TORONTO, Dec. 5, 2018 /CNW/ - Roots ("Roots," "Roots
Canada" or the "Company") (TSX: ROOT) today announced its financial
results for its third fiscal quarter ended November 3, 2018 ("Q3 2018"). All financial
results are reported in Canadian dollars unless otherwise stated.
Certain metrics, including those expressed on an adjusted or
comparable basis, are non-IFRS measures. See "Non-IFRS Measures and
Industry Metrics" below.
Third Quarter Fiscal 2018 Highlights
- Total sales of $87.0 million down
3.0% as compared to $89.7 million in
the third quarter of fiscal 2017 ("Q3 2017")
-
- Direct to Consumer ("DTC") sales of $70.7 million, down 8.4% from $77.2 million in Q3 2017
- Comparable Sales Decline of (13.4%) as compared to Comparable
Sales Growth of 10.0% in
Q3 2017
- Gross margin expanded to 55.1% from 54.9% in Q3 2017
-
- DTC Gross Margin increased 286 basis points to 62.0% from 59.1%
in Q3 2017
- Selling, general and administrative expenses of $42.5 million, up 4.1% from $40.8 million
in Q3 2017
- Adjusted EBITDA of $10.2 million,
down 37.4% from $16.3 million in Q3
2017
- Basic Earnings Per Share of $0.07, down 42.0% from $0.12 per share in Q3 2017, and Adjusted Net
Income Per Share of $0.11, down 52.2%
from $0.23 per share in Q3 2017
- Opened two new corporate retail stores in Canada and two new corporate retail stores in
the United States to end the
quarter with 125 stores in North
America
- Opened four partner-operated stores in Taiwan and six partner-operated stores in
China, ending the quarter with 115
stores in Taiwan and 33 in
China
"With negative year-over-year consumer traffic for Q3 2018, our
financial results for the quarter fell well below our
expectations," said Jim Gabel,
President and Chief Executive Officer of Roots. "We faced
significant headwinds due to three main factors: a weaker brand
voice in the absence of a large marketing campaign, unseasonably
warm fall weather that persisted through approximately two-thirds
of the quarter, and lapping one-time Canada 150-related sales recorded in Q3 2017.
Traffic and comparable sales strengthened as we moved through the
quarter and have continued to do so into Q4 2018, including
encouraging Black Friday and Cyber Monday results and the
successful release of our Shawn
Mendes capsule collection."
Mr. Gabel continued: "We remain extremely confident in the
Company's long-term growth opportunities. Roots is an iconic brand
with a 45-year history of delighting our consumers with great
products and engaging experiences. Looking to fiscal 2019, we
expect to continue to deliver growth. However, in light of the
headwinds we faced and our softer sales growth through the first
nine months of fiscal 2018, we are revising our previously stated
fiscal 2019 financial targets down to sales of $358 million to $375
million, Adjusted EBITDA of $46
million to $50 million and
Adjusted Net Income of $20 million to
$24 million."
Summary of Third Quarter Fiscal 2018 Financial
Results
Sales
Total Q3 2018 sales decreased 3.0% to
$87.0 million from $89.7 million in Q3 2017. Sales in the DTC
segment (corporate retail store and e-Commerce sales) decreased
8.4% to $70.7 million, compared to
$77.2 million in Q3 2017, reflecting
Comparable Sales Decline of (13.4%). During the quarter, the
Company experienced negative traffic trends as compared to Q3
fiscal 2017 due to a weaker brand voice, unseasonably warm fall
weather and one-time traffic and sales recorded in Q3 2017 that
were related to Canada 150. The
Company renovated one store, and relocated and expanded four stores
in the quarter. The Company also opened four new stores and closed
one store in Q3 2018, with two of the new stores opening at the end
of the quarter.
Sales in the Partners and Other segment (wholesale Roots-branded
products, royalties on partner retail sales, licensing to select
manufacturing partners and the sale of certain custom Roots-branded
products) for Q3 2018 were $16.3
million, representing a 29.9% increase as compared to
$12.5 million in Q3 2017. The
year-over-year increase was primarily driven by two factors: the
early delivery of certain orders to the Company's operating partner
in Asia that were initially
planned for Q4 2018 and sales growth in Asia, including the opening of 10 new
partner-operated stores, four in Taiwan and six in China. The Company also realized a
$0.6 million foreign exchange benefit
in Q3 2018.
Gross Profit
Total gross profit for Q3 2018
decreased 2.7% to $47.9 million, from
$49.3 million in Q3 2017.
Q3 2018 gross profit in the DTC segment decreased 3.9% to
$43.8 million, from $45.6 million in Q3 2017. Q3 2018 DTC Gross
Margin was 62.0%, up 286 basis points from a Q3 2017 DTC Gross
Margin of 59.1%. Year-over-year gross margin improvements reflect
the benefits of the Company's merchandising initiatives, including
the two-year implementation of the United Brand Range, that are
driving lower costs, as well as favourable foreign exchange rates
on goods purchased in U.S. dollars. The Company achieved its SKU
reduction target, reducing Q3 2018 SKU count 40% as compared to Q3
2016.
Gross profit in the Partners and Other segment increased 12.4%
to $4.1 million, from $3.6 million in Q3 2017.
Selling, general and administrative expenses
Selling, general and administrative expenses for Q3 2018 were
$42.5 million, up 4.1% compared to
$40.8 million in Q3 2017. The
year-over-year increase was primarily driven by incremental costs
to support a larger retail store footprint as Roots added five
net-new corporate retail stores since Q3 2017, as well as strategic
investments to drive the long-term growth of the business.
Year-over-year, marketing expense increased $0.3 million, the minimum wage increase in
Ontario and Alberta accounted for an additional
$0.5 million and public company costs
were an incremental $0.5 million.
Adjusted EBITDA, Net Income & Adjusted Net
Income
Adjusted EBITDA for Q3 2018 was $10.2 million, down 37.4% as compared to
$16.3 million in Q3 2017.
Net income was $2.8 million, or
$0.07 per share, compared to
$5.0 million, or $0.12 per share, in Q3 2017. Adjusted net income
was $4.7 million, or $0.11 per share, compared to $9.6 million, or $0.23 per share, in Q3 2017. In the quarter, the
Company recorded an income tax expense of $1.3 million, compared to $2.0 million in Q3 2017 with an effective tax
rate of 31.4%, up from 28.2% in Q3 2017.
Outlook
Roots expects to deliver growth in fiscal
2019. However, based on the Company's softer sales growth through
the first nine months of fiscal 2018, including Q3 2018 results
that fell well below the Company's expectations, Roots is revising
the fiscal 2019 financial targets it stated at the time of its
Initial Public Offering ("IPO").
For the remainder of fiscal 2018 and during fiscal 2019, Roots
will continue to execute on its growth strategy with a greater
focus on implementing larger scale brand-building marketing
campaigns and introducing new innovative and transitional seasonal
products into its product line. However, the company will operate
with a more conservative pace of expansion until it sees meaningful
consumer response to, and sustainable momentum around, both its new
marketing initiatives and the products the Company has tested in
fiscal 2018 for larger scale rollout in fiscal 2019.
The Company's more conservative pace of execution will be
apparent in various ways, including the revised key assumptions
underlying its fiscal 2019 outlook regarding renovations and
expansions, U.S. store openings, expansion into new international
markets and e-Commerce sales as a percentage of total DTC sales,
each as set forth in the table below.
Revised Sales Target
Roots is revising its fiscal 2019
sales target range to $358 million to
$375 million from its previously
stated target range of $410 million
to $450 million, which includes an
expectation that average annual Comparable Sales Growth across
fiscal 2017, 2018 and 2019 will fall below the Company's previously
stated 8.3%.
Revised Adjusted EBITDA and Adjusted Net Income
Targets
Due to the decrease in the Company's target sales
range for fiscal 2019, Roots is correspondingly revising its fiscal
2019 Adjusted EBITDA target range to $46
million to $50 million from
its previously stated target range of $61
million to $68 million, and is
also revising its Adjusted Net Income target range to $20 million to $24
million from its previously stated target range of
$35 million to $40 million.
Roots continues to believe that the long-term fundamentals of
the business remain unchanged, with the Company already hitting
three of its fiscal 2019 operational targets by Q3 2018: completing
a 40% SKU reduction in Q3 2018 compared to Q3 2016; achieving
Canadian store openings within the previously stated range of 8 to
10, with 10 new store openings since the Company's IPO; and
achieving new international store openings within the previously
stated range of 20 to 25, with the addition of 20 new stores in
Asia since the Company's IPO. The
Company also remains on-track to achieve its expected 300 basis
point improvement in gross margin when comparing fiscal 2019 to
fiscal 2016.
Roots continues to believe that the strategy it communicated at
the time of its IPO best positions the Company for long-term
growth, including:
- fully leveraging operational investments made to drive
efficiencies within the business;
- pursuing continued growth in Canada;
- expanding the brand's presence in the U.S.;
- expanding in international markets;
- deepening the Company's offering in leather and footwear.
However, as a result of the Company's weaker sales trends in the
first three quarters of fiscal 2018, in particular Q3 2018, Roots
plans to take a more conservative approach to the speed at which it
executes in each of these areas.
The key revised assumptions underlying the updated fiscal 2019
outlook above are as follows:
|
Updated fiscal 2019
targets
|
Previous fiscal 2019
targets
|
Renovations and
expansions
|
19-21
|
29-33
|
U.S. store
openings
|
5-6
|
10-14
|
International
markets
|
- Continue to add
stores in Taiwan and China
- Slower entry to new
markets
- Continued
international shipping for e-Commerce
|
- 20-25 new stores in
Taiwan and China
- Establish a
presence in new markets
|
e-Commerce as a
percentage of DTC sales
|
17-19%
|
20-22%
|
The Company will continue to manage capital investments in the
business in a prudent and responsible manner. During fiscal 2018 to
date, Roots has made numerous key investments to better position
the Company for long-term growth. This includes initiatives to
enhance its customer experience and strengthen operations, such as
broadening its distribution network for its products with a larger
global retail footprint; building out a network of enhanced
experience retail locations that serve as brand beacons across
North America; enhancing its
e-Commerce website; and commencing the buildout of a new
distribution centre that will bring retail and e-Commerce
fulfillment into a single Roots-operated facility. Throughout the
remainder of fiscal 2018 and during fiscal 2019, the Company will
continue to strategically invest to drive long-term growth at a
level commensurate with current growth expectations.
Conference Call and Webcast Information
Roots will
hold a conference call to discuss the Company's third quarter
fiscal 2018 financial results on December 5,
2018 at 8:00 a.m. ET. All
interested parties can join the call by dialing 647-427-7450
or 1-888-231-8191 and using conference ID: 5297565.
Please dial-in 15 minutes prior to the call to secure a line. The
conference call will be archived for replay until December 10, 2018, at midnight and can be
accessed by dialing 416-849-0833 or 1-855-859-2056 and entering
replay passcode 5297565.
A live audio webcast of the conference call will be available on
the Events and Presentations section of the Company's investor
website at http://investors.roots.com or by following the link
here. Please connect at least 15 minutes prior to the conference
call to ensure adequate time for any software download that may be
required to join the webcast. An archived replay of the webcast
will be available on the Company's website for one-year.
See Roots Interim Condensed Consolidated Financial Statements
and the Company's Management's Discussion and Analysis of Financial
Condition and Results of Operations for the Third Quarter Ended
November 3, 2018 on the Company's
investor website at http://investors.roots.com and on SEDAR at
www.SEDAR.com
About Roots
Established in 1973, Roots is a
premium outdoor lifestyle brand with a rich Canadian heritage and
portfolio of apparel, leather goods, accessories and footwear.
Roots delivers products to customers through its store network,
online platform and international partnerships. As of November 3, 2018, Roots integrated omni-channel
footprint included 118 company retail stores in Canada, seven company retail stores in
the United States, 115
partner-operated stores in Taiwan,
33 partner-operated stores in China and a global e-commerce platform. Roots
Corporation is a Canadian corporation doing business as "Roots" and
"Roots Canada".
Non-IFRS Measures and Industry Metrics
This press
release makes reference to certain non-IFRS measures including
certain metrics specific to the industry in which we operate. These
measures are not recognized measures under IFRS, do not have a
standardized meaning prescribed by IFRS and, therefore, may not be
comparable to similar measures presented by other companies.
Rather, these measures are provided as additional information to
complement those IFRS measures by providing further understanding
of our results of operations from management's perspective.
Accordingly, these measures are not intended to represent, and
should not be considered as alternatives to net income or other
performance measures derived in accordance with IFRS as measures of
operating performance or operating cash flows or as a measure of
liquidity. In addition to our results determined in accordance with
IFRS, we use non-IFRS measures including EBITDA, Adjusted EBITDA,
Adjusted Net Income (Loss), and Adjusted Net Income (Loss) per
Share. This press release also refers to Comparable Sales Growth
(or Decline), a commonly used metric in our industry but that may
be calculated differently compared to other companies. We believe
these non-IFRS measures and industry metrics provide useful
information to both management and investors in measuring our
financial performance and condition and highlight trends in our
core business that may not otherwise be apparent when relying
solely on IFRS measures. Definitions and reconciliations of
non-IFRS measures to the relevant reported measures can be found in
our MD&A under "Cautionary Note Regarding Non-IFRS Measures and
Industry Metrics", which is available on SEDAR at www.sedar.com or
the Company's Investor Relations website at
https://investors.roots.com.
Forward-Looking Information
Certain information in
this press release contains forward-looking information. This
information is based on management's reasonable assumptions and
beliefs in light of the information currently available to us and
are made as of the date of this press release. Actual results and
the timing of events may differ materially from those anticipated
in the forward-looking information as a result of various factors.
Information regarding our expectations of future results,
performance, achievements, prospects or opportunities or the
markets in which we operate is forward-looking information.
Statements containing forward-looking information are not facts but
instead represent management's expectations, estimates and
projections regarding future events or circumstances. Many factors
could cause our actual results, level of activity, performance or
achievements or future events or developments to differ materially
from those expressed or implied by the forward-looking
statements.
See "Forward-Looking Information" and "Risk Factors" in the
Company's Annual Information Form for the fiscal year ended
February 3, 2018 for a discussion of
the uncertainties, risks and assumptions associated with these
statements. Readers are urged to consider the uncertainties, risks
and assumptions carefully in evaluating the forward-looking
information and are cautioned not to place undue reliance on such
information. We have no intention and undertake no obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by applicable securities law.
ROOTS
CORPORATION Interim Condensed Consolidated Statement of
Financial Position
(In thousands of Canadian dollars, except per share amounts)
(Unaudited)
|
|
|
As at November
3,
|
|
|
As at February
3,
|
|
|
2018
|
|
|
2018
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
$
|
467
|
|
$
|
1,809
|
|
Accounts
receivable
|
|
9,971
|
|
|
6,420
|
|
Inventories
|
|
67,386
|
|
|
35,407
|
|
Prepaid
expenses
|
|
6,691
|
|
|
5,580
|
|
Derivative
assets
|
|
986
|
|
|
–
|
|
Total current
assets
|
|
85,501
|
|
|
49,216
|
|
|
|
|
|
|
Non-current
assets:
|
|
|
|
|
|
|
Loan
receivable
|
|
541
|
|
|
541
|
|
Fixed
assets
|
|
59,541
|
|
|
36,981
|
|
Intangible
assets
|
|
199,890
|
|
|
203,408
|
|
Goodwill
|
|
52,705
|
|
|
52,705
|
|
Total non-current
assets
|
|
312,677
|
|
|
293,635
|
|
|
|
|
|
|
Total
assets
|
$
|
398,178
|
|
$
|
342,851
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Bank
indebtedness
|
$
|
12,521
|
|
$
|
–
|
|
Accounts payable and
accrued liabilities
|
|
27,269
|
|
|
18,306
|
|
Deferred
revenue
|
|
4,115
|
|
|
4,647
|
|
Income taxes
payable
|
|
1,629
|
|
|
6,589
|
|
Current portion of
long-term debt
|
|
4,984
|
|
|
4,984
|
|
Derivative
obligations
|
|
–
|
|
|
1,233
|
|
Total current
liabilities
|
|
50,518
|
|
|
35,759
|
|
|
|
|
|
|
Non-current
liabilities:
|
|
|
|
|
|
|
Deferred tax
liabilities
|
|
22,953
|
|
|
21,166
|
|
Deferred lease
costs
|
|
10,131
|
|
|
4,815
|
|
Finance lease
obligation
|
|
592
|
|
|
894
|
|
Long-term
debt
|
|
116,122
|
|
|
79,481
|
|
Other non-current
liabilities
|
|
1,500
|
|
|
1,763
|
|
Total non-current
liabilities
|
|
151,298
|
|
|
108,119
|
Total
liabilities
|
|
201,816
|
|
|
143,878
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
Share
capital
|
|
196,853
|
|
|
195,994
|
|
Contributed
surplus
|
|
3,454
|
|
|
1,675
|
|
Accumulated other
comprehensive income (loss)
|
|
723
|
|
|
(904)
|
|
Retained earnings
(deficit)
|
|
(4,668)
|
|
|
2,208
|
Total shareholders'
equity
|
|
196,362
|
|
|
198,973
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
398,178
|
|
$
|
342,851
|
On behalf of the Board of Directors:
"Erol
Uzumeri"
|
Director
|
|
|
"Richard P.
Mavrinac"
|
Director & Audit
Committee Chair
|
ROOTS
CORPORATION
|
Interim Condensed
Consolidated Statement of Net Income (Loss)
|
(In thousands of
Canadian dollars, except per share amounts)
|
(Unaudited)
|
|
For the 13 and 39
week periods ended November 3, 2018 and October 28, 2017
|
|
|
|
November 3,
2018
|
|
October 28,
2017
|
|
November 3,
2018
|
|
October 28,
2017
|
|
|
(13 weeks)
|
|
(13 weeks)
|
|
(39 weeks)
|
|
(39 weeks)
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
86,979
|
$
|
89,690
|
$
|
198,205
|
$
|
196,036
|
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
39,049
|
|
40,420
|
|
88,060
|
|
89,804
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
47,930
|
|
49,270
|
|
110,145
|
|
106,232
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
42,465
|
|
40,784
|
|
115,014
|
|
105,989
|
|
|
|
|
|
|
|
|
|
Income (loss) before
interest expense and income
|
|
|
|
|
|
|
|
|
taxes expense
(recovery)
|
|
5,465
|
|
8,486
|
|
(4,869)
|
|
243
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
1,393
|
|
1,551
|
|
3,736
|
|
4,531
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
|
4,072
|
|
6,935
|
|
(8,605)
|
|
(4,288)
|
|
|
|
|
|
|
|
|
|
Income taxes expense
(recovery)
|
|
1,277
|
|
1,956
|
|
(1,729)
|
|
(928)
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
2,795
|
$
|
4,979
|
$
|
(6,876)
|
$
|
(3,360)
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings (loss) per share
|
$
|
0.07
|
$
|
0.12
|
$
|
(0.16)
|
$
|
(0.08)
|
|
|
|
|
|
|
|
|
|
ROOTS
CORPORATION
|
Interim Condensed
Consolidated Statement of Comprehensive Income (Loss)
|
(In thousands of
Canadian dollars, except per share amounts)
|
(Unaudited)
|
|
For the 13 and 39
week periods ended November 3, 2018 and October 28, 2017
|
|
|
|
November 3,
2018
|
|
October 28,
2017
|
|
November 3,
2018
|
|
October 28,
2017
|
|
|
(13 weeks)
|
|
(13
weeks)
|
|
(39
weeks)
|
|
(39 weeks)
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
2,795
|
$
|
4,979
|
$
|
(6,876)
|
$
|
(3,360)
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss),
|
|
|
|
|
|
|
|
|
net of
taxes:
|
|
|
|
|
|
|
|
|
Items that may be
subsequently
|
|
|
|
|
|
|
|
|
reclassified to profit
or loss:
|
|
|
|
|
|
|
|
|
Effective portion of
changes in fair
|
|
|
|
|
|
|
|
|
value of cash flow
hedges
|
|
419
|
|
1,025
|
|
3,517
|
|
(1,049)
|
Cost of hedging
excluded from
|
|
|
|
|
|
|
|
|
cash flow
hedges
|
|
54
|
|
13
|
|
178
|
|
76
|
Tax impact of cash
flow hedges
|
|
(126)
|
|
(277)
|
|
(984)
|
|
259
|
|
|
|
|
|
|
|
|
|
Total comprehensive
income (loss)
|
$
|
3,142
|
$
|
5,740
|
$
|
(4,165)
|
$
|
(4,074)
|
ROOTS
CORPORATION
|
Interim Condensed
Consolidated Statement of Changes in Shareholders'
Equity
|
(In thousands of
Canadian dollars, except per share amounts)
|
(Unaudited)
|
|
For the 39 week
periods ended November 3, 2018 and October 28, 2017
|
November 3, 2018 (39
weeks)
|
|
Share
capital
|
|
Contributed
surplus
|
|
Retained
earnings
(deficit)
|
|
Accumulated
other
comprehensive
income
(loss)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Balance, February 4,
2018
|
$
|
195,994
|
$
|
1,675
|
$
|
2,208
|
$
|
(904)
|
$
|
198,973
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
–
|
|
–
|
|
(6,876)
|
|
–
|
|
(6,876)
|
|
|
|
|
|
|
|
|
|
|
|
Net gain from
change
|
|
|
|
|
|
|
|
|
|
|
in fair value of cash
flow hedges, net of income taxes
|
|
–
|
|
–
|
|
–
|
|
2,710
|
|
2,710
|
|
|
|
|
|
|
|
|
|
|
|
Transfer of realized
gain on cash
|
|
|
|
|
|
|
|
|
|
|
flow hedges to
inventories, net of income taxes
|
|
–
|
|
–
|
|
–
|
|
(1,083)
|
|
(1,083)
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
–
|
|
1,985
|
|
–
|
|
–
|
|
1,985
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
shares
|
|
859
|
|
(206)
|
|
–
|
|
–
|
|
653
|
|
|
|
|
|
|
|
|
|
|
|
Balance, November 3,
2018
|
$
|
196,853
|
$
|
3,454
|
$
|
(4,668)
|
$
|
723
|
$
|
196,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 28, 2017 (39
weeks)
|
|
Share
capital
|
|
Contributed
surplus
|
|
Retained
earnings
(deficit)
|
|
Accumulated
other
comprehensive
income
(loss)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 29,
2017
|
$
|
195,994
|
$
|
483
|
$
|
4,707
|
$
|
–
|
$
|
201,184
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
–
|
|
–
|
|
(3,360)
|
|
–
|
|
(3,360)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from
change
|
|
|
|
|
|
|
|
|
|
|
in fair value of cash
flow hedges, net of income taxes
|
|
–
|
|
–
|
|
–
|
|
(714)
|
|
(714)
|
|
|
|
|
|
|
|
|
|
|
|
Transfer of realized
loss on cash
|
|
|
|
|
|
|
|
|
|
|
flow hedges to
inventories, net of income taxes
|
|
–
|
|
–
|
|
–
|
|
598
|
|
598
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
declared
|
|
–
|
|
–
|
|
(20,000)
|
|
–
|
|
(20,000)
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
–
|
|
611
|
|
–
|
|
–
|
|
611
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October 28,
2017
|
$
|
195,994
|
$
|
1,094
|
$
|
(18,653)
|
$
|
(116)
|
$
|
178,319
|
ROOTS
CORPORATION
|
Interim Condensed
Consolidated Statement of Cash Flows
|
(In thousands of
Canadian dollars, except per share amounts)
|
(Unaudited)
|
|
For the 39 week
periods ended November 3, 2018 and October 28, 2017
|
|
|
|
November 3,
2018
|
|
October 28,
2017
|
|
|
(39 weeks)
|
|
(39
weeks)
|
|
|
|
|
|
Cash provided by
(used in):
|
|
|
|
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
Net loss
|
$
|
(6,876)
|
$
|
(3,360)
|
|
Items not involving
cash:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
9,130
|
|
8,043
|
|
|
Share-based
compensation expense
|
|
1,985
|
|
611
|
|
|
Deferred lease costs
(recovery)
|
|
(565)
|
|
592
|
|
|
Amortization of lease
intangibles
|
|
407
|
|
701
|
|
|
Interest
expense
|
|
3,736
|
|
4,531
|
|
|
Income taxes
recovery
|
|
(1,729)
|
|
(928)
|
|
Interest
paid
|
|
(3,310)
|
|
(4,039)
|
|
Taxes paid
|
|
(2,036)
|
|
(262)
|
|
Change in working
capital:
|
|
|
|
|
|
|
Accounts
receivable
|
|
(3,551)
|
|
(617)
|
|
|
Inventories
|
|
(31,979)
|
|
(24,433)
|
|
|
Prepaid
expenses
|
|
(1,111)
|
|
(333)
|
|
|
Accounts payable and
accrued liabilities
|
|
8,963
|
|
5,998
|
|
|
Deferred
revenue
|
|
(532)
|
|
(642)
|
|
|
(27,468)
|
|
(14,138)
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
Issuance of long-term
debt
|
|
40,000
|
|
21,000
|
|
Long-term debt
financing costs
|
|
(66)
|
|
(999)
|
|
Repayment of
long-term debt
|
|
(3,737)
|
|
(7,162)
|
|
Finance lease
payments
|
|
(282)
|
|
(118)
|
|
Distributions
paid
|
|
–
|
|
(20,000)
|
|
Proceeds from
issuance of shares
|
|
653
|
|
–
|
|
|
36,568
|
|
(7,279)
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
Additions to fixed
assets
|
|
(28,997)
|
|
(9,664)
|
|
Tenant allowance
received
|
|
6,034
|
|
1,262
|
|
|
(22,963)
|
|
(8,402)
|
|
|
|
|
|
Decrease in
cash
|
|
(13,863)
|
|
(29,819)
|
|
|
|
|
|
Cash, beginning of
period
|
|
1,809
|
|
25,257
|
|
|
|
|
|
Cash and bank
indebtedness, end of period
|
$
|
(12,054)
|
$
|
(4,562)
|
SOURCE Roots Corporation