Roots (TSE:ROOT) Posts Quarterly Earnings Results

Roots (TSE:ROOT) posted its earnings results on Friday. The company reported C($0.19) earnings per share for the quarter, FiscalAI reports. The firm had revenue of C$42.57 million during the quarter. Roots had a net margin of 1.68% and a return on equity of 3.16%.

Here are the key takeaways from Roots’ conference call:

• Q1 sales grew 6.5% to CAD 42.6 million, with both direct-to-consumer and partner channels contributing. Comparable DTC sales rose 3.2% and partner/other revenue increased 26.6%.
• The company highlighted strong demand in newer and higher-growth categories, especially Cloud, activewear, midweight outerwear, and spring lifestyle. Management said activewear now exceeds 10% of DTC sales.
• Gross margin declined to 59.9% from 61.5%, but management said the pressure was temporary. It cited final-sale inventory actions ahead of the distribution center transition and unfavorable FX on U.S.-dollar purchases, with the FX headwind expected to reverse later in fiscal 2026.
• Adjusted EBITDA loss was CAD 7.4 million, roughly in line with last year, but net loss widened to CAD 10.1 million due to transition and strategic review costs. The company said these included CAD 2.4 million of incremental expenses in the quarter.
• Balance sheet leverage improved, with net debt down 20.7% year over year to CAD 23.4 million and net leverage at about 1.0x trailing EBITDA. Free cash outflow also improved versus last year, and liquidity was reported at CAD 53.7 million.

Roots Stock Up 2.7%

Shares of TSE:ROOT opened at C$4.64 on Friday. The stock has a market cap of C$181.87 million, a price-to-earnings ratio of 38.67, a PEG ratio of -0.54 and a beta of -0.21. The company has a quick ratio of 0.25, a current ratio of 1.30 and a debt-to-equity ratio of 67.56. Roots has a 12-month low of C$2.75 and a 12-month high of C$4.66. The business’s 50 day moving average is C$4.05 and its 200 day moving average is C$3.52.

Wall Street Analyst Weigh In

Separately, TD raised their price objective on Roots from C$4.25 to C$4.50 and gave the stock a “hold” rating in a research report on Monday. One research analyst has rated the stock with a Buy rating and one has assigned a Hold rating to the company’s stock. Based on data from MarketBeat, Roots has an average rating of “Moderate Buy” and an average price target of C$4.25.

About Roots

Roots Corp provides a portfolio of apparel, leather goods, accessories, and footwear for men, women, and children under the Roots brand. Its merchandise includes genuine leather, such as jackets, bags, and luggage; kids & baby clothing; and leather, linens, towels, and accessories. The company operates through two segments: Direct-To-Consumer, which accounts for majority revenue, and Partners & Other. The DTC segment sells products through the company’s corporate retail stores and e-commerce. The Partners & Other segment engage in the wholesale of Roots branded products to the company’s international operating partner, and it earns royalties on the retail sales of Roots-branded products.