Roots Reports Strong Third Quarter Fiscal 2025 Results

Executive Summary

• Roots reported Q3 2025 revenue of C$71.5 M, up 6.8% YoY, driven by higher direct‑to‑consumer sales and strong comparable sales growth.
• Adjusted EBITDA improved to C$7.5 M (↑5.3% YoY) and net debt fell 5.9% to C$44.1 M, indicating a healthier balance sheet.
• The company repurchased 415,200 shares for C$1.3 M under its normal‑course issuer bid program.

Key Details

• Revenue: C$71.5 M (Q3 2025) vs. C$66.9 M (Q3 2024), +6.8%.
• Direct‑to‑Consumer (DTC) Sales: C$56.8 M, +4.8% YoY; DTC comparable sales growth 6.3%; DTC gross margin 65.4% (↑140 bps).
• Partners & Other (P&O) Sales: C$14.6 M, +15.3% YoY.
• Gross Margin: Overall 60.8% (↑80 bps); Gross profit C$43.4 M (+8.1%).
• SG&A Expenses: C$38.2 M, up 10.6% YoY, reflecting higher variable costs and strategic marketing investments.
• Net Income: C$2.3 M (≈C$0.06 per share), down 4.5% YoY; adjusted for share‑based compensation impacts net income would have been C$2.4 M (+1.5%).
• Adjusted EBITDA: C$7.5 M, +5.3% YoY; excluding share‑based compensation impacts C$7.6 M (+7.3%).
• Free Cash Flow: (C$4.6 M) vs. (C$6.0 M) prior year, a 23.9% improvement.
• Net Debt: C$44.1 M, down 5.9% YoY; leverage ratio 1.9× based on trailing‑12‑month Adjusted EBITDA.
• Inventory: C$66.6 M at quarter end, up 10.3% YoY.
• Normal Course Issuer Bid (NCIB): Repurchased 415,200 shares for C$1.3 M in Q3 2025; total repurchases to date 1.022 M shares for C$3.2 M.
• Conference Call: Scheduled for December 10 2025 at 8:00 a.m. ET (details provided).

Notable Quotes

“Roots delivered strong third‑quarter results, with growth driven by consumers’ positive response to our products, enhanced marketing efforts, and improved in‑store execution,” – Meghan Roach, President & CEO.

“Our disciplined approach to investing in strategic growth continues to deliver results… supporting a stronger balance sheet with year‑over‑year reductions in net debt,” – Leon Wu, CFO.