Roots sees ‘positive momentum’ in early days of shorter holiday shopping season

TORONTO — Roots Corp.’s chief financial officer says holiday shopping is in full swing but it’s too early to tell whether the company’s busiest sales period will be impacted by the shorter span between Black Friday and Christmas Eve.

“We’re still early in the quarter,” Leon Wu said, when asked by an analyst Wednesday whether the five fewer days in the typical holiday shopping were weighing on the apparel retailer.

“So far we’re seeing the positive momentum … but it’s something that we will continue to monitor as we go into the holiday period.”

As the clock ticks down to Christmas, all eyes are on retailers like Roots because their insights offer a window into consumer sentiment and spending.

This year, shoppers are closely watching their spending, even though inflation, interest and mortgage rates have eased.

The company is also navigating a forthcoming GST break set to last two months which will offer tax relief on children’s clothes, some toys and even Christmas trees, as well as a Canada Post strike, which has halted mail service and the delivery of some orders destined to be gifts.

Roots isn’t very impacted by the postal strike. Chief executive Meghan Roach told The Canadian Press last month that the company switched a few years ago to using FedEx for the majority of its shipments.

On the same call as Wu on Wednesday, she added that despite all the quirks of the holiday season, she is “seeing the consumer out there and shopping with us during the holiday season.”

Those shopping with the Toronto-headquartered brand will discover the retailer has been making some changes to its footprint.

Some stores have been closed and consolidated to bring efficiency.

In downtown Vancouver, work is also well underway on a new, 4,000 square-foot flagship store on Robson Street due to open next year, beside its current store.

The hope is that such stores will help drive Roots’ performance even beyond what it experienced in its third quarter, when it reported a profit of $2.4 million, up from $519,000 a year earlier.

The company said the result amounted to six cents per diluted share for the quarter ended Nov. 2, compared with a penny per diluted share a year earlier.

The quarter spanned the back-to-school season, when shopping and spending can spike as kids head back to class with new outfits, and also the lead up to the debut of a new collection inspired by the “Wicked” movie that Roots released in early November.

Sales for the third quarter totalled $66.9 million, up from $63.5 million a year ago.

The increase came as direct-to-consumer sales rose to $54.2 million compared with $52.2 million in the same quarter last year, while comparable sales grew 5.8 per cent.

Roots attributed the growth to the strong performance of its active and core fleece collections.

This report by The Canadian Press was first published Dec. 11, 2024.

Companies in this story: (TSX:ROOT)

Tara Deschamps, The Canadian Press