Slide 1: Investor Presentation
Investor Presentation JUNE 2018
Slide 2: Disclaimer
Disclaimer All figures discussed in this presentation are stated in $CAD millions, unless otherwise noted. Non-IFRS Measures and Industry Metrics This presentation makes reference to certain non-IFRS measures including certain metrics specific to the industry in which we operate. These measures are
Slide 3: Roots, a loved brand with 44 years of heritage
Roots, a loved brand with 44 years of heritage
Slide 4: Roots Today: The Brand
Roots Today: The Brand Our Brand Position For the life and style collectors, who, like us, believe clothes should feel as good as they look. Roots is the brand that unites the worlds of cabin and city. As the grounded and groundbreaking connector, we create apparel, leather and footwear with unique
Slide 5: Target Consumer
Target Consumer Life and Style Collector 5
Slide 6: Diversified Product Portfolio
Diversified Product Portfolio Apparel Leather Accessories Kids Footwear 62%* 11%* 12%* 13%* 2%* * Percentage of FY2017 revenue 6
Slide 7: A Product Architecture Rooted in our Heritage
A Product Architecture Rooted in our Heritage Exciting products Seasonal Excitement ~30% for repeat visits On-trend, exciting and new Monthly Seasonal favourites that Perennial Favourites ~50% bring you back year after year Quarterly Fashion-Coloured Basic Sweats + Spring and Summer: Original Sweats
Slide 8: Modernizing the Brand, Transforming the Business
Modernizing Transforming the Brand the Business Ensuring the Roots brand Strategically investing in people, consistently appeals to, and systems, processes and connects with, our target global infrastructure to fuel accelerated omni-channel consumer, while and sustainable long-term respecting Roots
Slide 9: Moving to a Single Global Brand Range
Moving to a Single Global Brand Range • Enhanced products and assortments • Formalized, analysis-driven approach to building assortment • Right product, right number of units to the right locations • Improved costing • Coordinated collections across categories • Greater scalability Sales growth Oper
Slide 10: Leveraging Operational Investments to Drive Sales and Margin Expansion
Leveraging Operational Investments to Drive Sales and Margin Expansion Investments already made Leadership Merchandising Infrastructure eCommerce consumer-focused strategy Functional expertise and POS, HRIS, LMS Further enhancing our operational experience online storefront Accelerating future growt
Slide 11: Growth in Canada: Growing store network in high traffic areas
Growth in Canada: Growing store network in high traffic areas 117 Stores * As at Q1 Fiscal 2018 6-8 Remainder of new stores to add to * achieve end of Fiscal 2019 target of 8-10 new store openings *See Disclaimer – Forward Looking Information 11
Slide 12: Growth in Canada: Renovate and expand high-potential stores
Growth in Canada: Renovate and expand high-potential performing stores 20% Lakeshore Store + Before average sales uplift1 +20% Lakeshore Store average incremental contribution margin After 24-28 Store optimizations remaining to achieve * end of Fiscal 2019 target (1) Sales uplift calculated as the s
Slide 13: Growth in Canada: Amplifying brand communication
Growth in Canada: Amplifying brand communication Grow marketing investment from 2% to 4% of sales by end of Fiscal 2019 • Leveraging 99% aided brand awareness1 • Launching new products • Fostering stronger connections with customers and store communities Increase traffic across omni-channel network
Slide 14: Growth in Canada: eCommerce, fastest growing part of business
Growth in Canada: eCommerce, fastest growing part of business • Progressive environment of ongoing innovation • Seamless omni-channel experience • Shipping to more than 50 countries (1) 20-22% of DTC sales * Target by end of Fiscal 2019 (1) In Fiscal 2017. *See Disclaimer – Forward Looking Informati
Slide 15: Strategically Expanding US Footprint
Strategically Expanding US Footprint Current Footprint • 3 locations (NY, MI, UT) • Shipping to all 50 states(1) Current Pipeline • Boston, June 2018 • Washington, August 2018 • Full Omni-channel, Summer 2018 • Chicago, 2019 The Natick Mall, Massachusetts 10-14 Target new locations by end of * Bosto
Slide 16: Expanding in International Markets: Taiwan & China
Expanding in International Markets: Taiwan & China Footprint as at end of Q1 2018 • 112 Taiwan • 30 China New stores • 11 new stores H2 Fiscal 2017 Xindian FSS New Taipei City Shanghai No.1 Dept Store Yaohan • 2 new stores Q1 Fiscal 2018 7-12 * New store opens remaining to achieve end of Fiscal 2019
Slide 17: Expanding in International Markets: other markets
Expanding in International Markets: other markets offer unique potential Hong Kong • Progressing plans for Hong Kong, Singapore and/or Malaysia with existing partner Singapore • Conversations underway with potential partners for expansion into other international markets Malaysia The Rest of the Wor
Slide 18: Deepening Offering in Leather & Footwear
Deepening Offering in Leather & Footwear • Part of our DNA Leather • Leveraging the longstanding genuine leather credentials deeply valued by consumers • Modernizing range of leather goods with new styles • Expanding leather customization in select bags and jackets, to enhance connection with the co
Slide 19: Financial Review
Financial Review
Slide 20: Comparable Sales Growth
Comparable Sales Growth 12.1% Fiscal 2017 6.4% Q1 Fiscal 2018 8.3%Fiscal 2016 3.3% Q1 Fiscal 2017 Since start of transformation in 2016, Company has delivered 9 consecutive quarters of positive comparable sale growth 20 Note: See Disclaimer – Non-IFRS Measures and Retail Industry.
Slide 21: Sales
Sales Fiscal 2017 Q1 Fiscal 2018 ($ millions) 326.1 ($ millions) 51.0 +16.3% YoY Increase in +9.0% YoY Increase in 48.2 281.9 DTC Sales DTC Sales +15.7% YoY Increase in Total +5.8% YoY Increase in Total Sales Sales Fiscal 2016 Fiscal 2017 Q1 Fiscal Q1 Fiscal 2017 2018 21 Note: See Disclaimer – Non-I
Slide 22: Adjusted DTC Gross Margin
Adjusted DTC Gross Margin Fiscal 2017 Q1 Fiscal 2018 59.4% 57.3% +206 Basis Points 56.4% 59.1% +271 Basis Points 90% benefit from: ~100% benefit from: • Reductions in costs • Reductions in costs • More favourable • More favourable product mix of higher- product mix of higher- margin items margin ite
Slide 23: Investing in the growth
Key Investments Supporting higher sales Investing Driving long-term growth in the • Enhanced consumer experience • More stores growth of the • Renovations, relocations and expansions • eCommerce platform business • Great leaders and professionals joining the team • Building a global brand 23
Slide 24: Adjusted EBITDA
Adjusted EBITDA 52.6 Fiscal 2017 ($ millions) 41.6 • Sales growth Fiscal 2016 Fiscal 2017 • Gross margin improvements • Strategic investments Q1 Fiscal 2017 Q1 Fiscal 2018 Q1 Fiscal 2018 ($ millions) in growth -1.7 -3.1 24 Note: See Disclaimer – Non-IFRS Measures and Retail Industry.
Slide 25: Adjusted Net Income Per Share
Adjusted Net Income Per Share 0.69 Fiscal 2017 ($) 0.51 • Better effective tax rate Fiscal 2016 Fiscal 2017 • Reduction in interest expense Q1 Fiscal 2017 Q1 Fiscal 2018 Q1 Fiscal 2018 ($) -0.09 -0.11 25 Note: See Disclaimer – Non-IFRS Measures and Retail Industry.
Slide 26: Fiscal 2019 Financial Targets
Fiscal 2019 Financial Targets 410-450 Sales (in $ millions) 13-17% 282 FY2016A – FY2019E CAGR +300 bps • Better effective Adjusted DTC margintax over rate FY2016 FY2016A FY2019E • Reduction in interest expense 61-68 35-40 Adjusted EBITDA Adjusted Net (in $ millions) Income 42 14-18% (in $ millions)
Slide 27: Modernizing the Brand & Transforming the Business
Modernizing the Brand & Transforming the Business By end of Fiscal 2019 Fiscal 2020 and Beyond 2/ growth from Canada 3 Opportunity to double Strategically investing in growth business in Canada Stronger foothold in US market 100+ store opportunity in the US eCommerce 20-22% of DTC sales Further grow