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Dec 5, 2017

Roots ‘bucking the trend’ when it comes to bricks and mortar: CEO

First on BNN: Roots CEO confident e-commerce will be 22% of business by 2019

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The chief executive officer of Roots says the retailer is still largely focused on its bricks and mortar business and isn’t intimidated by big online competitors like Amazon.

“Money can buy a lot of things – Amazon’s got a lot of money. But it cannot by authenticity and heritage,” Jim Gabel told BNN in an interview Tuesday.

The company, which reported earnings Tuesday for the first time since going public, said sales were up 13 per cent in its latest quarter compared with a year ago.

Sales totalled $89.7 million for what was the company's third quarter, up from $79.4 million in the same quarter last year.

The increase was driven by comparable sales growth of 10.1 per cent and the opening of four new corporate stores compared to the same period last year.

When the company first went public, Roots said their business was 13 per cent e-commerce. But the retailer didn’t break out its e-commerce sales numbers in its latest earnings report.

Roots trades higher after earnings beat expectations

Shares of Roots traded higher on Tuesday after the company's quarterly earnings beat expectations. BNN's Paige Ellis has the details.

“When we look at e-commerce and bricks and mortar, we look at it as a seamless transaction,” Gabel explained, arguing that reporting the numbers separately could drive “artificial growth” to either side.   

While Gabel wouldn’t specify Roots’ online sales numbers, he did say the target is for the business to become 20-22 e-commerce by 2019, but still stressed the importance of its in-store experience.   

“The consumers have told us that they want both experiences,” Gabel  said. “We are enhancing out in-store experience just as we are enhancing our e-commerce experience.”

“We have positive traffic – and that’s certainly bucking the trend,” he added.

Gabel also said that while Roots is looking to expand globally, two-thirds of the company’s growth in the next two-and-a-half years will come from Canada.   

He said Roots plans to add new stores and renovate its existing stores in the country, noting “Canada is far from a mature market” for the retailer.

Roots earned $5 million or 12 cents per share for the13 weeks ended Oct. 28 compared with a profit of $5.9 million or 14 cents per share in the same period last year.

The drop came as selling, general and administrative expenses increased to $40.8 million compared with $32.3 million a year ago, boosted by costs to support higher sales, investments in the business and costs related to the initial public offering.

On an adjusted basis, Roots says it earned $9.5 million or 23 cents per share, up from $7.6 million or 18 cents per share a year ago. Analysts had expected a profit of 17 cents per share, according to Thomson Reuters.

--With files from The Canadian Press