Roots Reports Second Quarter Fiscal 2026 Results and Business Updates
Roots Corporation (“Roots” or the “Company”), a premium outdoor-lifestyle brand with a distinctive Canadian identity, has announced its financial results for the second quarter of fiscal 2026, ended August 1, 2026. All financial results are presented in Canadian dollars unless otherwise indicated. The company also provided updates on its strategic review and recently completed distribution centre transition.
During the quarter, Roots continued to navigate several temporary and non-recurring factors, including the relocation of its flagship Whistler store and the transition to a new distribution centre operated in partnership with Metro Supply Chain. Despite these short-term pressures, the company reported an improvement in Adjusted EBITDA and highlighted continued progress in positioning the business for future growth.
Strategic Review Update
Roots confirmed that, following its previously announced strategic review, it entered into an arrangement agreement on August 20, 2026, under which Marquee Brands, through its operating partner JM&A Design and Development Inc., has agreed to acquire all issued and outstanding common shares of Roots for $4.10 per share in cash.
The transaction represents an equity value of approximately $161 million and is currently expected to close during the fourth quarter of fiscal 2026, subject to shareholder, court and regulatory approvals.
Roots incurred approximately $1.0 million in incremental consulting and legal expenses related to the strategic review during the second quarter. On a year-to-date basis, costs associated with the process reached $1.5 million.
President and CEO Meghan Roach said the proposed acquisition strongly endorses the Roots brand and reflects the progress made over the past several years in restoring the company to a position of strength. She emphasized Roots’ distinctive Canadian identity and its continued resonance with customers in Canada and international markets.
Distribution Centre Transition Completed
Roots also reported that it completed its transition to the Metro Supply Chain distribution centre in July 2026. The transition resulted in $2.0 million of incremental costs during the second quarter, including $1.2 million related to accelerated non-cash depreciation of existing fixed assets and $0.8 million in non-recurring transition costs.
The transition costs have totaled $3.8 million year-to-date, with $2.9 million attributed to accelerated non-cash depreciation.
Beginning in June 2026, distribution centre occupancy costs began to be reflected in gross margin. These costs had previously been included in selling, general and administrative expenses when Roots operated its distribution activities internally.
Second Quarter Financial Performance
Roots generated total sales of $49.5 million in Q2 2026, representing a 2.4% decrease from $50.8 million in the same period of fiscal 2025.
Direct-to-Consumer sales, which include corporate retail stores and eCommerce, totaled $40.5 million, down 1.3% from $41.0 million a year earlier. DTC comparable sales declined 1.0%.
The company said DTC performance was affected primarily by the temporary closure of its flagship Whistler store during its scheduled relocation. Without the temporary closure, Roots said total DTC sales would have increased compared with the prior-year period. Sales were also affected by temporary delays in launching seasonal products during the latter part of the distribution centre transition.
Partners & Other sales were $9.0 million, down 7.3% from $9.7 million in Q2 2025. The decline was primarily attributable to lower wholesale volumes to Roots’ international operating partner in Taiwan and the timing of licensing royalties from certain manufacturing partners. These pressures were partially offset by continued momentum in North American wholesale and custom-product channels.
Gross profit was $28.9 million, compared with $30.8 million in the prior-year quarter. Gross margin declined to 58.3% from 60.7%. DTC gross margin was 60.6%, compared with 63.2% in Q2 2025. However, excluding all distribution centre costs, DTC gross margin would have reached 67.2%, improving from 66.4% a year earlier.
Improved Adjusted EBITDA
Adjusted EBITDA was a loss of $1.6 million in Q2 2026, compared with a loss of $2.1 million in Q2 2025, representing a 26.2% improvement.
The company’s net loss was $6.0 million, or $0.15 per share, compared with a net loss of $4.4 million, or $0.11 per share, in the prior-year quarter. Roots noted that the second quarter historically accounts for approximately 17% of full-year sales, meaning that the impact of non-recurring projects can have a more pronounced effect on quarterly earnings.
Adjusted net loss, which excludes costs associated with the distribution centre transition, strategic review and other unusual or non-recurring items, improved to $3.2 million from $3.8 million in Q2 2025.
Year-to-Date Performance
For the first six months of fiscal 2026, Roots generated total sales of $92.1 million, an increase of 1.5% from $90.7 million in the corresponding period of fiscal 2025.
DTC sales increased 0.8% to $76.3 million, while comparable sales grew 0.9%. Partners & Other sales increased 4.8% to $15.8 million.
Year-to-date gross profit was $54.4 million, compared with $55.4 million in the prior-year period. Gross margin declined to 59.0% from 61.0%, primarily reflecting the impact of distribution centre-related costs.
The company reported a year-to-date net loss of $16.1 million, or $0.41 per share, compared with a net loss of $12.3 million, or $0.31 per share, in the first six months of fiscal 2025. Adjusted net loss improved slightly to $10.8 million from $11.1 million.
Adjusted EBITDA for the first six months was a loss of $9.0 million, improving from a loss of $9.2 million in the prior-year period.
Positioning the Business for the Second Half
Chief Financial Officer Leon Wu said Roots has largely completed both the distribution centre transition and the relocation of its flagship Whistler store. He highlighted the efforts of the company’s cross-functional teams and said Roots is positioned to scale its operations and better serve customers during the larger second half of the fiscal year.
Despite the decline in quarterly sales, Roots’ improved Adjusted EBITDA, year-to-date sales growth and stronger comparable DTC performance demonstrate progress in several areas of the business. With major operational transitions largely completed and the proposed acquisition by Marquee Brands moving through the approval process, the company enters the second half of fiscal 2026 focused on operational execution, customer engagement and continued development of its premium outdoor-lifestyle brand.
The combination of Roots’ established Canadian heritage, growing North American channels and international presence provides a foundation for the company as it prepares for the next stage of its business development and the expected completion of the proposed transaction in the fourth quarter of fiscal 2026.
ABOUT ROOTS
Established in 1973, Roots is a global lifestyle brand. Starting from a small cabin in northern Canada, Roots has become a global brand which, as at the end of Q2 2026, operated 97 corporate retail stores and 10 temporary pop-up locations in Canada, two stores in the United States, and an eCommerce platform, roots.com. We have more than 100 partner-operated stores in Asia, and we also operate a dedicated Roots-branded storefront on Tmall.com in China. We design, market, and sell a broad selection of products in different departments, including women’s, men’s, children’s, and gender-free apparel, leather goods, footwear, and accessories. Our products are built with uncompromising comfort, quality, and style that allows you to feel At Home With Nature™. We offer products designed to meet life’s everyday adventures and provide you with the versatility to live your life to the fullest. We also wholesale through business-to-business channels and license the brand to a select group of licensees selling products to major retailers. Roots Corporation is a Canadian corporation doing business as “Roots” and “Roots Canada”.
