Daily Newsletter

14 September 2023

Daily Newsletter

14 September 2023

Roots reports total sales increased 3.4% in Q2 2023

The retailer posted a gross profit of C$51.9m and a net loss was C$13.3m in the first six months.

Jangoulun Singsit September 13 2023

Lifestyle brand Roots has reported total net sales of C$49.4m ($36.40m) in the second quarter (Q2) of fiscal year (FY) 2023, up 3.4% from C$47.8m ($35.22m) in the same period in FY22.

Direct-to-customers (DTC) sales, which include corporate retail store and e-commerce sales, declined by 3.5% to C$37.1m over the period. Meanwhile, DTC's gross margin was 62.7% in Q2 FY23 against 64.0% in Q2 2022.

The retailer’s gross profit for the quarter ending 29 July 2023 was C$27.4m, a 3.2% year-over-year decline compared with C$28.3m in the prior year's quarter.

Its gross margin for the period decreased to 55.5% in Q2 2023 from 59.3% in Q2 2022.

Driven by higher store labour costs and other factors, Roots' selling, general and administrative (SG&A) expenses also increased by 5.6% to C$32.3m in Q2 2023 against C$30.6m a year ago.

The retailer’s net loss was C$5.3m in Q2 FY23, compared to C$3.2m in Q2 FY22.

Its net loss per share was C$0.13 in the quarter against C$0.08 a year ago.

In the year to date, Roots generated total sales of C$90.9m and DTC sales fell 4.4% to C$72.5m.

Gross profit for the six-month period was C$51.9m and its net loss was C$13.3m.

Roots chief financial officer Leon Wu said: "We have made substantial progress towards improving our inventory position, which increased 2.0% year-over-year compared to 29% at the end of Q1 2023.

"Despite the competitive promotional environment, we have remained disciplined on our discounting while executing our inventory management strategies to minimise the impact on gross margin. By leveraging our pack-and-hold collections and tightening orders, we remain on track to right-size inventory by the end of the year."

Traditional AI is here to stay in the retail and apparel space

Initially, retailers used AI for basic tasks, including inventory management and demand forecasting. However, its usage has now become more prevalent in other aspects such as personalized marketing, customer service, pricing optimization, and supply chain management. With the rise of ecommerce and the increasing importance of data-driven decision-making, AI adoption in retail and apparel has accelerated. The industry now relies on AI to enhance the shopping experience, optimize business operations, and gain an overall competitive edge.

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