Q2 2024 Roots Corp Earnings Call Transcript
Key Points
- Roots Corp (RROTF) reduced net debt by 20% compared to the same period last year.
- The company saw growth during the back-to-school period, indicating strong product portfolio and effective branding and marketing initiatives.
- Product margins improved by 230 basis points due to better sourcing strategies and lower discounting.
- The active collection continued to drive double-digit year-over-year growth.
- Roots Corp (RROTF) generated strong double-digit growth in the US and China through digital channels.
- Total sales decreased by 3.4% compared to Q2 2023.
- Direct-to-consumer sales were down 1.8% year-over-year.
- Adjusted EBITDA losses remained stable at $3.1 million, showing no improvement from the previous year.
- The company faced inventory challenges in its Cooper fleece collection, impacting sales in Q1 and the start of Q2.
- Global logistics and transportation challenges, including ocean freight capacity limitations and domestic transportation labor disruptions, are expected to offset some product margin gains.
Good morning, ladies and gentlemen, and welcome to the Roots Corporation Q2 2024 analyst conference call. (Operator Instructions) This call is being recorded on Friday, September 13, 2024.
And I would now like to turn the conference over to Ms. Meghan Roach, CEO. Please go ahead.
Good morning, everyone. Thank you for joining our Q2 2024 earnings call. Second-quarter sales came in at $47.7 million compared to $49.4 million last year. With direct to consumer sales of $36.4 million relative to $37.1 million in Q2 2023, and comparable sales were nearly flat. Direct-to-consumer gross margins declined 100 basis points while product margins improved by 230 basis points. Adjusted EBITDA losses were stable compared to Q2 2023 at $3.1 million relative to $3.0 million in the prior year.
Notably, we also continued to strengthen our balance sheet, reducing net debt by 20% compared to this time last year. As a reminder, first half of the year remain seasonally small for risk
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