First-quarter Roots sales hit by DTC

Canada’s Roots said Tuesday that sales fell 9.7 per cent to $37.5 million in the first quarter, helped by lower direct-to-consumer (DTC) sales in the three months.

– said the lifestyle brand DTC sales, which consisted of retail and e-commerce sales, were $31.4 millionrepresenting a decline of 11.3% year-on-year, driven by lower sales reductions due to improved inventory levels year-on-year.

Sales growth in full-price seasonal collections was offset by lost sales opportunities in some core fleece collections due to stock shortages as a result of stronger-than-expected demand in the prior quarter. The company also lost money $0.6 million is due to the temporary renovation closure of two larger corporate retail stores and tightening consumer discretionary spending in the current macroeconomic environment, according to a press release.

P&O sales (wholesale Roots branded products, licensing of selected manufacturing partners and sales of some custom products) amounted to $6.1 million in the three months ending May 4.

Fall in lower royalties resulting from the licensing of the Roots brand to selected manufacturing partners were largely offset by increased wholesale sales to the company’s international operating partner in Taiwan.

Net losses widened to $8.9 million in the quarter, compared with a loss of $8 million in the prior-year period.

“We made significant progress in executing our strategic initiatives this quarter, with solid direct sales margin growth, reduced debt, and improved liquidity and free cash flow year over year. We also recently launched our brand ambassador program and debuted our AI-powered replenishment system, which will positively improve our operations, customer experience and engagement,” he stated Meghan Roachpresident and CEO of Roots Corporation.

“Our disciplined approach to inventory management resulted in lower discounted sales, which created short-term downward pressure on revenues in the first quarter. However, we continued to see positive momentum across many product lines, including solid growth in our adult sportswear collection.”