Roots (ROOT) Q1 2027 earnings summary

Executive summary

• Q1 2026 sales reached CAD 42.6 million, up 6.5% year-over-year, with growth in both direct-to-consumer and partner segments, marking the seventh consecutive quarter of comparable sales growth.

• Direct-to-consumer sales rose 3.3%, with comparable sales up 3.2% and a two-year stack of 16.6%.

• Partners and other revenue grew 26.6%, driven by wholesale, B2B, custom products, and licensing channels.

• Net loss widened to CAD 10.1 million from CAD 7.9 million year-over-year, mainly due to non-recurring costs from distribution centre transition and strategic review.

• Strategic initiatives included a distribution centre transition and ongoing strategic review, incurring CAD 2.4 million in related costs.

Financial highlights

• Gross profit was CAD 25.5 million, gross margin 59.9% (down from 61.5% last year), impacted by inventory clearance, higher final sale mix, and FX headwinds.

• Adjusted EBITDA loss was CAD 7.4 million, slightly higher than last year.

• Adjusted net loss was CAD 7.6 million (CAD 0.19 per share), versus CAD 7.4 million (CAD 0.18 per share) last year.

• SG&A expenses rose 12% to CAD 37.3 million, including CAD 2.4 million in non-recurring costs for DC transition and strategic review.

• Free cash outflow improved to CAD 19.1 million from CAD 21.8 million last year.

Outlook and guidance

• Distribution centre transition to Metro Supply Chain expected to complete by end of Q2 2026, with ongoing efforts to minimize cash impacts by shifting more products to final sale.

• Board-led strategic review, including potential sale, remains ongoing.

• Continued investment in high-growth product franchises and digital marketing channels.

• Monitoring macroeconomic and trade environment, especially the impact of ongoing geopolitical events.