Roots shares plunge after weak Q3 results, reduced long-term targets
The storefront of a Roots location in Toronto is pictured on September 14 , 2017. Retailer Roots Corp. plans to open two new stores in the Washington, D.C. area in August. The company says the new stores are part of its target to have 10 to 14 new U.S. locations by the end of next year. THE CANADIAN PRESS/Chris Young
The Canadian Press
Published Wednesday, December 5, 2018 9:57AM EST
Last Updated Wednesday, December 5, 2018 11:00AM EST
TORONTO -- Roots Corp. shares plunged Wednesday morning after the clothing company said it has lowered long-term financial targets set when it went public in October 2017.
The clothing company's shares were trading near all-time lows after falling more than 20 per cent. They were at $3.62, down 92 cents from Tuesday's close after about an hour of trading.
Earlier, Roots announced total sales for the three months ended Nov. 3 were "well below" its expectations at $87 million, and down three per cent from $89.7 million last year.
Net income was $2.8 million or seven cents per share, down from $5.0 million or 12 cent per share last year.
Adjusted net income was $4.7 million or 11 cents per share, down from 23 cents per share in last year's third quarter.
Analysts had estimated $90.6 million of revenue and 16 cents per share of adjusted earnings, according to Thomson Reuters Eikon.
Roots says its performance during the quarter ended Nov. 3 reflected the absence of a large marketing campaign and unseasonably warm fall weather and last year's strong sales related to Canada's 150th anniversary celebrations.
The company is now estimating between $358 million and $375 million of sales in fiscal 2018, compared with the estimated range of $410 million to $450 million when Roots did its initial public offering.
Roots is revising its fiscal 2019 target range for adjusted EBITDA to between $46 million and $50 million, from between $61 million and $68 million, and it's also revising its adjusted net income target range to between $20 million and $24 million from its previously stated target range of between $35 million and $40 million.
After spending most of its history as a private company, Roots did an initial public offering last year. The stock began public trading at $11.50 on Oct. 25, 2017, rose to as high as $13.55 in May but fell after missing analyst estimates for the second-quarter and third-quarter.