Roots Corporation (TSX: ROOT) Q1 2025 Earnings Call | 06/13/2025

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Roots Corporation reported Q1 2025 results on June 13, 2025, marking its third consecutive quarter of year-over-year growth in sales, gross margin, and adjusted EBITDA. Total sales for the quarter rose 6.7% year-over-year to $40.0 million, driven by a 10.2% increase in Direct-to-Consumer (DTC) sales, which reached $34.6 million. Comparable DTC sales grew 14.1%, reflecting strong consumer engagement, improved product curation, and better in-stock positions across both retail and eCommerce channels. Gross profit increased 11.2% to $24.6 million, and gross margin expanded by 250 basis points to 61.5%, supported by higher product margins from improved costing and fewer discount sales. DTC gross margin climbed to 62.9%. The company’s adjusted EBITDA loss improved to ($7.1) million from ($8.0) million a year ago, and the adjusted net loss per share narrowed to $0.18 from $0.20. Net loss for the quarter was ($7.9) million, an improvement from ($8.9) million in Q1 2024. Inventory at quarter-end was $40.5 million, up 14.5% year-over-year, reflecting increased investment in core collections and higher in-transit inventory to support upcoming seasonal launches. Free cash flow was ($21.8) million, impacted by inventory purchases and timing of occupancy payments. Net debt improved to $29.6 million, with total liquidity of $65.9 million, including cash and available credit. Roots’ stock rose 4.23% following the earnings release, closing at $3.33, as investors responded positively to the company’s strategic execution and financial discipline. Management highlighted continued momentum into Q2 2025 and plans to maintain elevated marketing spend, including a major back-to-school campaign in July. The company remains focused on product margin opportunities, omni-channel growth, and leveraging AI-driven operational enhancements to sustain profitability improvements. Outlook: Roots expects continued sales and margin momentum in Q2 2025, supported by strong DTC performance and ongoing marketing investments. The company will focus on optimizing inventory, expanding core collections, and capitalizing on product margin opportunities. Management remains committed to balancing revenue growth with cost discipline to drive long-term profitability and operational efficiency. #Roots #ROOTS #EarningsCall #Q12025 #Retail #DTC #GrossMargin #OmniChannel #Canada #Investing #InsideTicker