Roots (ROOT) Q3 2025 earnings summary

Executive summary

• Q3 2024 sales reached CAD 66.9 million, up 5.3% year-over-year, with DTC sales at CAD 54.2 million and partner/other sales at CAD 12.7 million, driven by strong brand appeal and effective marketing.

• Comparable DTC sales rose 5.8%, supported by e-commerce, stores, and growth in active and core fleece collections.

• Adjusted EBITDA increased 29% to CAD 7.1 million, with net income improving to CAD 2.4 million (CAD 0.06 per share) from CAD 0.5 million (CAD 0.01 per share) last year.

• Net debt declined by 11.3% year-over-year to CAD 46.9 million, reflecting improved financial discipline and a stronger balance sheet.

• Operational highlights included successful marketing campaigns, new partnerships, and omni-channel enhancements.

Financial highlights

• DTC sales reached CAD 54.2 million, up 3.8% year-over-year; partner and other sales grew 12% to CAD 12.7 million.

• Gross profit was CAD 40.2 million, up 8.2% from last year; gross margin expanded by 160bps to 60.0%.

• DTC gross margin improved to 64.0%, aided by better product costing and lower discounting, partially offset by FX headwinds.

• SG&A expenses were CAD 34.5 million (51.6% of sales), up 2.1% due to higher personnel and selling costs.

• Inventory at quarter-end was CAD 60.4 million, down 1.6% year-over-year, reflecting improved inventory health.

Outlook and guidance

• Early Q4 trends remain positive, with strong holiday season momentum and relevant inventory composition.

• Expect further product margin improvements in 2025, partially offset by foreign exchange headwinds.

• Ongoing focus on flagship store enhancements, digital innovation, and new design leadership to drive future growth.

• Q4 2023 included an extra week, which contributed CAD 2.2 million in sales last year.