Roots Corporation, the Canada-based outdoor lifestyle brand, reported total sales of CAD$115.5 million in Q4, up 4.2 percent from CAD$110.8 million in the fourth quarter of fiscal 2024.

Roots Corporation reports in Canadian dollars (CAD), except where noted below.

Direct-to-consumer (DTC) sales, which include corporate retail store and e-commerce sales, were CAD$107.0 million, a 5.7 percent increase from CAD$101.2 million in Q4 2024. The DTC sales growth was reportedly driven by strong comparable sales growth of 7.3 percent and 14.8 percent on a two-year stacked basis, with positive momentum across both channels.

“These results reflect a strong customer reception to our core and seasonal product offerings during our largest selling quarter, supported by marketing initiatives that drove DTC traffic growth and operational initiatives that improved our store conversion,” the company reported in its earnings release for the period.

P&O sales amounted to CAD$8.5 million in Q4 2025, as compared to CAD$9.6 million in Q4 2024. The decline in P&O sales was primarily driven by lower wholesale sales to the company’s international operating partner in Taiwan, resulting from the earlier handover of holiday and spring orders in Q3 2025. Roots said the decline was partially offset by continued positive momentum in other lines of business within the segment.

Gross profit reached CAD$71.4 million in Q4, as compared to CAD$68.0 million in the prior-year Q4 period, representing a year-over-year (y/y) increase of 5.1 percent. Gross margin was 61.8 percent in Q4, up 50 basis points y/y.

DTC gross margin was 62.5 percent in Q4, up 10 basis points from 62.4 percent in the prior-year Q4 period. The 10 basis-point DTC gross margin increase was reportedly driven by 30 basis points of product margin expansion, driven by ongoing product costing improvements, partially offset by several factors, including unfavorable foreign exchange impacts on U.S. dollar inventory purchases and distribution center transition costs.

SG&A expenses totaled CAD$49.3 million in Q4, up 9.1 percent from CAD$45.2 million in the prior-year Q4 period. The increase was primarily driven by CAD$2.8 million in incremental marketing costs and CAD$0.8 million in higher variable selling costs. SG&A expenses in Q4 also reportedly reflect CAD$1.1 million in incremental U.S. duties paid on e-commerce sales, CAD$0.6 million of higher costs associated with changes in personnel, and CAD$0.2 million of higher non-cash share-based compensation costs. These increases in SG&A expenses were said to be offset by a CAD$1.6 million reduction in store-related occupancy, capital depreciation, and impairment impacts, reflecting the ongoing improvements in store productivity.

Net income (loss) totaled CAD$14.7 million in Q4, as compared to a loss of CAD$21.7 million in the prior-year Q4 period, and net income (loss) per share was CAD$0.37, as compared to a loss of CAD$0.54 per share in the prior-year Q4 period. The increase in net income (loss) was attributed to the prior-year Q4 non-cash impairment charge on intangible assets and the associated deferred tax impacts. Excluding this impairment charge, the prior-year Q4 period net income would have totaled CAD$15.0 million, or CAD$0.37 per share.

Adjusted EBITDA totaled CAD$25.1 million in Q4, as compared to CAD$25.3 million in the prior-year Q4 period. Excluding the impacts from cash-settled instruments under the company’s share-based compensation plan, Q4 Adjusted EBITDA would have been CAD$24.9 million, a decrease of 3.1 percent from CAD$25.7 million in the prior-year Q4 period.

“We carried our momentum through the fourth quarter and delivered strong full-year results,” said Leon Wu, CFO, Roots Corporation. “Sustained sales growth and record gross margins, combined with disciplined capital allocation, drove earnings per share growth and robust free cash flow, enabling us to reduce net debt and further strengthen our balance sheet. These results reflect consistent execution and position us to continue delivering long-term shareholder value.”

Fiscal Full-Year 2025 Summary

  • Fiscal full-year sales were CAD$277.7 million, a 5.6 percent increase compared to CAD$262.9 million in fiscal 2024.
  • DTC sales were CAD$239.5 million, a 7.3 percent y/y increase compared to CAD$223.3 million in fiscal 2024.
    • DTC comparable sales growth was 9.5 percent y/y.
  • Gross margin amounted to 61.3 percent in fiscal 2025, up 150 basis points compared to 59.8 percent in fiscal 2024.
    • DTC gross margin was 63.4 percent, up 80 basis points compared to 62.6 percent in fiscal 2024.
  • Net income (loss) totaled CAD$4.7 million, compared to ($33.4) million in fiscal 2024.
    • Excluding the impacts from the revaluation of cash-settled instruments under a share-based compensation plan, net income (loss) would have been CAD$5.2 million in fiscal 2025, compared to a net loss of CAD$33.4 million in fiscal 2024.
  • Adjusted EBITDA amounted to CAD$23.3 million in 2025, compared to CAD$21.3 million in fiscal 2024
    • Excluding the impacts from the revaluation of cash-settled instruments under a share-based compensation plan, Adjusted EBITDA would have been CAD$24.1 million, compared to CAD$21.4 million in fiscal 2024.
  • The company repurchased 1,286,700 common shares for CAD$4.0 million under its normal course issuer bid.

Financial Position Summary
Inventory was CAD$45.1 million at the end of fiscal 2025, up from CAD$41.0 million at the end of fiscal 2024, an increase of CAD$4.1 million, or 9.9 percent y/y. Of the increase, CAD$0.7 million was attributed to higher foreign exchange rates on purchases. The remaining increase was driven by investments in certain core collections and higher in-transit inventory to support DTC sales for the upcoming year, along with an increase in P&O inventory to support the North American business-to-business wholesale growth.

Free cash flow was CAD$40.8 million in Q4 2025, as compared to CAD$39.4 million in Q4 2024. The increase in free cash flow was reportedly driven by higher sales and improvements to working capital during the quarter.

As at January 31, 2026, Roots had net debt of CAD$4.3 million, a 42.2 percent reduction from CAD$7.3 million in the year prior. The company’s leverage ratio, defined as total net debt to trailing 12-month Adjusted EBITDA, was below 0.2x at year-end. Roots has CAD$33.5 million outstanding under its credit facilities and total liquidity of CAD$73.6 million, including CAD$28.6 million of cash and CAD$45 million borrowing capacity available under its revolving credit facility.

Normal Course Issuer Bid
Under its normal course issuer bid (NCIB) program, Roots repurchased 264,700 common shares of the Company (Shares) for total consideration of CAD$0.9 million in Q4 2025. The NCIB allows the company to repurchase for cancellation up to 1,347,118 Shares during the 12-month period ending April 10, 2026. As at the end of F2025, 1,286,700 Shares had been purchased under the current NCIB program for total consideration of CAD$4.0 million.

Image courtesy Roots Corporation