Shares of Roots Corporation (ROOT) gained more than 7% in early trading on Friday after the company posted a strong rise in sales. The Canadian retailer sells leather goods, sportswear, and accessories.
Roots results have been impacted by temporary closures of its North American stores for about 30% of the quarter.
Total sales came in at C$37.3 million in Q1 2021, up 24.7% from C$29.9 million in Q1 2020. Direct-to-Consumer (DTC) sales were C$31.4 million, an increase of 27.6% from C$24.6 million in the prior-year quarter. The rise in sales was driven by an increase in e-commerce sales, which grew by approximately 50% in the quarter.
Meanwhile, net loss amounted to C$4.9 million (-C$0.12 per share), an improvement from a net loss of C$7.8 million (-$0.18 per share) in Q1 2020. On an adjusted basis, net loss was C$0.10 per share, less than the loss of C$0.22 per share reported a year ago.
Roots President and CEO Meghan Roach said, “Our Q1 2021 results highlight excitement for the brand, our omni-channel capabilities, and our success in driving operational and cost efficiencies. Despite the volatility of our current operating environment, we have significantly strengthened the fundamentals of the company over the past five quarters. As we continue to navigate through the pandemic, including government-mandated store closures that have persisted into our second quarter, we will continue to control what we can and thoughtfully respond to that which we cannot.”
During the quarter, Roots launched many collaborations such as Révolutionnaire x Roots, Roots x Emma Knight, and ROOTS X AVENGERS S.T.A.T.I.O.N. (See Roots Corporation stock analysis on TipRanks)
Last month, RBC Capital analyst Sabahat Khan reiterated a Hold rating on ROOT with a C$2.00 price target. This implies 47% downside potential.
Consensus among Wall Street analysts is that ROOT is a Hold based on 1 Buy and 4 Holds. The ROOT average analyst price target of C$3.55 implies 5.6% downside potential to current levels. Shares have gained nearly 70% year-to-date.
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