TORONTO, Sept. 13, 2024 /CNW/ - Roots ("Roots," "Roots Canada" or the "Company") (TSX:ROOT), a premium outdoor-lifestyle brand, announced today financial results for its second quarter ended August 3, 2024 ("Q2 2024"). All financial results are reported in Canadian dollars unless otherwise stated. Certain metrics, including those expressed on an adjusted or comparable basis, are non-IFRS measures or supplementary financial measures. See "Non-IFRS Measures and Industry Metrics".
"Our second-quarter results demonstrate stable comparable sales and an improvement compared to Q1 2024, alongside growth in product margins and net income, despite the challenging consumer environment," commented Meghan Roach, President & CEO, Roots Corporation.
"We were also pleased to see growth during the "back-to-school" period, underscoring the strength of our product portfolio and the effectiveness of our ongoing initiatives in branding, marketing, and enhancing the in-store experience; however, it is early in the quarter."
Second Quarter Highlights
Sales were $47.7 million compared to $49.4 million in Q2 2023
DTC sales were $36.4 million compared to $37.1 million in Q2 2023, with nearly flat comparable sales of (0.2%), improving from Q1 2024 comparable sales of (8.2%)
Gross margin was 56.4%, up 90bps compared to 55.5% Q2 2023
Net income (loss) totaled ($5.2) million, an improvement from ($5.3) million in Q2 2023
Net income (loss) per share of ($0.13), flat to Q2 2023
Adjusted EBITDA amounted to ($3.1) million versus ($3.0) million in Q2 2023
Net debt reduced 19.9% year-over-year to $40.8 million
Inventory was $44.0 million, a 21% reduction compared to $55.9 million in Q2 2023
SELECT FINANCIAL INFORMATION
(in '000s of CAD$, except where noted)
Second quarter ended
Year-to-date
August 3, 2024
July 29, 2023
Change
August 3, 2024
July 29, 2023
Change
Total sales
47,747
49,404
(3.4 %)
85,208
90,900
(6.3 %)
Direct-to-Consumer ("DTC") sales
36,417
37,103
(1.8 %)
67,822
72,509
(6.5 %)
Partners & Other ("P&O") sales
11,330
12,301
(7.9 %)
17,386
18,391
(5.5 %)
Gross profit
26,920
27,441
(1.9 %)
49,021
51,922
(5.6 %)
Gross margin
56.4 %
55.5 %
90 bps2
57.5 %
57.1 %
40 bps2
Selling, General and Administrative ("SG&A") expenses
31,845
32,338
(1.5 %)
63,827
65,344
(2.3 %)
Net income (loss)
(5,236)
(5,334)
1.8 %
(14,131)
(13,300)
(6.2 %)
Net income (loss) per share
($0.13)
$(0.13)
–
($0.35)
$(0.32)
(9.4 %)
Adjusted EBITDA
(3,131)
(2,983)
(5.0 %)
(11,090)
(8,831)
(25.6 %)
Free Cash Flow1
(8,954)
(7,173)
(24.8 %)
(23,567)
(22,044)
(6.9 %)
Net debt
–
–
–
40,774
50,921
(19.9 %)
1 Free cash flow is a supplementary financial measure that reflects cash flow generated from ongoing operations, calculated as our cash from operating activities less cash used in investing activities and the payment of principal on lease liabilities net of lease incentives. See "Non-IFRS Measures and Industry Metrics".
2 Basis points ("bps").
"We ended the second quarter in a healthy inventory position, addressing the core inventory shortfall while maintaining lower year-over-year inventory levels," said Leon Wu, Chief Financial Officer. "We are pleased with the improving sales trends, while also growing product margins and remaining disciplined on costs, resulting in the continued strengthening of our balance sheet."
SECOND QUARTER OVERVIEW
Total sales were $47.7 million in Q2 2024, representing a decrease of 3.4% from $49.4 million in the second quarter of fiscal 2023 ("Q2 2023").
DTC sales (corporate retail store and eCommerce sales) were $36.4 million, down 1.8% from $37.1 million in Q2 2023. DTC comparable sales were nearly flat, at (0.2%), driven by strengthening of sales in certain core fleece collections as the quarter progressed, as inventory was replenished, partially offset by declines in primarily ...
