Roots (ROOT) Q4 2026 earnings summary

Executive summary

• Q4 2025 sales reached $115.5 million (CAD 115.5 million), up 4.2% year-over-year, with DTC comparable sales growth of 7.3% and strong holiday performance from core and seasonal products.

• Full year revenue was $277.7 million (CAD 277.7 million), up 5.6%, with DTC comparable sales growth of 9.5% and record gross margin of 61.3%.

• Net income rebounded to $4.7 million from a $33.4 million loss last year; Q4 net income was $14.7 million, compared to a net loss of $21.7 million in Q4 2024.

• Adjusted EBITDA for the year was $23.3 million, up 9.5%; Q4 Adjusted EBITDA was $25.1 million.

• Net debt reduced 42% year-over-year to $4.3 million, reflecting disciplined execution and capital allocation.

Financial highlights

• Q4 DTC sales were $107.0 million, up 5.7% year-over-year; partner and other sales were down 11.5% due to lower Taiwan wholesale orders.

• Q4 gross profit was $71.4 million, up 5.1%; Q4 gross margin was 61.8%, up 50bps; DTC gross margin was 62.5%.

• Full year Adjusted Net Income increased 40.1% to $8.4 million; Q4 Adjusted Net Income was $16.3 million.

• Free cash flow for the year was $7.5 million; Q4 free cash flow was $40.8 million, up 3.5%.

• SG&A expenses in Q4 increased 9.1%, mainly due to higher marketing, U.S. duties, and personnel costs, partially offset by improved store efficiency.

Outlook and guidance

• Focus remains on strengthening core franchises, expanding complementary categories, and elevating the brand through collaborations and targeted marketing.

• Marketing spend will be reduced in 2026, with a focus on efficiency and higher ROI initiatives.

• Transition to a new distribution center in Ontario expected to complete by July 2026.

• Monitoring macro and trade environment closely, with continued investment in long-term brand growth.

• Strategic review process ongoing, with no specific guidance figures provided.