Roots reports “strong” Q3 driven by positive consumer demand

Canadian premium outdoor-lifestyle brand Roots has reported sales were up 6.8 percent to 71.5 million Canadian dollars for its third quarter ended November 1, as direct-to-consumer momentum continues.

The Q3 growth was driven by direct-to-consumer sales, from its retail stores and e-commerce sales, which were up 4.8 percent to 56.8 million Canadian dollars, following enhancements made to the omnichannel customer experience, as well as “strong customer engagement” with its brand initiatives and produce assortment.

Meghan Roach, president and chief executive officer of Roots Corporation, said in a statement: “Roots delivered strong third-quarter results, with growth driven by consumers’ positive response to our products, enhanced marketing efforts, and improved in-store execution.

“Even in a dynamic retail environment, our heritage, quality, and focus on comfort continued to differentiate the brand and drive engagement across our omnichannel platform. We remain disciplined in execution and committed to strengthening the foundations of the brand to support long-term value creation.”

Partners and other revenue, comprising wholesale Roots-branded products, licensing to select manufacturing partners and the sale of certain custom products, increased 15.3 percent to 14.6 million Canadian dollars. This was boosted by earlier wholesale orders in Taiwan for the upcoming holiday and spring selling seasons, a portion of which was fulfilled in the fourth quarter last year, as well as higher domestic wholesale sales of custom Roots-branded products.

Gross profit reached 8.1 percent to 43.4 million Canadian dollars, compared to 40.2 million Canadian dollars in Q3 2024, with gross margin improving to 60.8 percent from 60 percent last year. DTC gross margin was 65.4 percent in Q3 2025, up 140 basis points from 64 percent in Q3 2024. The increase in DTC gross margin was driven by product margin expansion “from improved costing and lower discounting". The unfavourable foreign exchange impact on US dollar purchases “was offset by improved freight costs”.

Net income totalled 2.3 million Canadian dollars, or 0.06 Canadian dollars per share, compared with 2.4 million Canadian dollars a year ago.

Canadian brand Roots delivers solid Q3 performance ahead of the holiday season

Year to date, for the first nine months of fiscal 2025, Roots' total sales amounted to 162.2 million Canadian dollars, up 6.6 percent from last year, while DTC revenue increased 8.6 percent to 132.5 million Canadian dollars. While net loss year-to-date totalled 10 million Canadian dollars, an improvement from an 11.7 million Canadian dollars loss a year earlier.

For its financial position looking ahead, Roots said its inventory was 66.6 million Canadian dollars at the end of Q3, an increase of 10.3 percent on the previous year. Of the increase, 0.7 million Canadian dollars was driven by the higher foreign exchange paid on our purchases, while the remaining increase supports the peak holiday selling periods, and higher in-transit inventory to support sales for the upcoming year.

Leon Wu, chief financial officer at Roots, added: “Our disciplined approach to investing in strategic growth continues to deliver results. We have sustained positive sales momentum and maintained the underlying margins of those sales, supporting a stronger balance sheet with year-over-year reductions in net debt.”

Established in 1973, Roots started from a small cabin in northern Canada and has grown into a global lifestyle brand with more than 100 retail stores in Canada, two stores in the US, and an e-commerce platform, roots.com. It also has over 100 partner-operated stores in Asia, and operates a dedicated Roots-branded storefront on Tmall.com in China.