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Canada Goose CEO: 'China has been fantastic for us’

Canada Goose CEO Dani Reiss joins Yahoo Finance's Brian Sozzi at the Goldman Sachs retail conference to discuss earnings, the company's sales in China, inventory, discounting, and more.

Video Transcript

AKIKO FUJITA: Well, Canada Goose exceeded Wall Street forecast for quarterly results last month, with more affluent consumers seemingly undeterred by sky high inflation. This despite Asia revenue taking a hit on ongoing COVID-related lockdowns. Our very own Brian Sozzi on the ground at Goldman Sachs annual global retail conference, he sat down with Canada Goose's CEO Dani Reiss. Take a listen.

DANI REISS: We are very much a different company now. You know, I mean, even if you go back eight years ago, we were a wholesale company. And today-- last year, we closed just under 70% DTC and this year we're forecasting around low 70% direct to consumer business. So we're actually-- we've become a retailer.

So not only from a product assortment perspective are we different, but we're also different from actual complexion of the business. And we're a retailer.

BRIAN SOZZI: You've also pushed-- you've pushed deeply into China too. Take us through that expansion plan. What has been the reception?

DANI REISS: China's been fantastic for us. We entered China a few years ago directly. We opened offices in Hong Kong and Shanghai with people on the ground there that are operating our business. We recently added a gentleman, Larry Li, as our president of mainland China and the operations there.

Belinda Wong has joined a board, corporate board. And she's the CEO of Starbucks for China. So we're really investing heavily in China and putting a lot of emphasis on it. The business has grown very well and continues to.

We have approximately 20 stores there now, and we continue to invest in them. You know, despite the conditions and the environment there at the moment, we know that the Chinese consumers are very interested in our product and that we have a high product affinity from our consumers in China. And we're prepared to invest now for the future. And we've always believed in that long-term approach.

BRIAN SOZZI: 20 stores in China-- that's a lot of stores. How has that consumer been doing more recently with the lockdowns-- just everything that customer is dealing with?

DANI REISS: I mean, it's been a challenging environment. And you know, it's been a challenging environment in China for the last few years. And 20 stores in China really isn't that many compared to so many other brands. It's actually a relatively small number.

So the opportunity for us in the future is so much greater, even, than where we are today. Right now, because it's so difficult for people who live in China to leave China because of quarantine regulations, having [INAUDIBLE] in China is important because to the extent they're able to move around their own country and shop at all, they're going to buy domestically.

And that's why the strategy of opening stores domestically in China has worked for us. It worked for us last year. And we're going to see what's yet to come this year in China. And we're keeping a close eye on it.

But the most important thing is that our brand is strong. And when the economy opens up and the environment opens up, I'm very confident we'll do very well.

BRIAN SOZZI: Last time we heard-- you reported your earnings, what, in August-- you said, consumer demand is not slowing. Has that continued? And what do you attribute that to?

DANI REISS: I think that we continue to invest in our brand, we continue to invest in brand awareness and brand heat. We are a very relevant brand today in today's world. And I think that that's going to continue. And I see that continuing.

Our consumers are still very excited to purchase Canada Goose products. And that-- the only thing that gets in the way of that is the macro environment. And that's beyond our control. And we continue to operate within it. And so far so good.

BRIAN SOZZI: I'm sure you're hearing a lot of retailers there, they're awash in inventory. And now they've started to cancel orders a bit for the holidays. What signals are you seeing?

DANI REISS: As far as our inventory is concerned, we're in fantastic shape. We're very happy with where we are. Our products never go on sale. We are not a discounter.

BRIAN SOZZI: Trust me, I shop it-- I've never seen them on sale before.

DANI REISS: Certainly glad to hear you echo that sentiment. And you know, yeah, we're very happy with our inventory. Lots of our products are classic core styles that are Evergreen styles that are always in fashion and always highly sought after by our consumer group.

But this year was a milestone year for us this past year. We crossed $1 billion in revenue. And in a way, it's a watershed moment, obviously. But also, there are companies that are so much bigger than us too. And you know, so there's so much more opportunity for us to continue to grow, continue to reach new people, and find new brand of fans. And I have no doubt that we're going to do that.

BRIAN SOZZI: Solid holiday shopping season or strong, you think?

DANI REISS: I think that's going to vary geographically. I think it's going to be a strong holiday season, actually. I think that's going to vary geographically. So that's the variable that we cannot control.

BRIAN SOZZI: Last one before I let you go-- you have now started a push into footwear. I've started to see some of these items-- boots-- that I think could really topple the snow out there pretty easily. How big a business will that be?

DANI REISS: I think footwear is going to be a very significant and material piece of our business down the road. We take a very measured approach to how we introduce new products to the market. We launched two new styles to start last year and we've added a few more since then that are now in-store and are performing very well.

And we've got a strong five-year plan to build out our footwear assortment in a very, obviously, first and foremost, best in class way, functional way, products that work well, products that look great, and the function for the use cases of our consumers. And I think that-- I mean, you know, I think it could be a very and will be a very material piece of our business in the years to come.

AKIKO FUJITA: And that was Brian Sozzi speaking with Canada Goose's CEO from the Goldman Sachs Retail Conference. He's got much more coverage throughout the day right here on Yahoo Finance.