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Roots stock falls after Q2 earnings report

The Canadian Press logoThe Canadian Press 2018-09-12

The storefront of a Roots location in Toronto is pictured on September 14 , 2017. THE CANADIAN PRESS/Chris Young: The storefront of a Roots location in Toronto is pictured on September 14 , 2017. © Provided by thecanadianpress.com The storefront of a Roots location in Toronto is pictured on September 14 , 2017.  TORONTO - Roots Corp. shares fell nearly 12 per cent after the heritage-clothing brand's second-quarter results Wednesday fell short of analysts' expectations.

The Toronto-based company reported a $4.08-million net loss for the quarter ended Aug. 4 — up from a net loss of $8.34 million in the second quarter of the previous year.

Roots said its adjusted net loss was $0.06 per share, while analysts surveyed by Thomson Reuters Eikon were expecting a loss of $0.02 per share.

The company's shares fell 11.79 per cent or $1.10 to $8.23 in afternoon trading, down roughly one-third from its IPO price of $12 on Oct. 25.

The company was coming off a particularly strong second quarter in 2017, said CEO Jim Gabel during a conference call with analysts.

"We benefited from one-time traffic and sales related to Canada's 150th birthday throughout 2017," he said, "given our strong Canadian heritage and unmatched Canada collection."

The company's total sales rose 3.6 per cent to $60.2 million in the second quarter compared to the same period last year, while its comparable sales growth increased 1.1 per cent.

Roots has seen success in its dresses, graphic T-shirts and fleece products, Gable said, but needs to continue adding seasonally relevant products during the warmer months of the year.

The company faced some store traffic headwinds, but consumers are increasingly embracing the retailer's e-commerce offerings, he said.

Roots is in the process of renovating certain stores, which he said brings a sales lift to those locations.

Companies in this story: (TSX:ROOT)

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