-
Sales were
$37.5 million compared to$41.5 million in Q1 2023-
DTC sales were
$31.4 million compared to$35.4 million in Q1 2023, driven by lower off-price sales year-over-year, due to the improved inventory position
-
DTC sales were
-
Gross margin was 59.0%, flat to Q1 2023
- DTC gross margin increased to 62.1% from 61.3%, driven by improved product costing and lower discounting
-
Net income (loss) totaled
($8.9) million compared to($8.0) million in Q1 2023 -
Adjusted EBITDA amounted to
($8.0) million versus($5.8) million in Q1 2023 -
Free cash flow was
($14.6) million , improving from($14.9) million in Q1 2023 -
Net debt reduced 22.7% year-over-year to
$31.7 million -
Inventory was
$35.4 million , a 30% reduction compared to$50.4 million in Q1 2023
"We made significant progress on our strategic initiatives this quarter, marked by robust direct-to-consumer margin growth, reduced debt, and enhanced liquidity and free cash flow on a year-over-year basis. We also recently launched our brand ambassador program and debuted our AI-driven replenishment system, which will positively enhance our operations, customer experience, and engagement," stated
"Our disciplined approach to inventory management resulted in fewer markdown sales, which created short-term downward pressure on revenue in the first quarter. However, we continued to see positive momentum in many product lines, including solid growth in our adult activewear collection."
SELECT FINANCIAL INFORMATION (in '000s of CAD$, except where noted) |
First quarter ended |
||
|
|
Change |
|
Total sales |
37,461 |
41,496 |
(9.7 %) |
Direct-to-Consumer ("DTC") sales |
31,405 |
35,406 |
(11.3 %) |
Partners & Other ("P&O") sales |
6,056 |
6,090 |
(0.6 %) |
Gross profit |
22,101 |
24,481 |
(9.7 %) |
Gross margin1 |
59.0 % |
59.0 % |
- |
Selling, General and Administrative ("SG&A") expenses |
31,982 |
33,006 |
(3.1 %) |
Net income (loss) |
(8,895) |
(7,966) |
(11.7 %) |
Net income (loss) per share |
( |
( |
(15.8 %) |
Adjusted EBITDA2 |
(7,959) |
(5,848) |
(36.1 %) |
Free Cash Flow3 |
(14,613) |
(14,871) |
+1.7 % |
|
|
1 |
Gross margin is a supplementary financial measure that measures our gross profit as a percentage of sales. |
2 |
Adjusted EBITDA is a non-IFRS Measure. See "Non-IFRS Measures and Industry Metrics" below. |
3 |
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. |
"We maintained a disciplined approach in managing our operating costs, working capital, and cash flow in the current operating environment," said
FIRST QUARTER OVERVIEW
Total sales were
P&O sales (wholesale Roots branded products, licensing to select manufacturing partners and the sale of certain custom products) amounted to
Gross profit reached
SG&A expenses totaled
Net income (loss) totaled
Adjusted EBITDA amounted to ($8.0) million in Q1 2024 as compared to
FINANCIAL POSITION
Inventory was
Free cash flow was
CONFERENCE CALL AND WEBCAST INFORMATION
Roots will hold a conference call to review its first quarter 2024 results on
A live audio webcast of the conference call will be available on the Events and Presentations section of the Company's investor website at https://investors.roots.com or by following the link here. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. An archived replay of the webcast will be available on the Company's website for one year.
NON-IFRS MEASURES AND INDUSTRY METRICS
This press release makes reference to certain non-IFRS measures including certain metrics specific to the industry in which we operate. These measures are not recognized measures under International Financial Reporting Standards as issued by the
We believe these non-IFRS measures and industry metrics provide useful information to both management and investors in measuring our financial performance and condition and highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. For further information regarding these non-IFRS measures, please refer to "Cautionary Note-Regarding Non-IFRS Measures and Industry Metrics" in our management's discussion and analysis for Q1 2024, which is incorporated by reference herein and is available on SEDAR+ at www.sedarplus.ca or the Company's Investor Relations website at https://investors.roots.com.
The table below provides a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods presented:
CAD $000s |
Q1 2024 |
Q1 2023 |
Net income (loss)................................................. |
(8,895) |
(7,966) |
Add the impact of: |
|
|
Interest expense (a)................................................ |
2,127 |
2,269 |
Income taxes expense (recovery) (a)................................. |
(3,113) |
(2,828) |
Depreciation and amortization (a).................................... |
7,241 |
7,537 |
EBITDA.......................................................... |
(2,640) |
(988) |
Adjust for the impact of: |
|
|
SG&A: Rent expense excluded from net income (loss) as a result of IFRS 16 (a) |
(5,589) |
(5,699) |
SG&A: Purchase accounting adjustments (b)......................... |
(6) |
(8) |
SG&A: Stock option expense (c)................................... |
91 |
100 |
SG&A: Changes in key personnel (d)............................... |
189 |
745 |
SG&A: Non-recurring legal fees (e) ................................ |
(4) |
2 |
Adjusted EBITDA(f)................................................ |
(7,959) |
(5,848) |
________________ |
|
Notes: |
|
(a) |
The impact of IFRS 16 in Q1 2024 and Q1 2023 was: (i) a decrease to selling, general, and admin ("SG&A") expenses of |
(b) |
As a result of the Acquisition, the Company recognized an intangible asset for lease arrangements in the amount of |
(c) |
Represents non-cash share-based compensation expense in respect of our Legacy Equity Incentive Plan, Legacy Employee Option Plan, and Omnibus Equity Incentive Plan. |
(d) |
Represents expenses incurred in respect of the Company's efforts to recruit for vacancies in key management positions and severance costs associated with employee separations relating to such positions. |
(e) |
Represents non-recurring legal costs that are outside the scope of normal operations. |
(f) |
Adjusted EBITDA excludes the impact of IFRS 16. If the impact of IFRS 16 was included for Q1 2024 and Q1 2023, Adjusted EBITDA would have been |
ABOUT ROOTS
Established in 1973, Roots is a global lifestyle brand. Starting from a small cabin in northern
FORWARD-LOOKING INFORMATION
Certain information in this press release contains forward-looking information. This information is based on management's reasonable assumptions and beliefs in light of the information currently available to us and is made as of the date of this press release. Actual results and the timing of events may differ materially from those anticipated in the forward-looking information as a result of various factors. Information regarding our expectations of future results, performance, achievements, prospects or opportunities or the markets in which we operate is forward-looking information. Statements containing forward-looking information are not facts but instead represent management's expectations, estimates and projections regarding future events or circumstances. Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements.
See "Forward-Looking Information" and "Risk Factors" in the Company's current Annual Information Form for a discussion of the uncertainties, risks and assumptions associated with these statements. Readers are urged to consider the uncertainties, risks and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. We have no intention and undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities law.
SOURCE