27, 20211		1.4	121.8	123.2	26.2	379.6	(6.8)	522.2	—	522.2

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

1The Company adopted a change in accounting policy on the treatment of implementation costs related to Software as a Service (“SaaS”) arrangements. See Note 2 for a description of the impact from adopting the agenda decision and the impact of retrospective application on this quarter.


			Canada Goose Holdings Inc.			Page 4 of 30

Condensed Consolidated Interim Statements of Cash Flows

(unaudited)

(in millions of Canadian dollars)


		First quarter ended
	Notes	July 3, 2022	June 27, 2021
			Restated (Note 2)
		$	$
Operating activities
Net loss		(63.6)	(57.5)
Items not affecting cash:
Depreciation and amortization		25.8	21.4
Income tax recovery		(24.5)	(20.8)
Interest expense	11	7.0	6.6
Foreign exchange loss		2.1	5.5
Acceleration of unamortized costs on debt extinguishment	11	—	9.5


Share-based payment	13	2.7	2.7
		(50.5)	(32.6)
Changes in non-cash operating items	17	(123.5)	(104.6)
Income taxes paid		(16.2)	(11.1)
Interest paid		(6.7)	(7.1)
Net cash used in operating activities		(196.9)	(155.4)

Investing activities
Purchase of property, plant and equipment		(2.5)	(6.0)
Investment in intangible assets		(1.1)	—
Initial direct costs of right-of-use assets	8	(0.1)	(0.4)
Net cash inflow from business combination	3	2.8	—
Net cash used in investing activities		(0.9)	(6.4)

Financing activities
Mainland China Facilities borrowings	11	4.6	7.2
Japan Facility borrowings	3, 11	3.9	—
Term loan repayments	11	(1.0)	(0.9)

Transaction costs on financing activities	11	—	(1.0)


Principal payments on lease liabilities	8	(13.8)	(9.9)

Exercise of stock options	13	—	1.2
Net cash used in financing activities		(6.3)	(3.4)
Effects of foreign currency exchange rate changes on cash		(1.8)	(6.8)
Decrease in cash		(205.9)	(172.0)
Cash, beginning of period		287.7	477.9
Cash, end of period		81.8	305.9

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


			Canada Goose Holdings Inc.			Page 5 of 30

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 product offerings include various styles of parkas, lightweight down jackets, rainwear, windwear, apparel, fleece, 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 Chairman and Chief Executive Officer of the Company. The principal shareholders hold multiple voting shares representing 48.4% of the total shares outstanding as at July 3, 2022, or 90.4% of the combined voting power of the total voting shares outstanding. Subordinate voting shares that trade on public markets represent 51.6% of the total shares outstanding as at July 3, 2022, or 9.6% 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 August 10, 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 April 3, 2022 annual consolidated financial statements have been applied


			Canada Goose Holdings Inc.			Page 6 of 30

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.

Certain comparative figures have been reclassified to conform with the current year presentation. Depreciation and amortization for amounts not included in costs of goods sold, which were previously presented in a separate line item, are reflected in the presentation of selling, general, and administrative ("SG&A") expenses.

COVID-19 pandemic

Globally, public health officials have imposed restrictions and recommended precautions to mitigate the spread of the novel coronavirus pandemic ("COVID-19"). While restrictions have been lifted to varying degrees in markets around the world, we continue to be impacted to some extent. In the first quarter of fiscal 2023, store operations have largely resumed with the exception of Mainland China. In the first quarter of fiscal 2023, eight out of 16 retail stores in Mainland China experienced store closures. Trading days lost due to temporary closures of our retail locations as well as reduced traffic and store productivity did not materially impact results for the first quarter of fiscal 2023. In the comparative quarter, retail stores were impacted by store closures in Canada and EMEA1, with approximately 20% of total trading days lost to temporary closures.

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

As a result of the temporary store closures, net costs of $2.2m were recognized in SG&A expenses and net interest, finance and other costs during the first quarter ended July 3, 2022 (first quarter ended June 27, 2021 - $0.2m).

Management assessed whether indicators of impairment existed as at July 3, 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 and those investments over which the Company has control. All intercompany transactions and balances have been eliminated.

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 our 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.


			Canada Goose Holdings Inc.			Page 7 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Summary of accounting policies adopted

Non-controlling interest

In connection with the Japan Joint Venture (refer to note 3), non-controlling interest accounting policy was adopted. At the date of acquisition, the Company elected to measure the non-controlling interest for the Japan Joint Venture based on the proportionate share of the acquiree's identifiable net assets. Transactions with non-controlling interests are treated as transactions with equity owners of the Company. Changes in the Company's ownership interest of CG Japan are accounted for as equity transactions.

Financial instruments

In connection with the Japan Joint Venture (refer to note 3), the Company established a financial liability for the put option in respect of non-controlling interests based on the present value of the amount expected to be paid to the non-controlling shareholder if exercised. Subsequently, the put option liability is adjusted to reflect changes in the present value of the amount that could be required to be paid at each reporting date, with fluctuations being recorded within the statement of loss, until it is exercised or expires. The put option is measured at fair value through profit or loss and the fair value of the put option is classified as Level 3 within IFRS 13, Fair value measurement.

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 policies 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

Configuration or Customization Costs in a Cloud Computing Arrangement

In April 2021, the International Financial Reporting Interpretations Committee (“IFRIC”) finalized an agenda decision within the scope of IAS 38, Intangible Assets 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.


			Canada Goose Holdings Inc.			Page 8 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

The adoption of the agenda decision was recognized as a change in accounting policy in accordance with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors ("IAS 8"). The Company amended the existing accounting policies related to implementation costs on SaaS arrangements as at April 1, 2019. The Company assessed the impact of the interpretation and identified $25.4m of costs recognized as intangible assets within ERP and computer software related to SaaS arrangements that were no longer eligible for capitalization and amortization in accordance with the agenda decision. As a result, these costs were written off as at April 1, 2019 as these costs would have been required to be expensed in the period incurred.

In accordance with IAS 8, retrospective application is required for accounting policy changes and comparative financial information was restated in these interim financial statements. Refer to the Company's Annual Financial Statements for the year ended April 3, 2022 for information on the opening balance sheet as a result of the retrospective application. The following tables outline the impacts of the restatements on the comparative periods:

Condensed Comprehensive Income Information

Increase (decrease)


	June 27, 2021
	As previously reported	Adjustments	Restated
	$	$	$
SG&A expenses	91.4	1.1	92.5
Income tax recovery	(20.5)	(0.3)	(20.8)
Net loss	(56.7)	(0.8)	(57.5)
Cumulative translation adjustment	(1.9)	0.1	(1.8)

Condensed Financial Position Information

Increase (decrease)


	June 27, 2021
	As previously reported	Adjustments	Restated
	$	$	$
Deferred income taxes (asset)	60.1	1.4	61.5
Intangible assets	155.5	(31.1)	124.4
Deferred income taxes (liability)	14.2	(6.5)	7.7
Shareholders' equity	545.4	(23.2)	522.2


			Canada Goose Holdings Inc.			Page 9 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Condensed Cash Flow Information

Increase (decrease)


	June 27, 2021
	As previously reported	Adjustments	Restated
	$	$	$
Net loss	(56.7)	(0.8)	(57.5)
Depreciation and amortization	23.5	(2.1)	21.4
Income tax recovery	(20.5)	(0.3)	(20.8)
Changes in non-cash items	(106.9)	2.3	(104.6)
Investment in intangible assets	(0.9)	0.9	—

Interest Rate Benchmark Reform

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, 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 term loan facility at a net book value of $380.0m, is 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 July 3, 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.

Note 3. Business combination

The Company and a former distributor of the Company's products in Japan, Sazaby League, Ltd. ("Sazaby League"), entered into an agreement (the "Joint Venture Agreement") to form a joint venture (the “Japan Joint Venture”) pursuant to which the Company acquired 50% of the issued and outstanding voting shares of the legal entity comprising the joint venture, Canada Goose Japan, K.K. (“CG Japan”), on April 4, 2022. CG Japan was established to market, distribute and sell Canada Goose products, and to operate retail stores and e-Commerce in Japan.


			Canada Goose Holdings Inc.			Page 10 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Prior to the establishment of CG Japan, the Company sold its products to the former distributor. The majority of sales historically occurred in the first and second quarters and were recorded in the Wholesale operating segment. Subsequent to the transaction, the Company will consolidate the results of CG Japan and revenue and results of operations will be aligned to the respective operating segments and are expected to occur more in line with the seasonality of the Company's Wholesale and DTC segments.

Management performed an analysis under IFRS 10, Consolidated Financial Statements and since the Company has the power to direct the relevant activities of CG Japan, is exposed to variable returns, and can use its power to influence those returns, management determined that the Company has control over CG Japan for accounting purposes. In addition, management performed an analysis under IFRS 3, Business Combinations and has determined that the Company is the acquirer of CG Japan. Management determined that the assets and processes acquired comprised a business and therefore, accounted for the transaction as a business combination using the acquisition method of accounting. Under the acquisition method, assets and liabilities of the acquiree are recorded at their fair values.

The Company paid cash consideration to CG Japan of $2.6m plus deferred contingent consideration to the non-controlling shareholder with an estimated fair value of $20.0m resulting in total consideration of $22.6m. The deferred contingent consideration is payable if an agreed cumulative adjusted EBIT target is not reached through the period ended June 30, 2026. The estimated fair value of the applicable contingent consideration is calculated using the estimated financial outcome and resulting expected contingent consideration to be paid and inclusion of a discount rate as appropriate. As at April 4, 2022, the contingent consideration amount has been recorded in other long-term liabilities. The amount of contingent consideration will be remeasured at its fair value each reporting period, with changes in fair value recorded in the consolidated statement of income and comprehensive income.

The Company incurred $0.8m in transaction related costs which are included in SG&A expenses in the consolidated statement of earnings and comprehensive income for the first quarter ended July 3, 2022. For the year ended April 3, 2022, the Company incurred $0.7m in transaction related costs.


			Canada Goose Holdings Inc.			Page 11 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Assets acquired and liabilities assumed have been recorded based on a preliminary valuation at their fair values at the date of acquisition as follows:


			$
Assets acquired
Cash			5.4
Inventories			27.3
Property, plant and equipment			1.2
Intangible assets			12.1
Right-of-use assets			3.3
Goodwill			11.8
Other assets			2.4
			63.5
Liabilities assumed
Bank loan			19.4
Lease liabilities			3.2
Warranty provision			0.3
			22.9

Total identifiable net assets acquired			40.6
Less: Deferred tax liability			7.2
Less: Non-controlling interests			10.8
Net assets acquired			22.6

Consideration
Cash paid			2.6
Contingent consideration			20.0
Total purchase consideration			22.6

Cash consideration paid			(2.6)
Plus: Cash balance acquired			5.4
Net cash inflow on business combination			2.8

The determination of the fair value of assets acquired and liabilities assumed is based on preliminary estimates and certain assumptions with respect to the fair values of the assets acquired and liabilities assumed and are expected to be finalized within one year of the acquisition.

Goodwill is calculated as the difference between total consideration and the fair value of the net assets acquired and is attributable to expected synergies between CG Japan and the Company’s existing operations. Goodwill of $11.8m was recognized as the excess of the acquisition cost over the fair value of net identifiable assets at the date of acquisition. Goodwill recognized is not expected to be deductible for income tax purposes. Intangible assets of $12.1m relate to the fair value of the customer list and reacquired distribution rights of the Japan market, which will be amortized over a 10-year period.


			Canada Goose Holdings Inc.			Page 12 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

The fair value of property, plant and equipment and right-of-use assets was based on management’s assessment of the acquired assets’ condition, as well as an evaluation of the current market value for such assets. In addition, the Company considered the length of time over which the economic benefit of these assets is expected to be realized and estimated the useful life of such assets as of the acquisition date. The fair value of inventories has been measured at net realizable value, less cost to sell. Final valuations of certain assets and liabilities including inventory, property, plant and equipment, intangible assets, right-of-use assets, other assets and warranty provisions are not yet complete due to the inherent complexity associated with valuations. Therefore, the purchase price allocation is preliminary and is subject to adjustment upon completion of the valuation process.

CG Japan’s results are consolidated into the Company’s financial results effective April 4, 2022. For the first quarter ended July 3, 2022, CG Japan contributed approximately $0.5m and $(2.7)m to the Company’s consolidated gross revenue and operating loss, respectively.

In connection with the business combination, the Joint Venture Agreement includes a put option that allows the non-controlling shareholder to sell its 50% interest to the Company within six months after certain circumstances constituting a "put option trigger" event occurs. If the put option is not exercised during such six-month period the put option will expire. The Company established a financial liability for the put option in respect of non-controlling interests. The fair value of the put option is classified as Level 3 within IFRS 13, Fair value measurement. As at April 4, 2022, the fair value of the put option held in Japanese Yen by the non-controlling shareholder is recorded in other long-term liabilities in the amount of JPY 2,076.4m ($21.2m).

The Company recorded the put option liability based on the present value of the amount expected to be paid to the non-controlling shareholder if exercised. Subsequently, the put option liability is adjusted to reflect changes in the present value of the amount that could be required to be paid at each reporting date, with fluctuations being recorded within the Company's statement of loss, until it is exercised or expires. For the first quarter ended July 3, 2022, there was no remeasurement adjustment on the put option liability.

Note 4. 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 (loss) income, which is the profit metric utilized by the Company's chief operating decision maker, the Chairman and Chief Executive Officer, for assessing the performance of operating segments. Our operating segments are not reliant on any single external customer.


			Canada Goose Holdings Inc.			Page 13 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

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


	First quarter ended July 3, 2022
(in millions of Canadian dollars)	DTC	Wholesale	Other	Total
	$	$	$	$
Revenue	34.8	33.2	1.9	69.9
Cost of sales	9.5	16.4	1.3	27.2
Gross profit	25.3	16.8	0.6	42.7

SG&A expenses	42.0	11.2	70.2	123.4
Operating (loss) income	(16.7)	5.6	(69.6)	(80.7)

Net interest, finance and other costs				7.4
Loss before income taxes				(88.1)

	First quarter ended June 27, 2021
(in millions of Canadian dollars)	DTC	Wholesale	Other	Total
	$	$	$	$
Revenue	29.1	26.1	1.1	56.3
Cost of sales	9.4	15.7	0.5	25.6
Gross profit	19.7	10.4	0.6	30.7

SG&A expenses	30.7	8.5	53.3	92.5
Operating (loss) income	(11.0)	1.9	(52.7)	(61.8)

Net interest, finance and other costs				16.5
Loss before income taxes				(78.3)

Geographic information

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


	First quarter ended
(in millions of Canadian dollars)	July 3, 2022	June 27, 2021
	$	$
Canada	17.9	9.9
United States	15.7	9.3
Asia Pacific	16.1	22.4
EMEA1	20.2	14.7
Revenue	69.9	56.3

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


			Canada Goose Holdings Inc.			Page 14 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Note 5. Earnings per share

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


	First quarter ended
(in millions of Canadian dollars, except share and per share amounts)	July 3, 2022		June 27, 2021

Net loss attributable to shareholders of the Company	$	(62.4)	$	(57.5)

Weighted average number of multiple and subordinate voting shares outstanding1	105,234,474		110,504,248


Loss per share attributable to shareholders of the Company
Basic and diluted	$	(0.59)	$	(0.52)

1 Subordinate voting shares issuable on exercise of stock options are not treated as dilutive if including them would decrease the loss per share. Accordingly, 561,537 potentially dilutive shares have been excluded from the calculation of diluted loss per share for the first quarter ended July 3, 2022 (first quarter ended June 27, 2021 - 967,328 shares).

Note 6. Trade receivables


(in millions of Canadian dollars)	July 3, 2022	June 27, 2021	April 3, 2022
	$	$	$
Trade accounts receivable	25.3	17.4	22.0
Credit card receivables	2.0	1.8	2.5
Government grant receivable	—	0.1	—
Other receivables	21.7	21.0	19.3
	49.0	40.3	43.8
Less: expected credit loss and sales allowances	(0.8)	(1.1)	(1.1)
Trade receivables	48.2	39.2	42.7

Note 7. Inventories


(in millions of Canadian dollars)	July 3, 2022	June 27, 2021	April 3, 2022
	$	$	$
Raw materials	75.7	70.6	71.3
Work in progress	15.9	17.1	14.9
Finished goods	413.1	316.8	307.1
Total inventories at the lower of cost and net realizable value	504.7	404.5	393.3

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 July 3, 2022,


			Canada Goose Holdings Inc.			Page 15 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

the provision for obsolescence amounted to $26.9m (June 27, 2021 - $23.1m, April 3, 2022 - $23.6m).

Amounts charged to cost of sales comprise the following:


	First quarter ended
(in millions of Canadian dollars)	July 3, 2022	June 27, 2021
	$	$
Cost of goods manufactured	24.8	21.9
Depreciation and amortization	2.4	3.7
	27.2	25.6

Note 8. 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	$	$	$	$
April 3, 2022	296.3	36.7	17.4	350.4
Additions	15.9	—	34.6	50.5
Additions from business combinations (note 3)	1.5	—	1.8	3.3
Lease modifications	0.2	—	—	0.2

Impact of foreign currency translation	(1.1)	—	0.1	(1.0)
July 3, 2022	312.8	36.7	53.9	403.4

March 28, 2021	253.3	36.7	18.4	308.4
Additions	20.9	—	0.4	21.3
Lease modifications	1.6	—	—	1.6
Impact of foreign currency translation	(3.5)	—	(0.2)	(3.7)
June 27, 2021	272.3	36.7	18.6	327.6


			Canada Goose Holdings Inc.			Page 16 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)


(in millions of Canadian dollars)	Retail stores	Manufacturing facilities	Other	Total
Accumulated depreciation	$	$	$	$
April 3, 2022	110.1	15.2	9.9	135.2
Depreciation	12.6	1.3	1.8	15.7


Impact of foreign currency translation	(0.6)	—	(0.1)	(0.7)
July 3, 2022	122.1	16.5	11.6	150.2

March 28, 2021	58.8	9.9	6.0	74.7
Depreciation	10.7	1.3	1.0	13.0

Impact of foreign currency translation	(0.8)	—	(0.1)	(0.9)
June 27, 2021	68.7	11.2	6.9	86.8

Net book value
July 3, 2022	190.7	20.2	42.3	253.2
June 27, 2021	203.6	25.5	11.7	240.8
April 3, 2022	186.2	21.5	7.5	215.2

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
	$	$	$	$
April 3, 2022	217.2	24.8	8.7	250.7
Additions	15.9	—	34.6	50.5
Additions from business combinations (note 3)	1.5	—	1.7	3.2
Lease modifications	0.2	—	—	0.2
Principal payments	(11.8)	(1.3)	(0.7)	(13.8)
Impact of foreign currency translation	(0.4)	—	0.1	(0.3)
July 3, 2022	222.6	23.5	44.4	290.5

March 28, 2021	211.0	29.9	13.9	254.8
Additions	20.5	—	0.4	20.9
Lease modifications	1.5	—	—	1.5
Principal payments	(7.6)	(1.3)	(1.0)	(9.9)
Impact of foreign currency translation	(2.8)	—	(0.2)	(3.0)
June 27, 2021	222.6	28.6	13.1	264.3


			Canada Goose Holdings Inc.			Page 17 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

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	50.8	5.8	3.3	59.9
Non-current lease liabilities	171.8	17.7	41.1	230.6
July 3, 2022	222.6	23.5	44.4	290.5

Current lease liabilities	40.3	5.7	3.6	49.6
Non-current lease liabilities	182.3	22.9	9.5	214.7
June 27, 2021	222.6	28.6	13.1	264.3

Current lease liabilities	49.7	5.8	3.0	58.5
Non-current lease liabilities	167.5	19.0	5.7	192.2
April 3, 2022	217.2	24.8	8.7	250.7

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

During the first quarter ended July 3, 2022, $0.6m of lease payments were not included in the measurement of lease liabilities (first quarter ended June 27, 2021 - $0.5m). The majority of this balance related to short-term leases and variable rent payments.

Note 9. Accounts payable and accrued liabilities

Accounts payable and accrued liabilities consist of the following:


(in millions of Canadian dollars)	July 3, 2022	June 27, 2021	April 3, 2022
	$	$	$
Trade payables	47.4	47.9	63.9
Accrued liabilities	73.9	56.4	67.0
Employee benefits	26.8	19.6	26.5
Derivative financial instruments	13.7	10.7	10.4
Other payables	3.8	15.0	8.4
Accounts payable and accrued liabilities	165.6	149.6	176.2


			Canada Goose Holdings Inc.			Page 18 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Note 10. Provisions

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	5.9	10.3	—	16.2
Non-current provisions	22.1	—	8.1	30.2
July 3, 2022	28.0	10.3	8.1	46.4

Current provisions	6.0	7.4	—	13.4
Non-current provisions	18.8	—	6.6	25.4
June 27, 2021	24.8	7.4	6.6	38.8

Current provisions	5.6	12.9	—	18.5
Non-current provisions	23.6	—	7.7	31.3
April 3, 2022	29.2	12.9	7.7	49.8

Note 11. 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 July 3, 2022, the Company had repaid all amounts owing on the revolving facility (June 27, 2021 - $nil, April 3, 2022 - $nil). As at July 3, 2022, interest and administrative fees for $0.5m (June 27, 2021 - $nil, April 3, 2022 - $0.5m) remain outstanding. Deferred financing charges in the amounts of $0.8m (June 27, 2021 - $1.6m, April 3, 2022 - $0.9m) were included in other long-term liabilities. As at and during the first quarter ended July 3, 2022, the Company was in compliance with all covenants.

The Company had unused borrowing capacity available under the revolving facility of $358.3m as at July 3, 2022 (June 27, 2021 - $313.7m, April 3, 2022 - $191.8m).


			Canada Goose Holdings Inc.			Page 19 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

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 July 3, 2022, the Company had letters of credit outstanding under the revolving facility of $4.6m (June 27, 2021 - $6.2m, April 3, 2022 - $4.6m).

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. The facility has an aggregate principal amount of US$300.0m, with quarterly repayments of US$0.75m on the principal amount and a maturity date of October 7, 2027. Moreover, the facility has an interest rate of LIBOR plus an applicable margin of 3.50% payable quarterly in arrears and LIBOR may not be less than 0.75%. The Company incurred transaction costs of $0.9m related to the facility which are being amortized using the effective interest rate method over the term to maturity.

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. As at July 3, 2022, the Company had US$295.5m (June 27, 2021 - US$299.3m, April 3, 2022 - US$296.3m) 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 first quarter ended July 3, 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)	July 3, 2022	June 27, 2021	April 3, 2022
	$	$	$
Term loan	380.7	367.9	370.8
Unamortized portion of deferred transaction costs	(0.7)	(1.0)	(0.8)



	380.0	366.9	370.0

Mainland China Facilities

A subsidiary of the Company in Mainland China has two uncommitted loan facilities in the aggregate amount of RMB 310.0m ($59.6m) ("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 the 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 July 3, 2022, the Company had $4.6m (RMB 24.0m) owing on the Mainland China Facilities (June 27, 2021 - $7.2m (RMB 38.0m), April 3, 2022 - $nil (RMB nil)).


			Canada Goose Holdings Inc.			Page 20 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Japan Facility

A subsidiary of the Company in Japan has a loan facility in the aggregate amount of JPY 4,000.0m ($38.1m) ("Japan Facility") with a floating interest rate of JBA TIBOR plus an applicable margin of 0.3%. The term of the facility is twelve months and each draw on the facility is payable within the term. Proceeds drawn on the Japan Facility are being used to support build up of inventory for peak season sales. As at July 3, 2022, the Company had $23.3m (JPY 2,450.0m) owing on the Japan Facility.

Short-term Borrowings

As at July 3, 2022, the Company has short-term borrowings in the amount of $30.8m. Short-term borrowings include $4.6m (June 27, 2021 - $7.2m, April 3, 2022 - $nil) owing on the Mainland China Facilities, $23.3m (June 27, 2021 - $nil, April 3, 2022 - $nil) owing on the Japan Facility, and $2.9m (June 27, 2021 - $3.7m, April 3, 2022 - $3.8m) for the current portion of 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:


	First quarter ended
(in millions of Canadian dollars)	July 3, 2022	June 27, 2021
	$	$
Interest expense


Revolving facility	0.1	0.2
Term loan	4.3	4.3
Lease liabilities	2.6	2.3
Standby fees	0.4	0.5
Acceleration of unamortized costs on debt extinguishment	—	9.5
Interest income	(0.1)	(0.3)
Other costs	0.1	—
Net interest, finance and other costs	7.4	16.5

Note 12. Shareholders' equity

Share capital transactions for the first quarter ended July 3, 2022

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	$
April 3, 2022	51,004,076	1.4	54,190,432	117.1	105,194,508	118.5



Exercise of stock options	—	—	55,248	2.6	55,248	2.6
Settlement of RSUs	—	—	84,219	—	84,219	—
July 3, 2022	51,004,076	1.4	54,329,899	119.7	105,333,975	121.1


			Canada Goose Holdings Inc.			Page 21 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Share capital transactions for the first quarter ended June 27, 2021

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


Exercise of stock options	—	—	41,203	2.7	41,203	2.7
Settlement of RSUs	—	—	48,558	—	48,558	—
June 27, 2021	51,004,076	1.4	59,524,840	121.8	110,528,916	123.2

Note 13. Share-based payments

Stock options

The Company 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:


	First quarter ended
	July 3, 2022			June 27, 2021
(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	$	42.99	2,722,690	$	38.32	2,498,973
Granted to purchase shares	$	24.64	1,568,221	$	48.93	728,375
Exercised	$	0.25	(55,248)	$	25.66	(41,203)
Cancelled	$	40.01	(26,572)	$	33.97	(1,414)

Options outstanding, end of period	$	36.73	4,209,091	$	40.92	3,184,731


			Canada Goose Holdings Inc.			Page 22 of 30

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:


	First quarter ended
	July 3, 2022	June 27, 2021
	Number	Number
RSUs outstanding, beginning of period	215,590	137,117
Granted	207,820	151,237
Settled	(84,219)	(48,558)
Cancelled	(3,282)	(1,026)

RSUs outstanding, end of period	335,909	238,770

Subordinate voting shares, to a maximum of 1,205,028 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 first quarter ended July 3, 2022, the Company recorded $2.7m, as contributed surplus and compensation expense for the vesting of stock options and RSUs (first quarter ended June 27, 2021 - $2.7m). 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:


	First quarter ended
(in millions of Canadian dollars, except share and per share amounts)	July 3, 2022			June 27, 2021
Weighted average stock price valuation	$	24.64		$	48.93
Weighted average exercise price	$	24.64		$	48.93
Risk-free interest rate	2.51		%	0.44		%
Expected life in years	5			5
Expected dividend yield	—		%	—		%
Volatility	40		%	40		%
Weighted average fair value of options issued	$	7.86		$	14.36

Fair value for RSUs is determined based on the market value of the subordinate voting shares at the time of grant. As at July 3, 2022, the weighted average fair value of the RSUs issued was $24.64 (June 27, 2021 - $48.93).


			Canada Goose Holdings Inc.			Page 23 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Note 14. 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 first quarter ended July 3, 2022, the Company incurred expenses with related parties of $0.3m (first quarter ended June 27, 2021 - $0.2m) from companies related to certain shareholders. Balances owing to related parties as at July 3, 2022 were $0.3m (June 27, 2021 - $0.2m, April 3, 2022 - $0.3m).

A lease liability due to the controlling shareholder of the acquired Baffin Inc. business (the "Baffin Vendor") for leased premises was $3.6m as at July 3, 2022 (June 27, 2021 - $4.4m, April 3, 2022 - $3.8m). During the first quarter ended July 3, 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 (first quarter ended June 27, 2021 - $0.3m). No amounts were owing to Baffin entities as at July 3, 2022, June 27, 2021, and April 3, 2022.

Lease liabilities due to the non-controlling shareholder of the Japan Joint Venture, Sazaby League, for leased premises was $2.8m as at July 3, 2022. During the first quarter ended July 3, 2022, the Company paid principal and interest on lease liabilities, royalty fees, and other operating costs to Sazaby League totaling $1.4m. Balances owing to Sazaby League as at July 3, 2022 were $0.2m.

Note 15. 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:


	July 3, 2022
(in millions of Canadian dollars)	Level 1	Level 2	Level 3	Carrying value	Fair value
	$	$	$	$	$
Financial assets
Derivatives included in other current assets	—	17.1	—	17.1	17.1
Derivatives included in other long-term assets	—	17.7	—	17.7	17.7
Financial liabilities
Derivatives included in accounts payable and accrued liabilities	—	13.7	—	13.7	13.7
Mainland China Facilities	—	—	4.6	4.6	4.6
Japan Facility	—	23.3	—	23.3	23.3

Term loan	—	380.0	—	380.0	404.9
Derivatives included in other long-term liabilities	—	10.5	—	10.5	10.5
Put option liability included in other long-term liabilities (note 3)	—	—	20.7	20.7	20.7
Contingent consideration included in other long-term liabilities (note 3)	—	—	19.5	19.5	19.5


			Canada Goose Holdings Inc.			Page 24 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)


	June 27, 2021
(in millions of Canadian dollars)	Level 1	Level 2	Level 3	Carrying value	Fair value
	$	$	$	$	$
Financial assets
Derivatives included in other current assets	—	8.5	—	8.5	8.5
Derivatives included in other long-term assets	—	4.4	—	4.4	4.4
Financial liabilities
Derivatives included in accounts payable and accrued liabilities	—	10.7	—	10.7	10.7
Mainland China Facilities	—	—	7.2	7.2	7.2
Derivatives included in other long-term liabilities	—	26.8	—	26.8	26.8

Term loan	—	366.9	—	366.9	367.9


	April 3, 2022
(in millions of Canadian dollars)	Level 1	Level 2	Level 3	Carrying value	Fair value
	$	$	$	$	$
Financial assets

Derivatives included in other current assets	—	9.5	—	9.5	9.5
Derivatives included in other long-term assets	—	20.4	—	20.4	20.4
Financial liabilities
Derivatives included in accounts payable and accrued liabilities	—	10.4	—	10.4	10.4

Derivatives included in other long-term liabilities	—	23.1	—	23.1	23.1

Term loan	—	370.0	—	370.0	386.9

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

Note 16. 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 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.


			Canada Goose Holdings Inc.			Page 25 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

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, the Mainland China Facilities, and the Japan Facility 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 July 3, 2022:


Contractual obligations by fiscal year	Q2 to Q4 2023	2024	2025	2026	2027	2028	Thereafter	Total
(in millions of Canadian dollars)	$	$	$	$	$	$	$	$
Accounts payable and accrued liabilities	165.6	—	—	—	—	—	—	165.6
Mainland China Facilities	4.6	—	—	—	—	—	—	4.6
Japan Facility	23.3	—	—	—	—	—	—	23.3

Term loan	2.9	3.9	3.9	3.9	3.9	362.2	—	380.7
Interest commitments relating to borrowings1	13.6	17.2	17.2	17.2	17.2	8.6	—	91.0

Lease obligations	53.7	63.1	57.9	44.5	37.1	25.8	64.2	346.3
Pension obligation	—	—	—	—	—	—	2.1	2.1

Total contractual obligations	263.7	84.2	79.0	65.6	58.2	396.6	66.3	1,013.6

1 Interest commitments are calculated based on the loan balance and the interest rate payable on the Mainland China Facilities, the Japan Facility and the term loan of 4.26%, 0.37%, and 4.51% respectively, as at July 3, 2022.

As at July 3, 2022, we had additional liabilities which included provisions for warranty, sales returns, asset retirement obligations, deferred income tax liabilities, as well as the put option liability and the contingent consideration on the Japan Joint Venture. These liabilities have not been included in the table above as the timing and amount of future payments are uncertain.


			Canada Goose Holdings Inc.			Page 26 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

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 issuing bank for amounts drawn on issued letters of guarantees. At July 3, 2022, the Company had $5.4m outstanding.

In addition, during the first quarter ended July 3, 2022, a subsidiary of the Company in Mainland China entered into letters of guarantee in the amount of $1.4m. 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 July 3, 2022, accounts receivable totaling approximately $14.4m (June 27, 2021 - $7.6m, April 3, 2022 - $8.1m) were insured subject to the policy cap. Complementary to the 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 first quarter ended July 3, 2022, the Company received no cash proceeds from the sale of trade accounts receivable as no amounts were derecognized from the Company's statement of financial position (first quarter ended June 27, 2021 - $0.9m). No fees were incurred during the first quarter ended July 3, 2022 (first quarter ended June 27, 2021 - less than $0.1m) and included in net interest, finance and other costs in the interim statements of loss. As at July 3, 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 less than $0.1m (June 27, 2021 - $0.9m, April 3, 2022 - $2.0m).

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 27 of 30

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, Hong Kong dollars and since the Japan Joint Venture, Japanese yen. 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. During the second quarter of fiscal 2022, 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 gains in the fair value of derivatives designated as cash flow hedges in other comprehensive income:


	First quarter ended
	July 3, 2022		June 27, 2021
(in millions of Canadian dollars)	Net gain	Tax expense	Net gain	Tax expense
	$	$	$	$
Forward foreign exchange contracts designated as cash flow hedges	0.7	(0.4)	0.7	(0.2)

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:


	First quarter ended
(in millions of Canadian dollars)	July 3, 2022	June 27, 2021
Loss (gain) from other comprehensive income	$	$
Forward foreign exchange contracts designated as cash flow hedges
Revenue	0.7	—
SG&A expenses	1.0	(0.1)
Inventory	(0.1)	(1.0)

For the first quarter ended July 3, 2022, unrealized loss of $0.6m (first quarter ended June 27, 2021 - unrealized gain of $0.3m) on forward exchange contracts that were not treated as hedges were recognized in SG&A expenses in the interim statements of loss.


			Canada Goose Holdings Inc.			Page 28 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Foreign currency forward exchange contracts outstanding as at July 3, 2022 related to operating cash flows were:


(in millions)	Aggregate Amounts		Currency
Forward contract to purchase Canadian dollars	US$	118.7	U.S. dollars
	€	113.6	euros

Forward contract to sell Canadian dollars	US$	25.0	U.S. dollars
	€	40.5	euros

Forward contract to purchase euros	CHF	2.1	Swiss francs
	CNY	469.1	Chinese yuan
	£	47.4	British pounds sterling



Forward contract to sell euros	CHF	6.4	Swiss francs
	CNY	90.3	Chinese yuan
	£	2.9	British pounds sterling

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 11). 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:


	First quarter ended
	July 3, 2022		June 27, 2021
(in millions of Canadian dollars)	Net gain	Tax expense	Net loss	Tax recovery
	$	$	$	$
Swaps designated as cash flow hedges	0.6	(0.2)	(0.5)	0.2

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


	First quarter ended
(in millions of Canadian dollars)	July 3, 2022	June 27, 2021
Loss from other comprehensive income	$	$
Swaps designated as cash flow hedges	0.2	0.2

For the first quarter ended July 3, 2022, unrealized gains of $12.4m (first quarter ended June 27, 2021 - unrealized losses of $7.5m) 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 interim statements of loss.


			Canada Goose Holdings Inc.			Page 29 of 30

Notes to the Condensed Consolidated Interim Financial Statements

(unaudited)

Interest rate risk

The Company is exposed to interest rate risk related to the effect of interest rate changes on the borrowings outstanding under the term loan, the Mainland China Facilities and Japan Facility which currently bear interest rates at 4.51%, 4.26%, and 0.37% respectively. As at July 3, 2022, the Company had no amounts outstanding on the revolving facility.

Based on the weighted average amount of outstanding borrowings, a 1.00% increase in the average interest rate during the first quarter ended July 3, 2022 would have increased interest expense on the term loan and Mainland China Facilities by $0.9m and less than $0.1m respectively (first quarter ended June 27, 2021 - $0.9m and less than $0.1m, respectively). Correspondingly, a 1.00% increase in the average interest rate would have increased interest expense on our Japan Facility by less than $0.1m.

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. 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 17. Selected cash flow information

Changes in non-cash operating items


	First quarter ended
(in millions of Canadian dollars)	July 3, 2022	June 27, 2021
		Restated (Note 2)
	$	$
Trade receivables	(4.5)	1.4
Inventories	(85.9)	(63.2)
Other current assets	(4.8)	(0.8)
Accounts payable and accrued liabilities	(14.3)	(35.6)
Provisions	(3.2)	(6.9)
Other	(10.8)	0.5
Change in non-cash operating items	(123.5)	(104.6)


			Canada Goose Holdings Inc.			Page 30 of 30

Document

CANADA GOOSE HOLDINGS INC.

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

For the first quarter ended July 3, 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 August 10, 2022 and provides information concerning our results of operations and financial condition for the first quarter ended July 3, 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 first quarter ended July 3, 2022 (“Interim Financial Statements”) and our audited consolidated financial statements and the related notes for the fiscal year ended April 3, 2022 (“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 April 3, 2022 (“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, political, and economic disruption caused by the novel coronavirus pandemic (“COVID-19”) and recent and ongoing geopolitical events;

•limited disruption to our DTC channel, including store closures, whether caused by COVID-19 and recent and ongoing geopolitical events or other events;

•our ability to implement our growth strategies;

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


			Canada Goose Holdings Inc.			Page 1 of 43

•our ability to keep pace with changing consumer preferences;

•our ability to protect our intellectual property;

•continued immaterial global supply chain disruptions to our business and ability to fulfill demand and maintain sufficient inventory levels, which we continue to monitor; and

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

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 and geopolitical events, which may further affect general economic and operating conditions;

•additional potential closures or retail 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;

•an economic downturn and general economic conditions (for example, inflation and rising interest rates) may further affect discretionary consumer spending;

•we may not be able to satisfy changing consumer preferences;

•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 manage inventory and forecast our inventory need and to manage our production distribution networks. In anticipation of our expected growth and as an important hedge against inflation, we have built up our inventory to elevated levels. If our supply exceeds demand, we may be required to take certain actions to reduce inventory which could damage our brand;

•we may not be able to protect or preserve our brand image and proprietary rights;

•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.


			Canada Goose Holdings Inc.			Page 2 of 43

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.

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 and Other Specified Financial Measures” below.

The Interim Financial Statements and the accompanying notes have been prepared using the accounting policies described in note 2 to the Annual Financial Statements. The Company adopted a change in accounting policy on the treatment of implementation costs related to Software as a Service (“SaaS”) arrangements as described in note 2 to the Interim Financial Statements. See “Changes in Accounting Policies” for a description of the impact from adopting the agenda decision.

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

All references 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; to “fiscal 2022” are to the Company’s fiscal year ended April 3, 2022; and to “fiscal 2023” are to the Company’s fiscal year ending April 2, 2023.


			Canada Goose Holdings Inc.			Page 3 of 43

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 was the first 53-week fiscal year, ended on April 3, 2022, and the additional week was added to the third quarter ended January 2, 2022.


			Canada Goose Holdings Inc.			Page 4 of 43

SUMMARY OF FINANCIAL PERFORMANCE

The following table summarizes results of operations for the first quarter ended July 3, 2022 compared to the first quarter ended June 27, 2021, 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)	First quarter ended
		July 3, 2022			June 27, 2021²			% Change
Statement of Operations data:
Revenue		69.9			56.3			24.2	%
Gross profit		42.7			30.7			39.1	%
Gross margin		61.1		%	54.5		%	660	bps
Operating loss		(80.7)			(61.8)			(30.6)	%
Net loss		(63.6)			(57.5)			(10.6)	%
Net loss attributable to shareholders of the Company		(62.4)			(57.5)			(8.5)	%
Loss per share attributable to shareholders of the Company
Basic and diluted		$	(0.59)		$	(0.52)		(13.5)	%

Non-IFRS Financial Measures:1
Adjusted EBIT		(75.6)			(61.3)			(23.3)	%
Adjusted EBIT margin		(108.2)		%	(108.9)		%	70	bps
Adjusted net loss attributable to shareholders of the Company		(58.5)			(50.8)			(15.2)	%
Adjusted net loss per basic and diluted share attributable to shareholders of the Company		$	(0.56)		$	(0.46)		(21.7)	%

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

2The Company adopted a change in accounting policy on the treatment of implementation costs related to Software as a Service (“SaaS”) arrangements. See “Changes in Accounting Policies” for a description of the impact from adopting the agenda decision and the impact of retrospective application on this quarter.


			Canada Goose Holdings Inc.			Page 5 of 43

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 July 3, 2022, our DTC segment included sales to customers through our 56 national e-Commerce markets and 43 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 segments, such as sales to employees and 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 due to current global conditions.

•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. While restrictions have been lifted to varying degrees in markets around the world, we continue to be impacted to some extent. Store operations have largely resumed during the first quarter of fiscal 2023 across our global store network with the exception of Mainland China, which was negatively impacted by COVID-19 related restrictions that resulted in store closures, reduced hours, significantly lower retail traffic, and conservative consumer buying behaviour. In the first quarter of fiscal 2023, eight out of 16 retail stores in Mainland China experienced store closures. As at July 3, 2022 and August 11, 2022, all of our retail stores globally were in operation.

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. We continue to anticipate and monitor escalating costs based both on freight constraints and required speed to stage inventory or deliver to consumers.

Future developments relating to COVID-19 are highly uncertain and out of our control. Prolonged disruptions due to the pandemic, including the emergence of the new COVID-19 variants and mutations, 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 impacts on our supply chain.

•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.


			Canada Goose Holdings Inc.			Page 6 of 43

•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 remain concerned about the conflict in Ukraine and impact on human life for those affected. We continue to suspend all wholesale and e-Commerce sales to Russia, which represented less than 1% of total annual revenue in fiscal 2022. 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.

•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 82.4% and 86.8% of our annual wholesale revenue in the combined second and third fiscal quarters of fiscal 2022 and fiscal 2021, respectively. Additionally, we generated 85.0% and 89.3% of our annual DTC revenue in the combined third and fourth fiscal quarters of fiscal 2022 and fiscal 2021, 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 EBIT1 in the first and fourth quarters, respectively. As a result of our seasonality, changes that impact gross margin and adjusted EBIT1 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 and Other Specified 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), the Mainland China Facilities (as defined below), and the Japan Facility (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.

•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 2022, 2021, and 2020, we generated 72.5%, 67.9%, and 62.3%, respectively, of our revenue in currencies other than Canadian dollars. Accordingly, we are exposed to the effect of translating the results of our foreign operations into Canadian dollars. 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.


			Canada Goose Holdings Inc.			Page 7 of 43

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 cross-currency swap and forward contracts to hedge a portion of the exposure to foreign currency exchange and interest rate risk on the principal amount of the Term Loan Facility. See “Quantitative and Qualitative Disclosures about Market Risk - Foreign Exchange Risk” below.

The main foreign currency exchange rates that impact our business and operations as at and for the first quarter ended July 3, 2022 and for the fiscal year ended April 3, 2022 are summarized below:


	Foreign currency exchange rate to $1.00 CAD
	Fiscal 2023
	Average Rate					Closing Rate
Currency	Q1	Q2	Q3	Q4	YTD	July 3, 2022
USD/CAD	1.2765	—	—	—	1.2765	1.2886
EUR/CAD	1.3590	—	—	—	1.3590	1.3467
GBP/CAD	1.6031	—	—	—	1.6031	1.5668
CHF/CAD	1.3232	—	—	—	1.3232	1.3489
CNY/CAD	0.1932	—	—	—	0.1932	0.1924
HKD/CAD	0.1627	—	—	—	0.1627	0.1642
JPY/CAD	0.0098	—	—	—	0.0098	0.0095


	Foreign currency exchange rate to $1.00 CAD
	Fiscal 2022
	Average Rate					Closing Rate
Currency	Q1	Q2	Q3	Q4	2022	April 3, 2022
USD/CAD	1.2280	1.2601	1.2600	1.2663	1.2536	1.2512
EUR/CAD	1.4804	1.4852	1.4409	1.4218	1.4571	1.3816
GBP/CAD	1.7170	1.7367	1.6991	1.6995	1.7131	1.6399
CHF/CAD	1.3485	1.3723	1.3669	1.3707	1.3646	1.3514
CNY/CAD	0.1902	0.1948	0.1971	0.1995	0.1954	0.1966
HKD/CAD	0.1581	0.1620	0.1618	0.1622	0.1610	0.1597

Source: Bank of Canada


			Canada Goose Holdings Inc.			Page 8 of 43

Components of Our Results of Operations

Revenue

DTC revenue consists of sales through our e-Commerce operations and retail stores. DTC revenue is recognized upon delivery of the goods to the customer and when consideration is received, net of an estimated provision for sales returns.

Wholesale revenue comprises sales to third party resellers, which includes retailers and distributors of our products. 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 products have been shipped to the reseller, are picked up from our third party warehouse, or arrive at the reseller’s facilities.

Other revenue comprises sales not directly allocated to the DTC or Wholesale segments, including sales to employees and in fiscal 2021, sales of personal protective equipment (“PPE”) to federal, provincial, and local health authorities.

Gross Profit

Gross profit is our revenue less cost of sales. Cost of sales comprises the cost of manufacturing our products and goods purchased from other manufacturers, 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, 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, as well as depreciation and amortization. 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, the Japan Facility, 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.


			Canada Goose Holdings Inc.			Page 9 of 43

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 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 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. Operating margin measures our operating income as a percentage of revenue.

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, the Japan Facility, and lease liabilities, as well as standby fees, net of interest income.

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 43

JOINT VENTURE

The Company and a former distributor of the Company's products in Japan, Sazaby League, Ltd. (“Sazaby League”), entered into an agreement (the “Joint Venture Agreement”) to form a joint venture (the “Japan Joint Venture”) pursuant to which the Company acquired 50% of the issued and outstanding voting shares of the legal entity comprising the joint venture, Canada Goose Japan, K.K. (“CG Japan”), on April 4, 2022. CG Japan was established to market, distribute and sell Canada Goose products, and to operate retail stores and e-Commerce in Japan. The Japan Joint Venture includes a permanent Canada Goose retail store in Tokyo, a national e-Commerce site, as well as wholesale points of distribution across the country. Total purchase consideration for the transaction was $22.6m which comprised of cash consideration of $2.6m plus deferred contingent consideration with an estimated fair value of $20.0m.

CG Japan’s results of operations have been consolidated with those of the Company from the date of acquisition. Prior to the establishment of CG Japan, the Company sold its products to the former distributor. The majority of sales historically occurred in the first and second quarters and were recorded in the Wholesale operating segment. Going forward, it is expected that CG Japan’s revenue and results of operations will be aligned to our respective operating segments and are expected to occur more in line with the seasonality of the Company's Wholesale and DTC segments, which is expected to have an impact on the timing of the revenue we recognize in Japan.


			Canada Goose Holdings Inc.			Page 11 of 43

RESULTS OF OPERATIONS

For the first quarter ended July 3, 2022 compared to the first quarter ended June 27, 2021

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)	First quarter ended						$ Change	% Change
	July 3, 2022			June 27, 2021²
Statement of Operations data:
Revenue	69.9			56.3			13.6	24.2	%
Cost of sales	27.2			25.6			(1.6)	(6.3)	%
Gross profit	42.7			30.7			12.0	39.1	%
Gross margin	61.1		%	54.5		%		660	bps
SG&A expenses	123.4			92.5			(30.9)	(33.4)	%
SG&A expenses as % of revenue	176.5		%	164.3		%		(1,220)	bps
Operating loss	(80.7)			(61.8)			(18.9)	(30.6)	%
Operating margin	(115.5)		%	(109.8)		%		(570)	bps
Net interest, finance and other costs	7.4			16.5			9.1	55.2	%
Loss before income taxes	(88.1)			(78.3)			(9.8)	(12.5)	%
Income tax recovery	(24.5)			(20.8)			3.7	17.8	%
Effective tax rate	27.8		%	26.6		%		(120)	bps
Net loss	(63.6)			(57.5)			(6.1)	(10.6)	%


Non-controlling interest	(1.2)			—			1.2	100.0	%
Net loss attributable to shareholders of the Company	(62.4)			(57.5)			(4.9)	(8.5)	%
Weighted average number of shares outstanding
Basic and diluted	105,234,474			110,504,248
Loss per share attributable to shareholders of the Company

Basic and diluted	$	(0.59)		$	(0.52)		(0.07)	(13.5)	%





Non-IFRS Financial Measures:1
Adjusted EBIT	(75.6)			(61.3)			(14.3)	(23.3)	%
Adjusted EBIT margin	(108.2)		%	(108.9)		%		70	bps
Adjusted net loss attributable to shareholders of the Company	(58.5)			(50.8)			(7.7)	(15.2)	%
Adjusted net loss per basic and diluted share attributable to shareholders of the Company	$	(0.56)		$	(0.46)		(0.10)	(21.7)	%

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


			Canada Goose Holdings Inc.			Page 12 of 43

Revenue

Revenue for the first quarter ended July 3, 2022 was $69.9m, an increase of $13.6m or 24.2%, from $56.3m for the first quarter ended June 27, 2021. Revenue generated from our DTC channel represented 49.8% of total revenue for the first quarter ended July 3, 2022 compared to 51.7% for the first quarter ended June 27, 2021. On a constant currency1 basis, revenue increased by 24.0% for the first quarter ended July 3, 2022 compared to the first quarter ended June 27, 2021.


	First quarter ended		$ Change			% Change
CAD $ millions	July 3, 2022	June 27, 2021	As reported	Foreign exchange impact	In constant currency1	As reported		In constant currency1
DTC	34.8	29.1	5.7	(1.1)	4.6	19.6	%	15.8	%
Wholesale	33.2	26.1	7.1	1.0	8.1	27.2	%	31.0	%
Other	1.9	1.1	0.8	—	0.8	72.7	%	72.7	%
Total revenue	69.9	56.3	13.6	(0.1)	13.5	24.2	%	24.0	%

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

DTC

Revenue from our DTC segment was $34.8m for the first quarter ended July 3, 2022 compared to $29.1m for the first quarter ended June 27, 2021. The increase of $5.7m or 19.6% was attributable to continued retail expansion, an increase in existing store sales and the reopening of existing retail stores. In the first quarter ended July 3, 2022, we were negatively impacted by COVID-19 related restrictions in Mainland China, which resulted in store closures, reduced hours, significantly lower retail traffic and conservative consumer buying behavior, which did not occur in the comparative quarter. However, in the first quarter ended June 27, 2021, similar COVID-19 related closures impacted certain stores in Canada and EMEA (defined below), which were open in the current year. DTC comparable sales growth2 was 10.7%.

2DTC comparable growth is a supplementary financial measure. See “Non-IFRS Financial Measures and Other Specified Financial Measures” for a description of this measure.

Wholesale

Revenue from our Wholesale segment was $33.2m for the first quarter ended July 3, 2022 compared to $26.1m for the first quarter ended June 27, 2021. The increase of $7.1m or 27.2% was attributable to pricing and customer requests for earlier shipments. Prior to the Japan Joint Venture, all revenue related to the Japanese market was recorded in the Wholesale channel. Historically revenue was recorded in the first and second quarters, with $9.3m of revenue related to that market included in results for the first quarter ended June 27, 2021. As a result of the Japan Joint Venture, the Company expects the sales to occur more in line with the seasonality of the Company's Wholesale and DTC segments. See “Joint Venture” for a description of the Japan Joint Venture.


			Canada Goose Holdings Inc.			Page 13 of 43

Other

Revenue from our Other segment was $1.9m, principally from sales to employees, for the first quarter ended July 3, 2022 compared to $1.1m for the first quarter ended June 27, 2021. The increase of $0.8m or 72.7% was attributable to an increase in employee sales.

Revenue by geography


	First quarter ended	$ Change		% Change
CAD $ millions	July 3, 2022	June 27, 2021	As reported	Foreign exchange impact	In constant currency2	As reported		In constant currency2
Canada	17.9	9.9	8.0	—	8.0	80.8	%	80.8	%
United States	15.7	9.3	6.4	(0.8)	5.6	68.8	%	60.2	%
Asia Pacific	16.1	22.4	(6.3)	(1.6)	(7.9)	(28.1)	%	(35.3)	%
EMEA1	20.2	14.7	5.5	2.3	7.8	37.4	%	53.1	%
Total revenue	69.9	56.3	13.6	(0.1)	13.5	24.2	%	24.0	%

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

2Constant currency revenue is a non-IFRS financial measure. See “Non-IFRS Financial Measures and Other Specified Financial Measures” for a description of these measures.

Revenue increased across all regions except for Asia Pacific for the first quarter ended July 3, 2022 compared to the comparative quarter. Canada and the United States regained momentum within existing stores, while revenue growth in EMEA is attributable to retail expansion. Asia Pacific results were impacted by COVID-19 related restrictions in Mainland China and shift in timing of revenue recognition related to the Japan Joint Venture as described above. Partially offsetting Mainland China declines were improved sales in Macau. All stores have re-opened in Mainland China as of the end of June 2022 and remain open to date.

Gross Profit

Gross profit and gross margin for the first quarter ended July 3, 2022 were $42.7m and 61.1%, respectively, compared to $30.7m and 54.5%, respectively, for the first quarter ended June 27, 2021. The increase in gross profit of $12.0m was attributable to higher revenue as noted above and gross margin expansion. Gross margin in the current quarter was favourably impacted by pricing, and lower product costs as a result of increased efficiencies due to the end of COVID-19 restrictions in our manufacturing facilities, partially offset by unfavourable region mix resulting from a lower proportion of sales in the Asia Pacific region due to retail closures relating to COVID-19 restrictions.


			Canada Goose Holdings Inc.			Page 14 of 43


	First quarter ended
	July 3, 2022			June 27, 2021
CAD $ millions	Gross profit	Gross margin		Gross profit	Gross margin		$ Change	Change in bps
DTC	25.3	72.7	%	19.7	67.7	%	5.6	500	bps
Wholesale	16.8	50.6	%	10.4	39.8	%	6.4	1,080	bps
Other	0.6	31.6	%	0.6	54.5	%	—
Total gross profit	42.7	61.1	%	30.7	54.5	%	12.0	660	bps

DTC

Gross profit in our DTC segment was $25.3m for the first quarter ended July 3, 2022 compared to $19.7m for the first quarter ended June 27, 2021. The increase of $5.6m in gross profit was attributable to higher revenues as noted above and gross margin expansion. The gross margin was 72.7% for the first quarter ended July 3, 2022, an increase of 500 bps compared to 67.7% in the comparative quarter. During the first quarter ended July 3, 2022, gross margin was favourably impacted by lower product costs (+640 bps) as a result of increased efficiencies due to the end of COVID-19 restrictions in our manufacturing facilities and pricing (+140 bps), partially offset by the unfavourable impact of the fair value inventory acquisition adjustment on sales related to the Japan Joint Venture (-80 bps) and an unfavourable region mix (-150 bps) resulting from a lower proportion of sales from the Asia Pacific region due to retail closures relating to COVID-19 restrictions.

Wholesale

Gross profit in our Wholesale segment was $16.8m for the first quarter ended July 3, 2022 compared to $10.4m for the first quarter ended June 27, 2021. The increase of $6.4m in gross profit was attributable to higher revenues and gross margin expansion. The gross margin was 50.6% for the first quarter ended July 3, 2022, an increase of 1,080 bps compared to 39.8% in the comparative quarter. During the first quarter ended July 3, 2022, gross margin benefited from product mix (+510 bps) driven by higher parka sales arising from customer requests for earlier shipments compared to prior quarter, lower product costs (+430 bps) as a result of increased efficiencies due to the end of COVID-19 restrictions in our manufacturing facilities, and pricing (+240 bps) partially offset by higher volume freight and duty costs (-70 bps).

Other

Gross profit in our Other segment was $0.6m for the first quarter ended July 3, 2022 compared to $0.6m for the first quarter ended June 27, 2021. Although there was no change in gross profit from the comparative quarter, there was a decrease in gross margin due to employee sales with lower margins in the current quarter.


			Canada Goose Holdings Inc.			Page 15 of 43

SG&A Expenses

SG&A expenses were $123.4m for the first quarter ended July 3, 2022 compared to $92.5m for the first quarter ended June 27, 2021. The increase of $30.9m or 33.4% was attributable to the timing of $12.6m of investment in marketing (which occurred earlier in the year compared to fiscal 2022) to assist with brand awareness and support our growth, representing earlier timing of activity than in the comparative quarter, $5.1m of incremental personnel costs, $6.9m in higher costs related to opening new stores and running stores at full capacity, $3.8m investment in strategic initiatives including digital and $2.9m in costs to support the new Japan Joint Venture. The increase was partially offset by $5.1m of favourable foreign exchange fluctuations related to working capital denominated in currencies other than Canadian dollars and the Term Loan Facility, net of hedge impacts.


	First quarter ended
	July 3, 2022			June 27, 2021
CAD $ millions	Reported	% of segment revenue		Reported	% of segment revenue		$ Change	% Change
DTC	42.0	120.7	%	30.7	105.5	%	(11.3)	(36.8)	%
Wholesale	11.2	33.7	%	8.5	32.6	%	(2.7)	(31.8)	%
Other	70.2			53.3			(16.9)	(31.7)	%
Total SG&A expenses	123.4	176.5	%	92.5	164.3	%	(30.9)	(33.4)	%

Depreciation and amortization, included above, was $23.4m for the first quarter ended July 3, 2022 compared to $17.8m for the first quarter ended June 27, 2021, an increase of $5.6m which is attributable to continued retail expansion.

DTC