Company provides COVID-19 business update,
including the transition to a predominantly eCommerce retail model
in the United States
TORONTO, April 29, 2020 /CNW/ - Roots ("Roots,"
"Roots Canada" or the "Company") (TSX: ROOT), a premium outdoor
lifestyle brand, today announced its financial results for its
fourth quarter and fiscal year ended February 1, 2020 ("Q4 2019" and "F2019"). 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".
Fourth Quarter Fiscal 2019 Highlights
- Total sales of $127.5 million,
compared to $130.8 million in the
fourth quarter of fiscal 2018 ("Q4 2018")
-
- Direct-to-Consumer ("DTC") sales of $119.1 million, compared to $120.7 million in Q4 2018
- Comparable Sales Decline of (1.8%)
- Gross margin of 54.4%, compared to 59.9% in Q4 2018
-
- DTC Gross Margin of 55.2%, compared to 61.8% in Q4 2018
- Recorded a fixed asset impairment of $19.2 million and goodwill impairment of
$44.8 million, compared to a fixed
asset impairment of $1.4 million and
goodwill impairment of $nil in Q4 2018
- Selling, general and administrative expenses of $69.4 million, up from $51.8 million in Q4 2018
- Adjusted EBITDA of $26.1 million,
compared to $34.8 million in Q4
2018
- Basic Earnings (Loss) per Share of ($1.06), compared to $0.43 per Share in Q4 2018, and Adjusted Net
Income per Share of $0.31, compared
to $0.53 per Share in Q4 2018
- Ended the quarter with 114 corporate-retail stores in
Canada and eight in the United States
- Ended the quarter with 114 partner-operated stores in
Taiwan, 36 in China and one in Hong Kong
Fiscal 2019 Highlights
- Total sales of $329.9 million, up
0.3% from $329.0 million in F2018
("F2018")
-
- DTC sales of $287.8 million, up
1.4% from $283.9 million in
F2018
- Comparable Sales Decline of (0.3%)
- Gross margin of 53.4%, compared to 57.3% in F2018
-
- DTC Gross Margin of 56.2%, compared to 61.2% in F2018
- Selling, general and administrative expenses of $188.3 million, up from $166.8 million in F2018
- Adjusted EBITDA of $26.1 million,
compared to $41.9 million in
F2018
- Basic Loss per Share of ($1.47),
compared to Basic Earnings per Share of $0.27 in F2018, and Adjusted Net Income per Share
of $0.10, compared to $0.48 per share in F2018
"As a result of operational challenges, the business performed
below expectations in the fourth quarter," said Meghan Roach, Interim Chief Executive Officer,
Roots. "While we successfully managed the significant demands
placed on the distribution centre during the holiday period, we
continued to face inefficiencies that drove increased costs. In
addition, the U.S. stores opened within the last three years
delivered another quarter of underperformance, driving a
$6.0 million Adjusted EBITDA loss for
the year. As a result of these losses and the increasingly
challenging retail environment resulting from COVID-19, we have
decided to permanently close those stores."
Ms. Roach continued: "We are taking all necessary actions to
steer the business through the COVID-19 pandemic, with our primary
focus areas being the health and safety of our employees and
customers as well as cost and liquidity management. In addition, as
a Company with an extensive collection of sweats, a product
category currently in high-demand, we are seeing our eCommerce
business perform better than expected. While it is impossible to
predict how long this crisis will last, we are confident there
continues to be multiple value-creation levers for the Company in
the long term. As a Canadian staple for 46 years, Roots has a
highly engaged and loyal consumer base, strong omni-channel
capabilities, and a solid core product offering."
Summary of Fourth Quarter and Year-End Fiscal 2019 Financial
Results
Sales
Total Q4 2019 sales were $127.5 million, down from total sales of
$130.8 million in Q4 2018, and total
F2019 sales were $329.9 million, up
from $329.0 million in F2018.
Q4 2019 DTC sales (corporate retail store and eCommerce sales)
were $119.1 million, down from
$120.7 million in Q4 2018, reflecting
a Comparable Sales Decline of (1.8%), partially offset by the
addition of one net new store. The Comparable Sales Decline for Q4
2019 was predominantly a result of lower in-store traffic, offset,
in part, by growth in eCommerce sales. F2019 DTC sales were
$287.8 million, up from $283.9 million in F2018, reflecting the one net
new store opening in F2019 as well as the full-year sales benefit
from stores opened in mid-F2018, partially offset by a Comparable
Sales Decline of (0.3%).
Partners and Other sales (wholesale Roots-branded products,
royalties on partner retail sales, licensing to select
manufacturing partners and the sale of certain custom Roots-branded
products) for Q4 2019 were $8.4
million, down from $10.1
million in Q4 2018. The year-over-year decline was due to
macro-economic and geopolitical headwinds affecting the Asian
markets that the Company's partner currently operates within. For
F2019, Partners and Other sales were $42.1
million, down from $45.2
million in F2018.
Gross Profit
Total gross profit for Q4 2019 was
$69.3 million, and $176.2 million for F2019, down from $78.3 million and $188.5
million in Q4 2018 and F2018, respectively.
Q4 2019 DTC gross profit was $65.7
million, representing a DTC Gross Margin of 55.2%, down from
DTC gross profit of $74.6 million and
DTC Gross Margin of 61.8% in Q4 2018. In Q4 2019, the Company
recorded an inventory write-off of $1.6
million, compared to $nil in Q4 2018. Excluding the impact
of the inventory write-off, Q4 2019 DTC Gross Margin was 56.5%. The
year-over-year decline in both DTC gross profit and DTC Gross
Margin, primarily reflects additional costs related to the
Company's move to its new integrated distribution centre, the
negative impact on full-price selling as a result of distribution
centre delays, the Company's decision to extend its holiday
promotional sales period, as well as foreign exchange headwinds. In
addition, the Company reclassified certain costs (into cost of
goods sold from selling, general and administrative expenses) with
the transition to in-house fulfillment of all eCommerce orders. For
F2019, DTC gross profit was $161.8
million, representing a DTC Gross Margin of 56.2%, down from
DTC gross profit of $173.8 million
and DTC Gross Margin of 61.2% in F2018.
Partners and Other gross profit was $3.6
million in Q4 2019 and $14.4
million for F2019, down from $3.8
million and $14.7 million for
Q4 2018 and F2018, respectively.
Selling, general and administrative expenses
(SG&A)
Selling, general and administrative expenses for
Q4 2019 were $69.4 million, up from
$51.8 million in Q4 2018. Excluding
the impact of IFRS 16 and non-cash fixed asset impairments,
SG&A declined $2.2 million to
$48.2 million in Q4 2019, from
$50.4 million in Q4 2018. SG&A
reflected savings related to temporary vacancies in certain senior
leadership roles, the shift of certain eCommerce costs from
SG&A to gross margin with the transition to in-house eCommerce
fulfillment, and store wage optimization. These decreases were
partially offset by incremental costs to support a larger total
store fleet square footage and larger distribution centre, one-time
distribution centre transition costs and one-time severance costs.
F2019 SG&A was $188.3 million, up
from $166.8 million in F2018.
Excluding the impact of IFRS 16 and the non-cash fixed asset
impairments recorded in the fourth quarter, SG&A was
$170.5 million and $165.4 million in F2019 and F2018, respectively.
In Q4 2019, the Company recorded a $19.2
million non-cash fixed asset impairment, primarily
associated with its U.S. stores, compared to $1.4 million in Q4 2018.
Adjusted EBITDA, Net Income & Adjusted Net Income
Reflecting factors discussed above, Adjusted EBITDA (which excludes
the impact of IFRS 16) for Q4 2019 was $26.1
million, down from $34.8
million in Q4 2018, and was $26.1
million for F2019, down from $41.9
million in F2018.
Q4 2019 net loss was ($44.6)
million, or ($1.06) Basic Loss
per Share, including a $44.8 million
goodwill impairment charge, down from net income of $18.3 million, or $0.43 Basic Earnings per Share in Q4 2018. In Q4
2019, Roots recorded an income tax recovery of $4.3 million, compared to an income tax expense
of $6.9 million in Q4 2018, with an
effective income tax expense (recovery) rate of (8.9%), down from
27.3% in Q4 2018. Q4 2019 Adjusted Net Income (which excludes the
impact of IFRS 16 and a goodwill impairment charge) was
$13.3 million, or $0.31 per share, compared to $22.3 million, or $0.53 per share, in Q4 2018.
F2019 net loss was ($62.0)
million, or ($1.47) Basic Loss
per Share, down from net income of $11.4
million, or $0.27 Basic
Earnings per Share in F2018. For F2019, the Company recorded an
income tax recovery of ($10.5)
million, compared to an income tax expense of $5.1 million in F2018, with an effective income
tax expense (recovery) rate of (14.4%), down from 31.0% in F2018.
F2019 Adjusted Net Income (which excludes the impact of IFRS 16 and
a goodwill impairment charge) was $4.0
million, or $0.10 per share,
compared to $20.2 million, or
$0.48 per share, in F2018.
Q4 and full-year fiscal 2019 IFRS 16 Impact
In Q1
2019, Roots commenced reporting lease obligations according to IFRS
16, with leases reflected on the Company's balance sheet and rent
expense being replaced with interest and depreciation on the
Company's income statement. The Q4 2019 IFRS 16 impact to SG&A
was an increase of $2.0 million; the
impact to interest expense was an increase of $2.3 million; and the decrease to deferred tax
expense was $0.5 million, resulting
in a $3.8 million decrease in net
income. The F2019 IFRS 16 impact to SG&A was a decrease of
$1.4 million; the impact to interest
expense was an increase of $9.0
million; and the decrease to deferred tax expense was
$1.4 million, resulting in a
$6.2 million increase in net loss.
Both Adjusted EBITDA and Adjusted Net Income for Q4 2019 and F2019
exclude the impact of IFRS 16.
Closure of Seven U.S. Stores
Today, the Company also
announced the liquidation of Roots USA Corporation, its U.S. subsidiary, through
a Chapter 7 bankruptcy filing. The filing will result in the
permanent closure of the Company's stores in Boston, Washington and Chicago, as well as its pop-up location in
Woodbury Common, New York.
Roots continues to believe in the U.S. market opportunity.
However, with the $6.0 million
Adjusted EBITDA loss generated by these seven U.S. stores in F2019
and the discretionary retail environment having become increasingly
challenging as a result of COVID-19, the Company believes a
principally eCommerce-based distribution in the near-term is the
best approach to continuing to serve its loyal U.S. customer base.
Roots will also continue to operate its two longstanding stores in
Michigan and Utah, as both locations play important roles
in the Company's heritage and have well-established customer
bases.
COVID-19 Business Update
In the context of COVID-19,
Roots is focused on the health and safety of its team and
customers, current company operations, business continuity and
managing liquidity.
In March 2020, to help protect
against COVID-19, Roots temporarily closed its North American
retail locations and its Canadian Leather Factory. As a result, the
Company made the very difficult decision to temporarily lay off its
store and leather factory employees. At this time, with the
implementation of various government relief programs, Roots is
reviewing potential opportunities to re-embrace retail and leather
factory employees into the business.
Roots continues to operate its global eCommerce business and its
distribution centre, with strict cleaning protocols and social
distancing measures in place. The Company also continues to operate
its wholesale, B2B and licensing business under a work-from-home
model. In addition, the Company recently launched a special
initiative at its Canadian leather factory, repurposing the
facility in accordance with appropriate health and safety
guidelines to produce non-medical face masks.
Roots Asian partner business continues to conform with local
government and global health organization guidance, including
reducing hours and temporarily closing select stores in
China. At this time, while all
stores are open in China,
Hong Kong and Taiwan, retail traffic trends remain below
pre-pandemic levels.
Roots has substantially reduced costs and capital expenditures
across all areas of the business and is actively managing
liquidity. The Board of Directors and Roots senior leadership team
have temporarily reduced their compensation and salaries,
respectively, by a minimum of 25%, and all other head office
salaries have been reduced as well. The Company has also reduced
forward inventory purchases, minimized discretionary expenditures
and effectively halted capital spend. Additionally, Roots continues
to work closely with its landlords, partners, suppliers, as well as
service and logistics providers to identify further areas of cost
reduction.
Roots recognizes that while it has implemented an action plan to
best navigate the impacts of COVID-19 on the business, this
situation continues to evolve quickly. To the extent that matters
continue to worsen, there may be a material impact on Roots
business operations and financial position in fiscal 2020. The
magnitude of this impact is dependent on the extent, duration and
severity of the pandemic and cannot currently be
quantified.
Conference Call and Webcast Information
Roots will
hold a conference call to discuss the Company's fiscal 2019 fourth
quarter and full-year results on April
29, 2020 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: 6585124.
Please dial-in 15 minutes prior to the call to secure a line. The
conference call will be archived for replay until May 6, 2020 at midnight and can be accessed by
dialing 416-849-0833 or 1-855-859-2056 and entering replay
passcode: 6585124.
A live audio webcast of the conference call will be available on
the Events and Presentations section of the Company's investor
website at https://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 Consolidated Financial Statements and the Company's
Management's Discussion and Analysis of Financial Condition and
Results of Operations for the Fourth Quarter and Fiscal Year ended
February 1, 2020 on the Company's
investor website at https://investors.roots.com and on SEDAR
at www.SEDAR.com.
Filing of Fiscal 2019 Annual Information Form
As a
result of Roots leadership team's continued focus on managing the
business during the COVID-19 pandemic, the Company will be
utilizing the temporary blanket relief granted by the Ontario
Securities Commission in Ontario Instrument 51-502 Temporary
Exemption from Certain Corporate Finance Requirements (and
equivalent relief granted by the other provinces and territories of
Canada) to postpone the filings of
its Fiscal 2019 Annual Information Form (AIF) by a period of up to
45 days. Roots expects to file its Fiscal 2019 AIF on or around
May 29, 2020.
Roots confirms that, since the filing of its annual
consolidated financial statements for the fiscal
year ended February 1, 2020,
there have been no material business developments affecting
the Company.
In connection with Roots utilization of the above-noted
relief, its management and other insiders are subject to an insider
trading blackout policy that reflects the principles in
section 9 of National Policy 11-207 Failure-to-File Cease Trade
Orders and Revocations in Multiple Jurisdictions.
About Roots
Established in 1973, Roots is a premium
outdoor-lifestyle brand. We unite the best of cabin and city
through unmistakable style built with uncompromising comfort and
quality. We offer a broad range of products designed for life's
everyday adventures, including: women's and men's apparel, leather
goods, footwear, accessories, and kids, toddler and baby apparel.
Starting from a little cabin in Algonquin
Park, Canada, Roots has grown to become a global brand. As
of April 29, 2020, we operated 114
corporate-retail stores in Canada,
two corporate-retail stores in the United
States, 115 partner-operated stores in Taiwan, 36 partner-operated stores in
China, two partner-operated stores
in Hong Kong and a global
eCommerce platform, roots.com, 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 DTC Gross Margin, EBITDA,
Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted Net
Income (Loss) per Share. This press release also refers to
Comparable Sales Growth (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 current Annual Information Form 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
Consolidated Statement of Financial
Position
(In thousands of Canadian dollars)
As at February 1, 2020 and
February 2, 2019
|
|
|
|
|
|
February
1,
|
February
2,
|
|
|
2020
|
2019
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
Cash
|
$
949
|
$
1,991
|
|
Accounts
receivable
|
7,158
|
6,627
|
|
Inventories
|
40,152
|
49,533
|
|
Prepaid
expenses
|
5,418
|
6,443
|
|
Derivative
assets
|
–
|
366
|
|
Total current
assets
|
53,677
|
64,960
|
|
|
|
Non-current
assets:
|
|
|
|
Loan
receivable
|
585
|
562
|
|
Lease
receivable
|
1,511
|
–
|
|
Fixed
assets
|
55,694
|
64,163
|
|
Right-of-use
assets
|
128,322
|
–
|
|
Intangible
assets
|
193,079
|
198,724
|
|
Goodwill
|
7,906
|
52,705
|
|
Total non-current
assets
|
387,097
|
316,154
|
|
|
|
|
Total
assets
|
$
440,774
|
$
381,114
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
Bank
indebtedness
|
$
7,226
|
$
12,409
|
|
Accounts payable and
accrued liabilities
|
20,252
|
22,291
|
|
Deferred
revenue
|
6,011
|
5,498
|
|
Income taxes
payable
|
2,008
|
6,445
|
|
Current portion of
lease liabilities
|
26,569
|
–
|
|
Current portion of
long-term debt
|
4,984
|
4,984
|
|
Derivative
obligations
|
158
|
–
|
|
Total current
liabilities
|
67,208
|
51,627
|
|
|
|
Non-current
liabilities:
|
|
|
|
Deferred tax
liabilities
|
13,942
|
22,761
|
|
Deferred lease
costs
|
–
|
10,063
|
|
Finance lease
obligation
|
–
|
504
|
|
Long-term portion of
lease liabilities
|
124,590
|
–
|
|
Long-term
debt
|
84,528
|
80,031
|
|
Other non-current
liabilities
|
–
|
1,424
|
|
Total non-current
liabilities
|
223,060
|
114,783
|
Total
liabilities
|
290,268
|
166,410
|
|
|
|
Shareholders'
equity:
|
|
|
|
Share
capital
|
196,903
|
196,853
|
|
Contributed
surplus
|
3,407
|
3,975
|
|
Accumulated other
comprehensive income (loss)
|
(116)
|
268
|
|
Retained earnings
(deficit)
|
(49,688)
|
13,608
|
Total shareholders'
equity
|
150,506
|
214,704
|
|
|
|
Total liabilities and
shareholders' equity
|
$
440,774
|
$
381,114
|
On behalf of the Board of Directors:
"Erol
Uzumeri" Director
"Richard P.
Mavrinac"
Director
ROOTS CORPORATION
Consolidated Statement of Net Income
(Loss)
(In thousands of Canadian dollars, except per share amounts)
For the 52-week periods ended February 1,
2020 and February 2, 2019
|
|
|
|
February
1,
|
February
2,
|
|
2020
|
2019
|
|
|
|
Sales
|
$
329,865
|
$
329,028
|
|
|
|
Cost of goods
sold
|
153,676
|
140,538
|
|
|
|
Gross
profit
|
176,189
|
188,490
|
|
|
|
Selling, general and
administrative expenses
|
188,308
|
166,790
|
|
|
|
Goodwill
impairment
|
44,799
|
–
|
|
|
|
Income (loss) before
interest expense and
|
|
|
income taxes expense
(recovery)
|
(56,918)
|
21,700
|
|
|
|
Interest
expense
|
15,567
|
5,171
|
|
|
|
Income (loss) before
income taxes
|
(72,485)
|
16,529
|
|
|
|
Income taxes expense
(recovery)
|
(10,456)
|
5,129
|
|
|
|
Net income
(loss)
|
$
(62,029)
|
$
11,400
|
|
|
|
Basic earnings (loss)
per share
|
$
(1.47)
|
$
0.27
|
Diluted earnings
(loss) per share
|
$
(1.47)
|
$
0.27
|
|
|
|
ROOTS CORPORATION
Consolidated Statement of
Comprehensive Income (Loss)
(In thousands of Canadian dollars)
For the 52-week periods ended February 1,
2020 and February 2, 2019
|
|
|
|
February
1,
|
February
2,
|
|
2020
|
2019
|
|
|
|
Net income
(loss)
|
$
(62,029)
|
$
11,400
|
|
|
|
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
|
425
|
3,538
|
|
|
|
|
|
|
|
Cost of hedging
excluded from
|
|
|
|
|
cash flow
hedges
|
362
|
218
|
|
|
|
|
|
|
|
Tax impact of cash
flow hedges
|
(210)
|
(1,001)
|
Total other
comprehensive income
|
577
|
2,755
|
|
|
|
Total comprehensive
income (loss)
|
$
(61,452)
|
$
14,155
|
ROOTS CORPORATION
Consolidated Statement of Changes in
Shareholders' Equity
(In thousands of Canadian dollars)
For the 52-week periods ended February 1,
2020 and February 2, 2019
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
Retained
|
other
|
|
|
|
Share
|
Contributed
|
earnings
|
comprehensive
|
|
February 1,
2020
|
capital
|
surplus
|
(deficit)
|
income
|
Total
|
Balance, February 2,
2019
|
$
196,853
|
$
3,975
|
$
13,608
|
$
268
|
$
214,704
|
|
|
|
|
|
|
Adjustment on
adoption of IFRS 16
|
–
|
–
|
(1,267)
|
–
|
(1,267)
|
|
|
|
|
|
|
Balance, February 3,
2019
|
$
196,853
|
$
3,975
|
$
12,341
|
$
268
|
$
213,437
|
|
|
|
|
|
|
Net loss
|
–
|
–
|
(62,029)
|
–
|
(62,029)
|
|
|
|
|
|
|
Net gain from change
in fair
|
|
|
|
|
|
|
value of cash flow
hedges,
|
|
|
|
|
|
|
net of income
taxes
|
–
|
–
|
–
|
577
|
577
|
|
|
|
|
|
|
Transfer of realized
loss on cash
|
|
|
|
|
|
|
flow hedges to
inventories, net
|
|
|
|
|
|
|
of income
taxes
|
–
|
–
|
–
|
(961)
|
(961)
|
|
|
|
|
|
|
Share-based
compensation
|
–
|
(518)
|
–
|
–
|
(518)
|
|
|
|
|
|
|
Issuance of
shares
|
50
|
(50)
|
–
|
–
|
–
|
|
|
|
|
|
|
|
Balance, February 1,
2020
|
$
196,903
|
$
3,407
|
$
(49,688)
|
$
(116)
|
$
150,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
other
|
|
|
|
Share
|
Contributed
|
Retained
|
comprehensive
|
|
February 2,
2019
|
capital
|
surplus
|
earnings
|
income
|
Total
|
|
|
|
|
|
|
Balance, February 4,
2018
|
$
195,994
|
$
1,675
|
$
2,208
|
$
(904)
|
$
198,973
|
|
|
|
|
|
|
Net income
|
–
|
–
|
11,400
|
–
|
11,400
|
|
|
|
|
|
|
Net gain from change
in fair
|
|
|
|
|
|
|
value of cash flow
hedges,
|
|
|
|
|
|
|
net of income
taxes
|
–
|
–
|
–
|
2,755
|
2,755
|
|
|
|
|
|
|
Transfer of realized
loss on cash
|
|
|
|
|
|
|
flow hedges to
inventories, net
|
|
|
|
|
|
|
of income
taxes
|
–
|
–
|
–
|
(1,583)
|
(1,583)
|
|
|
|
|
|
|
Share-based
compensation
|
–
|
2,507
|
–
|
–
|
2,507
|
|
|
|
|
|
|
Issuance of
shares
|
859
|
(207)
|
–
|
–
|
652
|
|
|
|
|
|
|
|
Balance, February 2,
2019
|
$
196,853
|
$
3,975
|
$
13,608
|
$
268
|
$
214,704
|
ROOTS CORPORATION
Consolidated Statement of Cash
Flows
(In thousands of Canadian dollars)
For the 52-week periods ended February 1,
2020 and February 2, 2019
|
|
|
|
|
|
February
1,
|
February
2,
|
|
|
2020
|
2019
|
|
|
|
Cash provided by
(used in):
|
|
|
|
|
|
Operating
activities:
|
|
|
|
Net income
(loss)
|
$
(62,029)
|
$
11,400
|
|
Items not involving
cash:
|
|
|
|
Depreciation and
amortization
|
39,606
|
12,935
|
|
Share-based
compensation expense (recovery)
|
(518)
|
2,507
|
|
Impairment of fixed
assets and right-of-use assets
|
22,398
|
1,375
|
|
Impairment of
goodwill
|
44,799
|
–
|
|
Deferred lease costs
(recovery)
|
–
|
(617)
|
|
Amortization of lease
intangibles
|
–
|
548
|
|
Interest
expense
|
15,567
|
5,171
|
|
Income taxes expense
(recovery)
|
(10,456)
|
5,129
|
|
Gain on lease
modification
|
(520)
|
–
|
|
Interest
paid
|
(5,904)
|
(4,620)
|
|
Payment of interest on
lease liabilities
|
(9,048)
|
–
|
|
Taxes paid
|
(2,200)
|
(4,104)
|
|
Change in non-cash
operating working capital:
|
|
|
|
Accounts
receivable
|
(531)
|
(207)
|
|
Inventories
|
9,381
|
(14,126)
|
|
Prepaid
expenses
|
1,025
|
(863)
|
|
Accounts payable and
accrued liabilities
|
(2,039)
|
3,985
|
|
Deferred
revenue
|
513
|
851
|
|
|
40,044
|
19,364
|
|
|
|
|
Financing
activities:
|
|
|
|
Issuance of long-term
debt
|
9,000
|
5,000
|
|
Long-term debt
financing costs
|
(163)
|
(66)
|
|
Repayment of
long-term debt
|
(4,984)
|
(4,984)
|
|
Finance lease
payments
|
–
|
(361)
|
|
Payment of principal
on lease liabilities, net of tenant allowance
|
(17,436)
|
–
|
|
Proceeds from
issuance of
shares
|
–
|
652
|
|
|
(13,583)
|
241
|
|
|
|
|
Investing
activities:
|
|
|
|
Additions to fixed
assets
|
(22,320)
|
(37,695)
|
|
Tenant allowance
received
|
–
|
5,863
|
|
|
(22,320)
|
(31,832)
|
|
|
|
|
Increase (decrease)
in cash
|
4,141
|
(12,227)
|
Cash, beginning of
period
|
(10,418)
|
1,809
|
|
|
|
|
Cash and bank
indebtedness, end of period
|
$
(6,277)
|
$
(10,418)
|
SOURCE Roots Corporation