(Toronto) Roots’ top boss says the retailer has a “cautious outlook” these days because some shoppers are delaying their holiday shopping as they are increasingly price-sensitive.
“Obviously discounts drive consumer purchasing behavior, [but] there’s a long period between Black Friday and the holidays, so I think we expect people to push back a little bit more. sales,” CEO Meghan Roach said during a conference call with investors Wednesday to discuss the company’s latest results.
Roots reported that its third-quarter profit and sales were down from a year earlier as the company faced what it called economic headwinds and a change in customer behavior. share of buyers.
Roach’s presentation on the Toronto-based clothing retailer comes in the midst of a holiday shopping season many are watching, as inflation and higher interest rates weigh on consumers and force some to look for discounts more often.
“As consumers become more cautious, I also anticipate people will continue to look for deals,” Roach said.
Deloitte recently predicted that Canadians’ average holiday spending would decline 11% from last year, to $1,347.
In response to financial pressures, some shoppers skipped Black Friday and shopped early, but early indicators suggest the November 24 sales day was not a bust for Canadian retailers.
E-commerce giant Shopify had announced that its merchant sales for Black Friday stood at 4.1 billion this year, up 22% from the previous year, while Salesforce added that online sales for Black Friday totaled 70.9 billion worldwide and in Canada, an increase of 2% from the previous year.
Roots began its Black Friday sales almost a week early and Ms Roach said the strategy had been “well received”.
The move is part of a more cautious approach by Roots to discounts. The company has been “less promotional” over the past three years, Roach recalled, which could impact its gross margins.
Asked by an analyst whether the company expects competitors to have huge sales like women’s clothing company Aritzia did in October, Ms. Roach said that “some retailers still have a lot of excess inventory, while others have a much healthier inventory position.”
“I think a lot of people take stock after Black Friday and look at what their inventory looks like at that time,” she added.
In reporting its third-quarter results, Roots said it earned $519,000, or 1 cent per share, for the quarter ended Oct. 28, compared with earnings of $2.2 million, or 4 cents per share, for the same quarter of last year.
Sales totaled 63.5 million for the quarter, down from 69.8 million a year earlier.
The company attributed the decline to the fact that direct-to-consumer sales, which include the company’s retail stores and online sales, totaled 52.2 million, down from 56.9 million for the year former.
The drop was driven by fewer off-price sales and a tightening of consumers’ discretionary spending, while full-price sales increased 3% from a year earlier.
Sales to partners and others, which include wholesale branded products, licenses to manufacturing partners and some custom products, totaled 11.3 million, down from 12.9 million in the same quarter of the year former.
