Cara Salpini
3 min read
This story was originally published on Retail Dive. To receive daily news and insights, subscribe to our free daily Retail Dive newsletter.
-
Five years after Canadian brand Roots shuttered its U.S. operations in bankruptcy, pivoting to an e-commerce-first approach in the country, the brand recorded its third consecutive quarter of year-over-year sales growth. Sales grew 6.7% in Q1, reaching 40 million Canadian dollars ($29.5 million as of press time).
-
As part of a multiyear strategy, Roots is closing underperforming stores and focusing resources on “high potential locations” that have strong brand resonance, customer engagement and long-term profitability, CEO Meghan Roach said on a call with analysts.
-
Roots is also updating its existing fleet with a new store design that includes refreshed merchandising layouts, digital screens and flexible fixtures that allow for regular changes to highlight seasonal stories. The retailer still operates two stores in the U.S. and said at the time of its exit in 2020 that it believed in the market opportunity in the country.
Roots is beefing up its marketing and investing in physical stores as it seeks to increase conversion across channels.
DTC sales in the quarter grew 10%, with comps up 14%, but the retailer still netted a loss of CA$7.9 million in the quarter. Executives said losses were expected given Roots only does 30% of its business in the first half of the year and usually comes out positive in the second half of the year. Net debt was down 6.7% in the quarter, to CA$29.6 million, and the brand had a net leverage ratio of 1.3 times. Roots also updated its credit terms to extend maturity to 2027.
The retailer hired a new head of omnichannel growth in the quarter and discussed plans to update its stores and operations. Roots is investing in product development and sourcing and merchandising improvements, with the aim of reducing time to market. In-stock levels also improved in the quarter.
When it comes to store design changes, those are based on customer feedback and in-store analytics, according to Roach, and are aimed at improving the store experience.
“The goal is to create a more immersive, intuitive and inspiring retail environment, one that aligns with our brand direction and deepens emotional connection with customers,” Roach said on a Friday call, according to a Seeking Alpha transcript. “Our stores are not only a point of sale but extensions of our brand ethos, and we remain committed to ensuring they deliver both inspiration and convenience.”
