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Category: Roots Corporation (ROOT)
Date: 9 April 2021 Stock price of Root Corporation: CAD3.58 Market Capital Of Roots Corporation: CAD151.7 million We take a look at the 4th quarter 2020 earnings report of Roots Corporation (ROOT) a premium outdoor lifestyle brand. They 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.
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In fiscal 2020, we navigated unprecedented disruption in our industry; however, as a result of the team’s resilience, determination and passion, we ended the year stronger than we started -Meghan Roach, President and Chief Executive Officer, Roots "
More About Roots Corporation
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 at January 30, 2021, we operated 111 corporate retail stores in Canada, two corporate retail stores in the United States, 117 partner-operated stores in Taiwan, 26 partner-operated stores in China, two partneroperated stores in Hong Kong, and a global eCommerce platform, roots.com. Roots Corporation is a Canadian corporation doing business as “Roots” and “Roots Canada”. On October 14, 2015, Searchlight Capital Partners, L.P. (“Searchlight”) incorporated Roots Corporation under the laws of Canada and its subsidiary, Roots USA Corporation, under the laws of the State of Delaware. Pursuant to a purchase and sale agreement dated October 21, 2015, Roots and its subsidiaries acquired substantially all of the assets of Roots Canada Ltd., former wholly-owned subsidiary Roots U.S.A., Inc. (refer to “Key Business Developments – RTS USA Corp. Chapter 7 Filing”), Roots America L.P., entities controlled by our founders Michael Budman and Don Green (the “Founders”), and all of the issued and outstanding shares of Roots International ULC, effective December 1, 2015 (the “Acquisition”). The Company’s common shares (the “Shares”) are listed on the Toronto Stock Exchange (“TSX”) under the trading symbol “ROOT”.
Overview of Roots Corporation 4th quarter 2020 earnings
Fourth Quarter Fiscal 2020 Highlights
- Total sales of $99.4 million, compared to $127.5 million in the fourth quarter of fiscal 2019 (“Q4 2019”).
- DTC sales of $91.8 million, compared to $119.1 million in Q4 2019.
- Gross margin of 59.2%, compared to 54.4% in Q4 2019.
- DTC Gross Margin of 59.8%, up 460 basis points from 55.2% in Q4 2019.
- Selling, general and administrative expenses of $38.1 million (excluding fixed asset impairment of $0.9 million), down from $50.2 million in Q4 2019 (excluding fixed asset impairment of $19.2 million).
- Adjusted EBITDA of $26.1 million, in line with $26.1 million in Q4 2019.
- Net income per share of $0.29, improved from a net loss per Share of ($1.06) in Q4 2019.
- Adjusted Net Income per Share of $0.39, improved from $0.31 per Share in Q4 2019.
Roots Corporation management commentary on their 4th quarter 2020 earnings
TORONTO, April 8, 2021 – Roots (“Roots,” “Roots Canada” or the “Company”) (TSX: ROOT), a premium outdoor‐lifestyle brand, today announced its financial results for its fiscal year and fourth quarter ended January 30, 2021 (“F2020” and “Q4 2020”, respectively). All financial results are reported in Canadian dollars unless otherwise stated
“In fiscal 2020, we navigated unprecedented disruption in our industry; however, as a result of the team’s resilience, determination and passion, we ended the year stronger than we started,” said Meghan Roach, President and Chief Executive Officer, Roots. “Our performance reflects the strength of the Roots brand, the loyalty of our customer base, and the capabilities of our omni‐channel platform. As a brand known for comfort and quality, our products continued to resonate with customers, and our disciplined approach to promotional activity, focus on cost controls, and efficiencies at our distribution centre strengthened our bottom‐line results.” Ms. Roach added: “Despite the fact that most of our retail locations were closed during what is typically our busiest and most productive time of the year, we were able to deliver profitability for the fourth quarter that was in line with the previous year when all of our stores were open. While we continue to face government mandated temporary store closures in Q1 2021, we are confident in our capabilities to manage the business through these challenging times.”
“In fiscal 2020, we navigated unprecedented disruption in our industry; however, as a result of the team’s resilience, determination and passion, we ended the year stronger than we started,” said Meghan Roach, President and Chief Executive Officer, Roots. “Our performance reflects the strength of the Roots brand, the loyalty of our customer base, and the capabilities of our omni‐channel platform. As a brand known for comfort and quality, our products continued to resonate with customers, and our disciplined approach to promotional activity, focus on cost controls, and efficiencies at our distribution centre strengthened our bottom‐line results.” Ms. Roach added: “Despite the fact that most of our retail locations were closed during what is typically our busiest and most productive time of the year, we were able to deliver profitability for the fourth quarter that was in line with the previous year when all of our stores were open. While we continue to face government mandated temporary store closures in Q1 2021, we are confident in our capabilities to manage the business through these challenging times.”
COVID‐19 Business Update In the fourth quarter of 2020, in response to a second wave of government mandated lockdowns, the Company temporarily closed corporate retail stores within certain regions of Canada. As of March 11, 2021, the Company had reopened all but two corporate retail stores in these regions. This month, in accordance with further changes to provincial guidelines, the Company has shifted its store operations to curbside pick‐up and eCommerce fulfillment only for certain regions in Québec, effective April 2, 2021, and for the province of Ontario, effective April 8, 2021. This represents two corporate‐retail stores in Québec, as well as 62 corporate‐retail stores and five pop‐up locations in Ontario. The changes in operation for these locations will be in place for at least 10 days in Québec and four weeks in Ontario.
Roots Corporation (ROOT) stock price history since their listing
The image below obtained from Google, the shows the stock price history of Roots Corporation (ROOT) since their listing. And its not been a good time for Roots stockholders with the stock decreasing sharply by-63.2% over the last 5 years.
The stock of Roots Corporation (ROOT) is trading at close to its 52 week high and far away from its 52 week low which is a clear indication that the short term sentiment and momentum of Roots Corporation stock is positive at this point in time.
The stock of Roots Corporation (ROOT) is trading at close to its 52 week high and far away from its 52 week low which is a clear indication that the short term sentiment and momentum of Roots Corporation stock is positive at this point in time.
Latest stock valuation of Roots Corporation (ROOT)
So what is Roots Corporation (ROOT) stock worth based on their 4th quarter 2020 earnings release? Based on their latest earnings report our valuation model provides a target price (full value price) for Roots Corporation at CAD4.20 a stock.
We therefore believe the stock of Roots Corporation is undervalued at its current price of CAD3.58
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is CAD4.20, thus a good entry point into Roots Corporation would be at $3.80 or below.
We expect the stock of Roots Corporation to kick up from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is undervalued
We therefore believe the stock of Roots Corporation is undervalued at its current price of CAD3.58
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is CAD4.20, thus a good entry point into Roots Corporation would be at $3.80 or below.
We expect the stock of Roots Corporation to kick up from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is undervalued
Next earnings release from Roots Corporation (ROOT)
It is expected that Roots Corporation (ROOT) will release their 1st quarter 2021 earnings release in mid July 2021
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