Shares of Roots Corporation (ROOT) gained 3% in early trading Friday, after the company posted a smaller loss in the second quarter of 2021 than a year ago. The Canadian retailer sells leather goods, sportswear, and accessories.
Roots results have been impacted by temporary closures of its stores in Ontario for about 60% of the quarter. The retailer started the quarter with 68 corporate retail stores and five pop-up stores temporarily closed, but reopened all but one of its stores as of quarter-end.
Total sales came in at C$38.9 million in Q2 2021, up 1.8% from C$38.2 million in Q2 2020. Direct-to-Consumer (DTC) sales were C$30.4 million, an increase of 6.7% from C$28.5 million in the prior-year quarter. (See Roots Corporation stock charts on TipRanks)
Meanwhile, net loss amounted to C$1.2 million (-C$0.03 per share) in the quarter ended July 31, an improvement from a net loss of C$1.8 million (-C$0.04 per share) in Q2 2020. On an adjusted basis, net loss was C$0.01 per share, less than the loss of $0.04 per share reported a year ago.
Roots president and CEO Meghan Roach said, “We are continuing to run the business in the manner needed to successfully adapt to the changing business environment created by COVID-19, including current industry-wide supply chain disruptions.
“Our focus remains on maximizing the success of the business over the long term. With the high-quality, comfort, and versatility of our products, we are well-positioned to capitalize on the ongoing casualization of the North American wardrobe.”
On August 27, TD Securities analyst Brian Morrison reiterated a Buy rating on ROOT, with a C$5 price target. This implies 49.3% upside potential.
Consensus among Wall Street analysts is that ROOT is a Hold, based on one Buy and five Holds. The average Roots Corporation price target of C$4.46 implies 33.1% upside potential to current levels.
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