Roots Canada has reported a first-quarter loss of $10.1 million, despite a year-over-year increase in sales. The Toronto-based apparel retailer announced the results on Friday, revealing a net loss of $0.25 per diluted share for the quarter ended April 30, compared to a loss of $8.5 million or $0.21 per share in the same period last year.
Sales Growth Amid Losses
Revenue for the quarter rose 3.2% to $89.6 million, up from $86.8 million a year earlier. The growth was driven by strong performance in the company's direct-to-consumer channel, including e-commerce and retail stores. However, higher operating expenses and supply chain costs weighed on profitability.
Roots CEO James Gabel said the company is focused on improving operational efficiency and investing in its digital platform to drive long-term growth. “We are making progress on our strategic initiatives, but we recognize there is more work to be done to return to profitability,” Gabel said in a statement.
Market Reaction
Shares of Roots Corp. (TSX:ROOT) fell 2.5% to $2.35 on the Toronto Stock Exchange following the earnings release. Analysts noted that while the sales increase is positive, the company's ability to manage costs will be critical in the coming quarters.
The retailer has been navigating a challenging retail environment, with consumers tightening spending amid inflationary pressures. Roots has also faced increased competition from fast-fashion brands and online retailers.
Outlook
Roots reaffirmed its full-year guidance, expecting revenue growth in the low single digits. The company plans to open new stores in Canada and the United States while expanding its product categories, including accessories and home goods.
The earnings report comes as Roots continues to adapt to changing consumer preferences, with a focus on sustainability and digital engagement. The company recently launched a new loyalty program and enhanced its mobile app to boost customer retention.
