- Sales were
$41.5 million , compared to$43.1 million in Q1 2022 - Gross margin was 59.0% compared to 60.9% in the same period in 2022
- Net loss totaled
($8.0) million compared to($5.3) million in Q1 2022 - Adjusted EBITDA amounted to
($5.8) million compared to($3.2) million in Q1 2022 - Inventory level increased 28.6% year-over-year to
$50.4 million , an improvement over Q4 2022 - Repurchased 461,812 shares for
$1.4 million under the normal course issuer bid
"Our Q1 2023 results aligned with our internal projections and reflect a challenging economic environment," indicated
"We observed notable strength across most of our apparel categories in the first quarter, particularly in dresses, skirts, and activewear. While softness in demand for traditional fleece bottoms resulted in an overall year-over-year sales decline, our success in broadening our product range underscores the capacity of the brand to diversify and attract new customers. In Q1, we achieved our highest average unit revenue in the Company's history, while maintaining gross margins above pre-pandemic levels."
SELECTED FINANCIAL INFORMATION (in thousands of CAD$, except per share amounts) | First quarter ended | ||
Change | |||
Total sales | 41,496 | 43,072 | (3.7 %) |
Direct-to-Consumer ("DTC") sales | 35,406 | 37,377 | (5.3 %) |
Partners & Other ("P&O") sales | 6,090 | 5,695 | 6.9 % |
Gross profit | 24,481 | 26,218 | (6.6 %) |
Gross margin1 | 59.0 % | 60.9 % | -190 bps |
Selling, General and Administrative ("SG&A") | 33,006 | 31,306 | 5.4 % |
Subsidies and abatements2 | - | 134 | (100 %) |
Net loss | (7,966) | (5,261) | (51.4 %) |
Net loss per share | ( | ( | (46.2 %) |
Adjusted EBITDA3 | (5,848) | (3,204) | (82.5 %) |
1 Gross margin is a supplementary financial measure that measures our gross profit as a percentage of sales. |
2 Subsidies and abatements are reported as a reduction to the related expense, either as a decrease to cost of goods sold or to SG&A expenses. |
3 Adjusted EBITDA is a non-IFRS Measure. See "Non-IFRS Measures and Industry Metrics" below. |
"Despite the short-term sales and profitability headwinds, we remain confident in the long-term operating fundamentals of the business," said
"We have also made good progress towards right-sizing our inventory, aiming to achieve the right balance by the end of the second half of the year. By maintaining a robust balance sheet and ample liquidity, we remain well-equipped to navigate the unpredictable macro-economic conditions. Looking beyond the immediate challenges, we will continue to make prudent investments that generate sustainable growth and deliver long-term value to our shareholders."
FIRST QUARTER OVERVIEW
Total sales decreased 3.7% to
P&O sales (wholesale Roots branded products, licensing to select manufacturing partners and the sale of certain custom products) amounted to
Gross profit reached
SG&A expenses totaled
Net loss totaled
Adjusted EBITDA amounted to
FINANCIAL POSITION
Inventory was
As at
NORMAL COURSE ISSUER BID
Under its Normal Course Issuer Bid ("NCIB") program, Roots repurchased 461,812 shares for a total consideration of
CONFERENCE CALL AND WEBCAST INFORMATION
Roots will hold a conference call to review its first quarter 2023 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.
NON-IFRS MEASURES AND INDUSTRY METRICS
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 International Financial Reporting Standards as issued by the
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. For further information regarding these non-IFRS measures, please refer to "Cautionary Note-Regarding Non-IFRS Measures and Industry Metrics" in our management's discussion and analysis for Q1 2023, which is incorporated by reference herein and is available on SEDAR at www.SEDAR.com or the Company's Investor Relations website at https://investors.roots.com.
The table below provides a reconciliation of net loss to EBITDA and Adjusted EBITDA for the periods presented:
CAD $000s | Q1 2023 | Q1 2022 | |
Net loss | (7,966) | (5,261) | |
Adjust for the impact of: | |||
Interest expense (a) | 2,269 | 1,985 | |
Income taxes expense (a) | (2,828) | (1,812) | |
Depreciation and amortization (a) | 7,537 | 7,185 | |
EBITDA | (988) | 2,097 | |
Adjust for the impact of: | |||
SG&A: Rent expense excluded from net income due to IFRS 16 (a) | (5,699) | (5,515) | |
SG&A: Purchase accounting adjustments (b) | (8) | 19 | |
SG&A: Stock option expense (c) | 100 | 200 | |
SG&A: Changes in key personnel (d) | 745 | (5) | |
SG&A: Non-recurring legal fees (e) | 2 | - | |
Adjusted EBITDA (f) | (5,848) | (3,204) |
_____________________ | |
Notes: | |
(a) | The impact of IFRS 16 in Q1 2023 and Q1 2022 was: (i) a decrease to SG&A expenses of |
(b) | As a result of the Acquisition, the Company recognized an intangible asset for lease arrangements in the amount of |
(c) | Represents non-cash share-based compensation expense in respect of our Legacy Equity Incentive Plan, Legacy Employee Option Plan, and Omnibus Equity Incentive Plan. |
(d) | Represents expenses incurred in respect of the Company's efforts to recruit for vacancies in key management positions and severance costs associated with employee separations relating to such positions. |
(e) | Represents non-recurring legal costs that are outside the scope of normal operations. |
(f) | Adjusted EBITDA excludes the impact of IFRS 16 in Q1 2023 and Q1 2022. If the impact of IFRS 16 was included for Q1 2023 and Q1 2022, Adjusted EBITDA would have been |
ABOUT ROOTS
Established in 1973, Roots is a global lifestyle brand. Starting from a small cabin in northern
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 is 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.
SOURCE
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