Roots, the Canadian premium lifestyle and clothing brand, reported a drop in sales and profits for the third quarter as its financial performance was challenged by “prevailing economic headwinds.”
Sales for the three months ended October 28, 2023, fell 9% year over year from C$69.8 million to C$63.5 million.
Direct-to-consumer sales were down 8.2% year over year at C$52.2 million, driven by lower off-price sales partially offset by strength in full-price sales, which increased 3% over the year-ago quarter.
Its profits fell from C$2.2 million or C$0.05 per share in 3Q 2022 to C$0.5 million or C$0.01 per share.
“Our full-priced sales have shown resilience, underscoring the appeal of our latest products and the success of our intensified marketing strategies in the third quarter,” Roots CEO Meghan Roach commented.
“However, the prevailing economic headwinds have altered consumer spending patterns and in the third quarter, we maintained a promotional discipline which influenced our off-price sales dynamics.”
During the company’s earnings call, the CEO told investors that the retailer has a “cautious outlook” as price-sensitive shoppers delay holiday purchases.
"Discounts obviously are driving consumer purchasing behaviour, (but) there is a longer time now between Black Friday and the holiday period, so I do think we're expecting people to push out their sales a little bit more," Roach said.
“With the consumer being more cautious out there, I do anticipate also that people are going to continue to look for value and for deals.”
Shares of Roots are down 5.5% in the year to date, last trading hands at C$2.60.
Contact the author at emily.jarvie@proactiveinestors.com
Follow her on X, formerly known as Twitter, @emilyjjarvie