ROOT Earnings: Clothing Retailer Roots Discloses Net Loss - What’s Next for the Brand?

Another quarter, another red line for Roots—the Canadian apparel giant just posted disappointing earnings that have investors scratching their heads.

Fashion Fumble or Fundamental Flaw?

The numbers don't lie: Roots missed targets across the board. While retail loves to blame 'macroeconomic headwinds,' this feels more like a brand losing its way in an oversaturated market. Their signature sweats might be cozy, but comfort doesn't pay the bills when you're bleeding cash.

Where's the Bottom?

Analysts are watching inventory levels like hawks—another write-down could spell serious trouble. The street's patience wears thinner than last season's clearance rack merchandise. Maybe they should accept crypto payments—at least then they'd have some volatility they can blame instead of their merchandising strategy.

Roots needs more than maple syrup to sweeten this bitter pill. Time to see if this Canadian icon can stitch together a comeback—or if it's destined for the discount bin of retail history.

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The Toronto-based company had hoped that summer promotions WOULD help return it to profitability. But unfortunately, a 6% year-over-year increase in revenue wasn’t enough for the company to deliver a profit for its shareholders.

Roots announced a second-quarter net loss of $4.4 million, which was down from a loss of $5.2 million a year earlier. The result equaled a loss of $0.11 a share for the quarter compared with a loss of $0.13 a year ago. Second-quarter sales totaled $50.8 million, up from $47.7 million in the same period of 2024.

Strong Second Half?

Management at Roots said on an earnings call with media and analysts that the company typically generates only about 30% of its sales in the first half of the year, with the majority of revenue earned during the year’s second half, driven by back-to-school shopping and the year-end holidays.

However, management also acknowledged that trade tensions between Canada and the U.S. have made consumers more cautious. The company has undertaken direct-to-consumer marketing campaigns to try and boost sales and return to profitability.

Is ROOT Stock a Buy?

The stock of Roots has a consensus Moderate Buy rating among two Wall Street analysts. That rating is based on one Buy and one Hold recommendations issued in the last three months. The average ROOT price target of C$3.63 implies 13.08% upside from current levels. These ratings could change after the company’s financial results.