Grew total sales 25%, expanded gross margins and improved profitability
Roots Q1 2021 financial results reflect ongoing impacts of COVID-19, most notably the temporary closure of the Company's North American store fleet for approximately 30% of the quarter, compared to closures for approximately 50% of the first quarter in fiscal 2020 ("Q1 2020").
Fiscal 2021 First Quarter Financial Highlights
- Total sales of
$37.3 million , up 24.7% from$29.9 million in Q1 2020. - Direct-to-Consumer ("DTC") sales of
$31.4 million , up 27.6% from$24.6 million in Q1 2020. - Gross margin of 57.5%, up 260 basis points from 54.9% in Q1 2020.
- DTC Gross Margin of 61.2%, up 320 basis points from 58.0% in Q1 2020.
- Selling, general and administrative expenses of
$25.9 million , down from$27.8 million in Q1 2020. - Adjusted EBITDA of
($2.5) million , improved from($7.5) million in Q1 2020. - Net loss per share of (
$0.12 ), improved from a net loss per share of ($0.18 ) in Q1 2020. - Adjusted Net Loss per Share of (
$0.10 ), improved from ($0.22 ) per Share in Q1 2020.
Fiscal 2021 First Quarter Business Highlights
- Increased eCommerce sales by approximately 50% year-over-year, partially offsetting store sales declines during periods of closure.
- Released a limited-edition, premium fleece collection, which was crafted at the Company's Canadian leather factory and sold out in 48 hours.
- Amplified the brand with the launch of multiple collaborations, including Révolutionnaire x Roots, Roots x
Emma Knight and ROOTS X AVENGERS S.T.A.T.I.O.N. - Generated excitement with new and existing customers with the release of the Roots Retro Collection, a re-launch of a beloved logo from the Company's archives, and expanded colour options for some of the Company's most iconic leather products.
- Furthered the Company's commitment to supporting the communities in which it operates, donating a portion of sales from the Company's made-in-
Canada masks and select collaboration collection items to theBlack Academy and Girls E-Mentorship.
"Our Q1 2021 results highlight excitement for the brand, our omni-channel capabilities, and our success in driving operational and cost efficiencies," said
"As we slowly emerge from the pandemic, we believe customers will seek to express their style without sacrificing the comfort, quality, versatility, and digital convenience to which they have become accustomed,"
Summary of Fiscal 2021 First Quarter Results
Sales
Total Q1 2021 sales were
Roots Q1 2021 Partners and Other sales (wholesale Roots-branded products, royalties on partner retail sales, licensing to select manufacturing partners and the sale of certain custom Roots-branded products) were
Gross Profit
Q1 2021 total gross profit was
Selling, General and Administrative Expenses ("SG&A")
Q1 2021 SG&A was
Q1 2021 SG&A also reflects
Adjusted EBITDA, Net Income (Loss) & Adjusted Net Income (Loss)
Reflecting factors discussed above, Adjusted EBITDA (which excludes the impact of IFRS 16 – Leases ("IFRS 16") and includes rent expense) was
Q1 2021 net loss was
COVID-19 Business Update
Roots entered Q1 2021 having temporarily closed corporate retail stores within certain regions of
In
Subsequent to quarter-end, Roots reopened its two stores in
During the second quarter of fiscal 2021 ("Q2 2021") Roots anticipates having a higher number of temporary corporate retail store closures in
Amendment to Company's Credit Agreement
Subsequent to Q1 2021, Roots amended its credit facility to extend the original maturity date of
Conference Call and Webcast Information
Roots will hold a conference call to discuss the Company's fiscal 2021 first quarter 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.
See Roots Consolidated Financial Statements and the Company's Management's Discussion and Analysis of Financial Condition and Results of Operations for the fiscal quarter ended
About Roots
Established in 1973, Roots is a premium outdoor-lifestyle brand. We unite the best of cabin and city through unmistakable style built with uncompromising comfort and quality. We offer a broad range of products designed for life's everyday adventures, including women's and men's apparel, leather goods, footwear, accessories, and kids, toddler and baby apparel. Starting from a little cabin in
Non-IFRS Measures and Industry Metrics
Roots has historically reported Comparable Sales Growth (Decline) as an additional metric to demonstrate the performance of its DTC business. Commencing in Q1 2020, the Company's DTC segment was significantly impacted by COVID-19. As a result of the negative impacts COVID-19 has had on the apparel retail operating environment, including periods of store closures, phased re-openings and retail store operating limitations, the Company does not believe that Comparable Sales Growth (Decline) is a representative metric of performance in affected periods. Management will continue to monitor and evaluate the effects of COVID-19 and will resume the evaluation of Comparable Sales Growth (Decline) when year-over-year results are no longer significantly impacted by COVID-19.
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 IFRS, do not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures are not intended to represent, and should not be considered as alternatives to net income or other performance measures derived in accordance with IFRS as measures of operating performance or operating cash flows or as a measure of liquidity. In addition to our results determined in accordance with IFRS, we use non-IFRS measures including DTC Gross Margin, EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted Net Income (Loss) per Share. 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. Definitions and reconciliations of non-IFRS measures to the relevant reported measures can be found in our MD&A under "Cautionary Note Regarding Non-IFRS Measures and Industry Metrics", which is available on SEDAR at www.sedar.com or the Company's Investor Relations website at https://investors.roots.com.
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 are 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.
Interim Condensed Consolidated Statement of Financial Position
(In thousands of Canadian dollars)
(Unaudited)
2021 | 2021 | |||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash | $ | 4,578 | $ | 9,166 | ||||||
Accounts receivable | 7,654 | 7,165 | ||||||||
Inventories | 42,493 | 42,401 | ||||||||
Prepaid expenses | 3,021 | 3,137 | ||||||||
Total current assets | 57,746 | 61,869 | ||||||||
Non-current assets: | ||||||||||
Loan receivable | 608 | 608 | ||||||||
Lease receivable | 1,103 | 1,187 | ||||||||
Fixed assets | 46,439 | 47,981 | ||||||||
Right-of-use assets | 77,983 | 79,995 | ||||||||
Intangible assets | 190,205 | 190,777 | ||||||||
7,906 | 7,906 | |||||||||
Total non-current assets | 324,244 | 328,454 | ||||||||
Total assets | $ | 381,990 | $ | 390,323 | ||||||
Liabilities and Shareholders' Equity | ||||||||||
Current liabilities: | ||||||||||
Bank indebtedness | $ | 495 | $ | – | ||||||
Accounts payable and accrued liabilities | 17,391 | 25,850 | ||||||||
Deferred revenue | 5,447 | 5,759 | ||||||||
Income taxes payable | 3,237 | 5,955 | ||||||||
Current portion of lease liabilities | 22,503 | 22,197 | ||||||||
Current portion of long-term debt | 4,984 | 4,984 | ||||||||
Derivative obligations | 813 | 418 | ||||||||
Total current liabilities | 54,870 | 65,163 | ||||||||
Non-current liabilities: | ||||||||||
Deferred tax liabilities | 16,170 | 15,891 | ||||||||
Long-term portion of lease liabilities | 76,386 | 78,989 | ||||||||
Long-term debt | 75,532 | 66,100 | ||||||||
Total non-current liabilities | 168,088 | 160,980 | ||||||||
Total liabilities | 222,958 | 226,143 | ||||||||
Shareholders' equity: | ||||||||||
Share capital | 197,333 | 197,333 | ||||||||
Contributed surplus | 3,755 | 3,682 | ||||||||
Accumulated other comprehensive income (loss) | (595) | (227) | ||||||||
Retained earnings (deficit) | (41,461) | (36,608) | ||||||||
Total shareholders' equity | 159,032 | 164,180 | ||||||||
Total liabilities and shareholders' equity | $ | 381,990 | $ | 390,323 |
On behalf of the Board of Directors:
"
"
Interim Condensed Consolidated Statement of Net Loss
(In thousands of Canadian dollars)
(Unaudited)
(13 weeks) | (13 weeks) | ||||
Sales | $ | 37,345 | $ | 29,949 | |
Cost of goods sold | 15,871 | 13,516 | |||
Gross profit | 21,474 | 16,433 | |||
Selling, general and administrative expenses | 25,879 | 27,806 | |||
Gain from deconsolidation of | – | 4,774 | |||
Loss before interest expense and | |||||
income taxes recovery | (4,405) | (6,599) | |||
Interest expense | 2,278 | 3,747 | |||
Loss before income taxes recovery | (6,683) | (10,346) | |||
Income taxes recovery | (1,745) | (2,561) | |||
Net loss |
$ | (4,938) | $ | (7,785) | |
Basic loss per share | $ | (0.12) | $ | (0.18) | |
Diluted loss per share | $ | (0.12) | $ | (0.18) | |
Interim Condensed Consolidated Statement of Comprehensive Income (Loss)
(In thousands of Canadian dollars)
(Unaudited)
For the 13 week periods ended
(13 weeks) | (13 weeks) | ||||||
Net loss | $ | (4,938) | $ | (7,785) | |||
Other comprehensive income (loss), net of taxes: | |||||||
Items that may be subsequently reclassified to profit or loss: | |||||||
Effective portion of changes in fair | |||||||
value of cash flow hedges | (912) | 3,499 | |||||
Cost of hedging excluded from | |||||||
cash flow hedges | (1) | (36) | |||||
Tax impact of cash flow hedges | 243 | (985) | |||||
Total other comprehensive income (loss) | (670) | 2,478 | |||||
Total comprehensive loss | $ | (5,608) | $ | (5,307) |
Interim Condensed Consolidated Statement of Changes in Shareholders' Equity
(In thousands of Canadian dollars)
(Unaudited)
For the 13 week periods ended
Accumulated | ||||||||||
Retained | other | |||||||||
Share | Contributed | earnings | comprehensive | |||||||
capital | surplus | (deficit) | income (loss) | Total | ||||||
Balance, | $ | 197,333 | $ | 3,682 | $ | (36,608) | $ | (227) | $ | 164,180 |
Adjustment on amendment of IFRS 16 | – | – | 85 | – | 85 | |||||
Balance, | 197,333 | 3,682 | (36,523) | (227) | 164,265 | |||||
Net loss | – | (4,938) | – | (4,938) | ||||||
Net loss from change in fair | ||||||||||
value of cash flow hedges, | ||||||||||
net of income taxes | – | – | – | (670) | (670) | |||||
Transfer of realized gain on cash | ||||||||||
flow hedges to inventories, net | ||||||||||
of income taxes | – | – | – | 302 | 302 | |||||
Share-based compensation | – | 73 | – | – | 73 | |||||
Balance, | $ | 197,333 | $ | 3,755 | $ | (41,461) | $ | (595) | $ | 159,032 |
Accumulated | ||||||||||
Retained | other | |||||||||
Share | Contributed | earnings | comprehensive | |||||||
capital | surplus | (deficit) | income (loss) | Total | ||||||
Balance, | $ | 196,903 | $ | 3,407 | $ | (49,688) | $ | (116) | $ | 150,506 |
Net loss | – | (7,785) | – | (7,785) | ||||||
Net gain from change in fair | ||||||||||
value of cash flow hedges, | ||||||||||
net of income taxes | – | – | – | 2,478 | 2,478 | |||||
Transfer of realized loss on cash | ||||||||||
flow hedges to inventories, net | ||||||||||
of income taxes | – | – | – | (186) | (186) | |||||
Share-based compensation | – | 152 | – | – | 152 | |||||
Balance, | $ | 196,903 | $ | 3,559 | $ | (57,473) | $ | 2,176 | $ | 145,165 |
Interim Condensed Consolidated Statement of Cash Flows
(In thousands of Canadian dollars)
(Unaudited)
For the 13 week periods ended
(13 weeks) | (13 weeks) | |||||
Cash generated from (used in): | ||||||
Operating activities: | ||||||
Net loss | $ | (4,938) | $ | (7,785) | ||
Items not involving cash: | ||||||
Depreciation and amortization | 7,518 | 8,859 | ||||
Share-based compensation expense | 73 | 152 | ||||
Gain from deconsolidation of RTS | – | (4,774) | ||||
Unrealized loss on de-designated forward contracts | – | (318) | ||||
Rent concessions related to practical expedient | (180) | – | ||||
Interest expense | 2,278 | 3,747 | ||||
Income taxes recovery | (1,745) | (2,561) | ||||
Settlement of de-designated forward contracts | (105) | – | ||||
Interest paid | (670) | (1,378) | ||||
Payment of interest on lease liabilities | (1,430) | (2,201) | ||||
Taxes refunded (paid) | (594) | 3,503 | ||||
Change in non-cash operating working capital: | ||||||
Accounts receivable | (489) | 837 | ||||
Inventories | (92) | (2,443) | ||||
Prepaid expenses | 116 | 3,093 | ||||
Accounts payable and accrued liabilities | (8,459) | 4,549 | ||||
Deferred revenue | (312) | (624) | ||||
(9,029) | 2,656 | |||||
Financing activities: | ||||||
Issuance of long-term debt | 10,500 | 14,000 | ||||
Long-term debt financing costs | – | (146) | ||||
Repayment of long-term debt | (1,246) | (1,246) | ||||
Payment of principal on lease liabilities, net of tenant allowance | (4,613) | (2,452) | ||||
4,641 | 10,156 | |||||
Investing activities: | ||||||
Additions to fixed assets | (695) | (1,013) | ||||
Deconsolidation of | – | (541) | ||||
(695) | (1,554) | |||||
Increase (decrease) in cash | (5,083) | 11,258 | ||||
Cash and bank indebtedness, beginning of period | 9,166 | (6,277) | ||||
Cash and bank indebtedness, end of period | $ | 4,083 | $ | 4,981 |
SOURCE
© Canada Newswire, source