Slide 1: Investor Presentation Q1 2023
Investor Presentation Q1 2023 June 8, 2023 PAGE 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain information in this presentation contains forward-looking information. This information is based on management’s reasonable assumptions and beliefs in light of the information currently available to us and are made as of June 7, 2023. Actual results and the timing
Slide 3: Who We Are
Who We Are Roots was founded in 1973 by Michael Budman and Don Green, who met at summer camp in Algonquin Park, where they first fell in love with the ideals and beauty of Canada. Starting from a little cabin, they were inspired by nature and Canada's wilderness to create Roots. With its uncompromis
Slide 4: Our History
Our History 1973 1980 1998 2015 2017 2020 Michael Budman and Roots moves onto its Roots has created the Searchlight Capital Completed IPO on New executive Don Green founded core business – Olympic outfits of Partners acquires the Toronto Stock leadership team. Roots, centered selling athletic and se
Slide 5: Iconic Canadian Brand with a Global Community
Iconic Canadian Brand with a Global Community 1 Rich heritage of delivering high-quality, versatile and stylish products to customers that span all ages and genders High-Quality, Versatile, Purpose-Driven Products 2 Mix of iconic classics and new pieces that resonate with customers Omni-Channel Stra
Slide 6: Our Values
OUR VALUES Community Be Genuine Integrity Freedom We are a place of While we draw inspiration We always strive to do We celebrate the inclusivity, diversity and from the world around us, what’s right and to build individuality of style as a open-mindedness. We we never forget where we trust and last
Slide 7: Meghan Roach
Meghan Roach President & Chief Executive Officer PAGE 7
Slide 8: Quarterly Highlights and Trends
Quarterly Highlights and Trends • Q1 2023 results in-line with expectations o Reflect challenging economic environment o First quarter historically represents 15% of annual sales • Growth in most apparel categories o Five-fold sales increase in dress and skirt offering o Renewed momentum in tops bus
Slide 9: Quarterly Highlights and Trends
Quarterly Highlights and Trends • Softness in traditional fleece bottoms resulted in overall sales decline year-over-year o Trend shifting towards dresses and skirts o Desire for more diversity in bottoms silhouettes, particularly women o Return to fleece bottoms sales levels more consistent with hi
Slide 10: Operational Highlights
Operational Highlights • Long-term growth strategy remains intact o Remaining prudent to navigate current environment o Investing in key initiatives for seasonally strong third and fourth quarters and future years o Enhancing omnichannel capabilities through spending in data analytics, customer insi
Slide 11: Sustainability
Sustainability • Successfully reduced reliance on conventional materials in favour of preferred fibres and materials • Among top-10 companies making greatest improvements year-over-year, according to Textile Exchange’s Material Change Index • Targeting 80% of apparel to include preferred fibres and
Slide 12: Outlook
Outlook • Pleased with progress made in first quarter on key growth initiatives • Expecting sales and margin headwinds to continue in second quarter due to economic climate PAGE 12
Slide 13: Leon Wu
Leon Wu Chief Financial Officer PAGE 13
Slide 14: First-Quarter Sales
First-Quarter Sales Total Sales DTC Sales P&O Sales $43.1M $41.5M $37.4M $35.4M $5.7M $6.1M Q1-2022 Q1-2023 Q1-2022 Q1-2023 Q1-2022 Q1-2023 • Economic headwinds (-) • Higher sales to international trading partner in • Promotional environment (-) Taiwan (+) • Sales decrease in select fleece bottoms,
Slide 15: Gross Margin
Gross Margin Total DTC 63.0% 60.9% 61.3% 59.0% Q1-2022 Q1-2023 Q1-2022 Q1-2023 • Higher product costs from transition to sustainable • Lower freight premiums (+) materials (-) • Unfavourable FX impact (-) • Increased discounts on targeted inventory (-) • Release of non-cash inventory provision (+) P
Slide 16: DTC Gross Margin Bridge
DTC Gross Margin Bridge Mainly driven by higher product costs from transition to sustainable materials and discounts on targeted inventory Unfavourable FX impact offset by release of non-cash inventory provision 120 bps 63.0% -290 bps 61.3% Q1-2022 Product Freight FX Impact/Release of Q1-2023 Margin
Slide 17: SG&A Expenses
SG&A Expenses $31.3M $33.0M Q1-2022 Q1-2023 • Higher store labour costs (-) • Increased corporate compensation expenses (-) • Contractual increases in store rent costs (-) PAGE 17
Slide 18: Profitability
Profitability Net Loss Adjusted EBITDA1 ($3.2M) ($5.3M) ($5.8M) ($8.0M) Q1-2022 Q1-2023 Q1-2022 Q1-2023 1 Adjusted EBITDA is a non-IFRS measure. See "Appendix" at the end of this presentation. (in millions of $CAD) PAGE 18
Slide 19: Inventory Bridge
Inventory Bridge $3.6M $2.9M $4.7M $50.4M $39.2M Q1-2022 Pack and Hold Higher Product Costs On-Hand Q1-2023 Inventory level on track to be right-sized in second half of 2023 (in millions of $CAD) PAGE 19
Slide 20: Solid Financial Position
Solid Financial Position Net Debt $14.0M $41.0M Cash position $39.4M $74.0M Total liquidity $1.4M Q1-2022 Q1-2023 Value of shares repurchased under NCIB (in millions of $CAD) PAGE 20
Slide 21: Summary
Summary • Excited about long-term growth potential • Well-equipped to navigate short-term macro-economic conditions • Planning beyond temporary challenges to invest in growth strategy in a disciplined manner • Generate sustained shareholder value PAGE 21
Slide 22: Appendix
Appendix PAGE 22
Slide 23: Non-IFRS Measures and Industry Metrics
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 not recognized measures under International Financial Reporting Standards as issued by the International Ac
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