PARTY HANGOVER
Roots reports a net loss as it comes off high point during Canada’s 150th birthday,
Roots Corp. shares fell nearly 16 per cent after the heritage-clothing brand’s second-quarter results Wednesday fell short of analysts’ expectations.
The Toronto-based company reported a $4.08-million net loss for the quarter ended Aug. 4 — up from a net loss of $8.34 million in the second quarter of the previous year.
Roots said its adjusted net loss was $0.06 per share, while analysts surveyed by Thomson Reuters Eikon were expecting a loss of $0.02 per share.
The company’s shares fell 15.65 per cent, or $1.46, to $7.87 at market close Wednesday, down roughly one-third from its IPO price of $12 on Oct. 25.
The company was coming off a particularly strong second quarter in 2017, said CEO Jim Gabel during a conference call with analysts.
“We benefited from one-time traffic and sales related to Canada’s 150th birthday throughout 2017,” he said, “given our strong Canadian heritage and unmatched Canada collection.”
The company’s total sales rose 3.6 per cent to $60.2 million in the second quarter compared to the same period last year, while its comparable sales growth increased 1.1 per cent.
Roots has seen success in its dresses, graphic T-shirts and fleece products, Gable said, but needs to continue adding seasonally relevant products during the warmer months of the year. The company faced some store traffic headwinds, but consumers are increasingly embracing the retailer’s e-commerce offerings, he said.