Roots Soars with Strong Second Quarter Driven by Direct-to-Consumer Surge

Canada's beloved lifestyle brand, Roots, has reported impressive financial results for the second quarter, which concluded on August 2, 2025. The company announced a 6.3% increase in overall sales, reaching $50.8 million, primarily driven by a significant boost in direct-to-consumer (DTC) sales during the three-month period.

The core of this growth stemmed from the DTC segment, which encompasses both retail store and e-commerce sales. DTC sales surged to $41.0 million, marking a substantial 12.7% increase from $36.4 million recorded in Q2 2024. This robust performance was further amplified by strong comparable sales growth of 17.8%, indicating healthy customer engagement across its direct channels.

However, the Partners & Other (P&O) sales segment experienced a decline. This category, which includes wholesale Roots branded products, licensing to select manufacturing partners, and the sale of certain custom products, fell to $9.7 million in Q2 2025, down from $11.3 million in the corresponding quarter of 2024. The decrease was primarily attributed to lower wholesale sales, although this was partially offset by continued positive momentum across other business lines within the segment.

Profitability metrics showcased significant improvements for Roots. Gross margin rose to an impressive 60.7%, an increase of 430 basis points from the previous year. This expansion was supported by stronger product margins and reduced discounting strategies. Specifically, the DTC gross margin improved to 63.2%, up from 61.7% in Q2 2024. Furthermore, the company successfully narrowed its net loss to $4.4 million, or $0.11 per share, a considerable improvement compared to a loss of $5.2 million, or $0.13 per share, in the prior year. On an adjusted basis, excluding the revaluation of share-based compensation, the loss would have been $4.0 million, representing a 26.8% year-over-year improvement.

Meghan Roach, President and Chief Executive Officer of Roots Corporation, expressed her satisfaction with the results, stating, “Roots delivered a strong second quarter with comparable sales up 17.8 percent, reflecting the strength of our brand and the resonance of our products with consumers.” She emphasized that this positive momentum was bolstered by “innovative collaborations, a compelling product assortment, and our focus on creating meaningful customer experiences,” underscoring the brand's commitment to strengthening its presence and deepening engagement with its loyal community to create long-term value.

For the first half of fiscal 2025, Roots also reported strong overall performance. Sales for the six-month period reached $90.7 million, representing a 6.5% increase. DTC sales led this growth, climbing 11.6%, with comparable sales showing a robust 16.1% increase. The net loss for the first half of the fiscal year improved to $12.3 million, down from $14.1 million in the previous year.

Looking ahead, Roach provided an optimistic update for the current quarter. She noted that while it is still early in the third quarter, Roots continues to experience positive trends, particularly during the crucial back-to-school period.