Roots (ROOT) Q2 2027 earnings summary

Executive summary

• Entered into an agreement to be acquired by Marquee Brands for $4.10 per share, valuing equity at $161 million; transaction expected to close in Q4 2026.

• Completed transition to a new third-party distribution centre, incurring significant one-time costs.

• Q2 2026 sales declined 2.4% year-over-year to $49.5 million, with DTC sales down 1.3% and P&O sales down 7.3%.

• Adjusted EBITDA improved 26.2% year-over-year to $(1.6) million; net loss widened to $(6.0) million.

Financial highlights

• Gross margin decreased to 58.3% from 60.7% in Q2 2025; DTC gross margin fell to 60.6% from 63.2%.

• Excluding DC costs, DTC gross margin rose to 67.2% from 66.4%.

• Adjusted Net Loss was $(3.2) million, an improvement from $(3.8) million last year.

• Free cash flow was $(10.1) million, down from $(6.9) million in Q2 2025.

• Net debt reduced 11.8% year-over-year to $33.6 million.

Outlook and guidance

• Management expects improved operational efficiency and scalability following the DC transition.

• Positioned to better serve customers in the larger second half of the year.