By By Adriano Marchese
Roots, the Canadian apparel company, has reported a decline in both profit and revenue for the third quarter. The company attributes this to a focus on improving its pricing strategy during a period of reduced consumer spending.
Financial Performance
- Net income declined to 519,000 Canadian dollars ($381,828), or C$0.01 a share, compared to 2.2 million Canadian dollars, or C$0.05 a share, in the same quarter last year.
- Sales for the period decreased to C$63.5 million from C$69.8 million.
- Direct-to-customer sales fell by 8.2% during the quarter, amounting to C$52.2 million.
- Sales through partners and others decreased by about 12% to C$11.3 million.
Factors Impacting Revenue
The decline in revenue was primarily driven by a reduction in promotional sales. Roots aimed to strengthen its promotional discipline, resulting in lower revenue figures. Additionally, the company noted that consumer discretionary spending has tightened in the current macroeconomic environment, impacting customer spending habits.
Inventory Progress
Roots has been actively working to improve its inventory position, which has been a cause for concern in recent quarters. Chief Financial Officer Leon Wu reported that the company has made significant progress, reducing inventory by almost 16% compared to the previous year. This is a significant improvement considering that inventory had increased by 33% at the beginning of the year.
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