This section is The content in this section is supplied by Business Wire for the purposes of distributing press releases on behalf of its clients. Postmedia has not reviewed the content. by Business Wire Article content
Sign In or Create an Account
or View more offersArticle content
TORONTO — Roots (“Roots,” or the “Company”) (TSX: ROOT), a premium outdoor-lifestyle brand, announced today financial results for its second quarter ended August 1, 2026 (“Q2 2026”). All financial results are reported in Canadian dollars unless otherwise stated. Certain metrics, including those expressed on an adjusted basis, are non-IFRS measures. See “Non-IFRS Measures and Industry Metrics” below.
Article contentWe apologize, but this video has failed to load.Try refreshing your browser, or
tap here to see other videos from our team.Article content Strategic Review UpdateArticle content
As previously announced on August 20, 2026, the Company entered into an arrangement agreement whereby Marquee Brands, through its operating partner JM&A Design and Development Inc., would acquire all of the Company’s issued and outstanding common shares at a price of $4.10 per share in cash, implying an equity value of approximately $161 million. The transaction is expected to close in the fourth quarter of fiscal 2026, subject to shareholder, court and regulatory approvals. In Q2 2026, the Company incurred $1.0 million in incremental consulting and legal costs related to this process. Year-to-date, the costs incurred related to this process have been $1.5 million.
Article content
Story continues below
This advertisement has not loaded yet, but your article continues below.
Article content Distribution Centre Transition UpdateArticle contentArticle content
The Company completed its transition to the Metro Supply Chain distribution centre (“DC”) in July 2026. In Q2 2026, the Company incurred $2.0 million incremental costs related to this transition, $1.2 million of which was driven by the accelerated non-cash depreciation of existing fixed assets, and $0.8 million from non-recurring transition costs, including operating costs of two distribution centres during the move. Year-to-date, the Company has incurred $3.8 million incremental costs related to this transition, $2.9 million of which was driven by the accelerated non-cash depreciation.
Article content
Starting June 2026, with the new distribution partnership, gross margins began to include DC occupancy costs that were previously recorded within SG&A when distribution operations were managed in-house.
Article content Second Quarter Highlights:Article content
“Subsequent to the quarter, Roots agreed to be acquired in a transaction that strongly endorses the Roots brand. Over the past several years, we have restored Roots to a position of strength, with a distinctive Canadian identity that resonates with customers here and around the world,” said Meghan Roach, President and CEO of Roots.
Article content
“Despite the short-term impact of the Whistler relocation, we were pleased to end the quarter with over 26% growth in Adjusted EBITDA,” continued Ms. Roach.
Article content
- Sales were $49.5 million, a 2.4% reduction as compared to $50.8 million in Q2 2025
- DTC sales were $40.5 million, a 1.3% reduction as compared to $41.0 million in Q2 2025
- DTC comparable sales decline was 1.0%
- Gross margin was 58.3%, as compared to 60.7% in Q2 2025
- DTC gross margin was 60.6%, as compared to 63.2% in Q2 2025
- Excluding all DC costs, DTC gross margin was 67.2%, as compared to 66.4% in Q2 2025
- DTC gross margin was 60.6%, as compared to 63.2% in Q2 2025
- Adjusted EBITDA amounted to ($1.6) million, as compared to ($2.1) million in Q2 2025
- Net loss totaled ($6.0) million, as compared to ($4.4) million in Q2 2025
- Adjusted Net Income (Loss), which excludes the costs arising from the DC transition and strategic review, along with other non-recurring or unusual costs outside the normal course of operations, was ($3.2) million, as compared to ($3.8) million last year.
- Net debt reduced 11.8% year-over-year to $33.6 million
Article content
SELECT FINANCIAL INFORMATION
(in ‘000s of CAD$, except where noted)
Second quarter ended
Year-to-date
August 1, 2026
August 2, 2025
Change
August 1, 2026
August 2, 2025
Change
Total sales
49,544
50,769
(2.4%)
92,111
90,749
1.5%
Direct-to-Consumer (“DTC”) sales
40,533
41,049
(1.3%)
76,298
75,657
0.8%
Partners & Other (“P&O”) sales
9,011
9,720
(7.3%)
15,813
15,092
4.8%
Gross profit
28,862
30,828
(6.4%)
54,369
55,400
(1.9%)
Gross margin
58.3%
60.7%
(240 bps)1
59.0%
61.0%
(200 bps)1
Selling, General and Administrative (“SG&A”) expenses
35,211
34,732
1.4%
72,507
68,021
6.6%
Net loss
(6,038)
(4,394)
(37.4%)
(16,099)
(12,305)
(30.8%)
Net loss per share
($0.15)
($0.11)
(36.4%)
($0.41)
($0.31)
(32.3%)
Adjusted Net Income (Loss) 2
(3,207)
(3,751)
14.5%
(10,783)
(11,106)
2.9%
Adjusted Net Income (Loss) per Share 2
($0.08)
($0.09)
11.1%
($0.28)
($0.28)
–
Adjusted EBITDA2
(1,573)
(2,130)
26.2%
(9,009)
(9,236)
2.5%
Free Cash Flow3
(10,081)
(6,901)
(46.1%)
(29,178)
(28,707)
(1.6%)
Net Debt4
–
–
–
33,627
38,131
(11.8%)
1 Basis points (“bps”).
2 Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Share, and Adjusted EBITDA are non-IFRS measures that adjusts for the impact of certain items that are non-recurring or unusual in nature to improve the comparability of underlying financial performance between periods. See “Non-IFRS Measures and Industry Metrics”.
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. See “Non-IFRS Measures and Industry Metrics”.
4 Net debt is a non-IFRS measure that reflects our liquidity, refer to the “Reconciliation of long-term debt to net debt and leverage ratio” table for the calculation. See “Non-IFRS Measures and Industry Metrics”.
Article content
Story continues below
This advertisement has not loaded yet, but your article continues below.
Article content
“We are pleased to have largely completed the distribution centre transition and relocation of our flagship Whistler store,” said Leon Wu, Chief Financial Officer. “Thanks to the hard work of our cross functional teams, we are well positioned to scale operations and better serve our customers during the larger second half of the year.”
Article contentSECOND QUARTER OVERVIEWArticle content
Total sales were $49.5 million in Q2 2026, representing a decrease of 2.4% from $50.8 million in the second quarter of fiscal 2025 (“Q2 2025”).
Article content
DTC sales (corporate retail store and eCommerce sales) were $40.5 million, a 1.3% decrease from $41.0 million in Q2 2025. The year-over-year variance in DTC sales was primarily impacted by the temporary closure of a flagship store location in Whistler, British Columbia, as part of a scheduled relocation. Excluding this temporary closure, total DTC sales in Q2 2026 would have grown relative to Q2 2025. Additionally, sales were impacted by the temporary delays in the introduction of new seasonal products during the DC transition in the second half of Q2.
Article content
P&O sales (wholesale Roots branded products, licensing to select manufacturing partners, and the sale of certain custom products) amounted to $9.0 million in Q2 2026, decreasing 7.3% as compared to $9.7 million in Q2 2025. P&O sales were primarily driven by lower wholesale sales volumes to our international operating partner in Taiwan, and timing shifts in licensing royalties from select manufacturing partners into the next quarter. This was partially offset by continued positive momentum across our North American wholesale and custom products channels.
Article content
Gross profit was $28.9 million in Q2 2026, as compared to $30.8 million in Q2 2025, representing a year-over-year decrease of 6.4%. Gross margin was 58.3% in Q2 2026 as compared to 60.7% in Q2 2025.
Article content
DTC gross margin was 60.6% in Q2 2026, as compared to 63.2% in Q2 2025. DTC gross margin was impacted by both non-recurring DC transition costs and the reporting of DC occupancy costs that were recorded within SG&A expenses in the prior year. Excluding all DC costs, DTC gross margin would have been 67.2%, as compared to 66.4% in Q2 2025.
Article content
SG&A expenses totaled $35.2 million in Q2 2026, as compared to $34.7 million in Q2 2025, representing a year-over-year increase of 1.4%. The year-over-year change in SG&A expenses was primarily driven by $1.4 million of incremental costs related to the DC transition, the majority of which was comprised of accelerated depreciation on existing assets, and $1.0 million of incremental costs related to the strategic review. Excluding these project costs, SG&A expenses decreased 5.4%, driven by the management of corporate costs, lower variable selling costs, and impacts from cash settled instruments under our share-based compensation plan.