Roots posts 6.5% sales growth in Q1

Canada’s Roots said on Friday first-quarter sales rose 6.5% to $42.6 million for the period ended May 2, driven by growth across both its direct-to-consumer and wholesale businesses.

Direct-to-consumer sales, which include stores and e-commerce, increased 3.3% to $35.8 million, while comparable sales climbed 3.2%. Roots said the performance was supported by positive traffic trends and a curated product assortment. The company’s partners and other segment, which includes wholesale, licensing and custom products, posted the strongest growth, with sales surging 26.6% to $6.8 million.

Despite the revenue gains, Roots reported a net loss of $10.1 million, or 26 cents per share, compared with a loss of $7.9 million, or 20 cents per share, a year earlier. Adjusted net loss, which excludes costs associated with the company’s distribution centre transition and strategic review, was $7.6 million compared with $7.4 million in the prior-year period.

“We are pleased with the continued sales momentum and deleveraging in the first quarter, and we continue to progress on our strategic review and the distribution centre transition initiatives,” said Leon Wu, chief financial officer. 

“We are in the final stages of preparation for our distribution centre move and remain on track to be fully operational at the third-party distribution centre by the end of the second quarter.”

Roots incurred approximately $1.8 million in costs related to its transition to a third-party logistics partnership with Metro Supply Chain during the quarter, primarily due to accelerated depreciation of existing assets. The move is expected to be completed by the end of the second quarter.

The retailer also spent $600,000 on consulting and legal fees tied to a strategic review launched in March. The review includes evaluating potential alternatives, including a possible sale of the company.