Roots was founded 50 years ago by Michael Budman and Don Green, two city kids from Detroit, who met at summer camp in Algonquin Park, Ontario, where they first fell in love with the ideals and beauty of Canada.
Starting from a little cabin, they created Roots, inspired by the experience of traveling from their city homes into the heart of Canada’s wilderness.
Today, as the retailer celebrates its 50th anniversary, it has more than 120 stores across North America, more than 110 internationally and it offers online shopping to more than 70 countries.
“At the heart of Roots’ 50-year legacy lies an unwavering commitment to quality, authenticity, and innovation. As we mark this milestone, we remain inspired by our rich heritage and continue to drive forward with a dynamic vision of creative leadership and a dedication to crafting meaningful connections with our global community. The founders and I are immensely grateful to the team at Roots (past and present) who continue to support this incredible journey,” said Meghan Roach, President & CEO of Roots Corporation.
“When you think about the Roots brand, what’s unique about it is the fact that it’s not really just about products. What’s so unique with the Roots brand over the last 50 years is that it’s really integrated itself into life. It’s been a lifestyle. People bought into the lifestyle. And as the world changed over the last 50 years the brand kind of changed with it. It continued to adapt. It continued to pivot. It continued to grow.
“When you talk to the founders and their wives, the business itself kind of changed as their lives have changed. So they had kids and they made kids’ clothing. They were really able to integrate themselves into the culture over the last 50 years and I think that’s what’s made it really iconic and also what’s made it successful for so long.”
In a statement, Budman and Green said: “We would like to thank the Canadian public and our supporters worldwide for bringing Roots into their hearts and allowing us to celebrate the first 50 years of Roots. We want to give our thanks and gratitude to our wives, Diane and Denyse, who have been essential to every step of the journey and to Karl Kowalewski and his family for being there from the beginning. The Roots Brand is 50 years young. We are thrilled to have created a solid foundation and are excited to see the growth continue so Canada and the rest of the world can experience the authentic Roots lifestyle.”
Roach said the founders, who are retired, remain as minority investors in the company. She said she has been able to use them as a sounding board for the business.
The retailer is celebrating its milestone with several limited edition collection launches and collaborations as well as a new content series called, Roots Stories.
“Tapping into the deep emotional connections the Brand and its Founders have built over the last 50 years, Roots will be pulling from its rich archives for its limited-edition anniversary collections, resurrecting past favourites all the way from the 70s, 80s, and 90s, and releasing future-forward designs that honour its rich heritage as well as the Canadian environment that serves as a consistent thread of inspiration,” said the company.
“Throughout the year and until July 2024, a carefully curated assortment of must-have commemorative products with limited runs alongside capsule collections will excite long-time Roots loyalists and garner fanfare from a new consumer base. The first product drop will be the Roots Sporting Goods Collection and the Golden Beaver collection, an update on Roots core classics with a 50th anniversary spin.
“As a way of honouring the role Roots has played in generations of Roots customers’ lives over the last 50 years, Roots will be releasing Roots Stories on its website. This anthology, produced by Emily Spivack, author of the New York Times bestselling turned Netflix series Worn Stories, will chronicle the intersection of generations of Roots customers, and the part Roots pieces have played in their lives as told by Roots customers – from everyday folks to notable personalities. Closely following Roots Stories, a Roots 50th anniversary commemorative print magazine, an echo of Budman and Green’s 1980’s magazine, Paris Passion, that honoured arts, culture, design, fashion, and more, will launch. The first limited edition issue, 50 Years of Roots, will be released in-store in September.”
Roach said the next 50 years are not about reinvention but about reimagining aspects of the brand and the heritage while continuing to modernize it for the future.
“We’re focused on finding new customers through a couple of different ways and engaging our customers . . . Over the next 50 years, you’re going to increasingly see us be much more global. We have a good presence in Canada today, a good presence in Taiwan, a presence in China. Continue to expand on a global stage is something that’s going to be really important to us and especially in Asia where we have a lot of good traction,” said Roach.
“The second thing from a product perspective, we’ll continue to expand the product line.”
Roach said the brand will be reimagining some of its classics into a more modern and engaging way as well as reintroducing customers to the brand.
In its most recent financial report, covering the first quarter which ended April 29, the company said sales were $41.5 million, compared to $43.1 million in Q1 2022. Gross margin was 59.0 per cent compared to 60.9 per cent in the same period in 2022. Net loss totaled ($8.0) million compared to ($5.3) million in Q1 2022. Adjusted EBITDA amounted to ($5.8) million compared to ($3.2) million in Q1 2022. Inventory level increased 28.6 per cent year-over-year to $50.4 million, an improvement over Q4 2022.
“Our Q1 2023 results aligned with our internal projections and reflect a challenging economic environment,” said Roach. “Considering our historical patterns, it is worth noting that the first quarter traditionally represents less than 15 per cent of our annual sales. Consequently, our results also include several of the strategic investments made in our business during the first half of the year that support our revenue-intensive second half.
“We observed notable strength across most of our apparel categories in the first quarter, particularly in dresses, skirts, and activewear. While softness in demand for traditional fleece bottoms resulted in an overall year-over-year sales decline, our success in broadening our product range underscores the capacity of the brand to diversify and attract new customers. In Q1, we achieved our highest average unit revenue in the Company’s history, while maintaining gross margins above pre-pandemic levels.”
Leon Wu, Chief Financial Officer at Roots, said that despite the short-term sales and profitability headwinds, the company remains confident in the long-term operating fundamentals of the business.
“The decline in gross margins were in-line with our expectations, as we transition to sustainable materials, a strategic initiative that began in late 2022, and offered higher discounts on select seasonal inventory amidst the current competitive landscape. We continue to remain disciplined around promotions with discount rates remaining significantly below pre-pandemic levels. We anticipate the gross margin declines to gradually moderate towards the latter half of the year,” he said.
“We have also made good progress towards right-sizing our inventory, aiming to achieve the right balance by the end of the second half of the year. By maintaining a robust balance sheet and ample liquidity, we remain well-equipped to navigate the unpredictable macro-economic conditions. Looking beyond the immediate challenges, we will continue to make prudent investments that generate sustainable growth and deliver long-term value to our shareholders.”
