Roots has ‘limited’ tariff exposure, watching for shift in consumer sentiment: CEO

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This article was published 09/04/2025 (545 days ago), so information in it may no longer be current.

TORONTO – Roots Corp. says tariffs likely won’t have much of a direct effect on its business, but could weigh on consumer confidence.

Meghan Roach, chief executive of the Toronto-based apparel company, said the business has “limited exposure” to the tariffs U.S. President Donald Trump has levied on more than 180 countries.

“We have a relatively small business in the U.S. market and so we’re not seeing any significant impact on our business thus far,” she told analysts on a Wednesday call.

“From a consumer perspective, obviously we are looking to see what happens in Canada over the longer term.”

Roach’s remarks come as Trump’s tariff assault on the world has roiled stock markets, scuttled corporate expansion plans and pushed some companies to lay off staff as they try to keep their businesses alive.

For the fashion industry, Trump’s tariffs stand to upend supply chains because they make it more expensive to move materials and inventory around the world.

Beyond the duties he hit Canada with, the U.S. imposed tariffs on countries like Bangladesh, China, India, Indonesia and Taiwan where many companies make garments and accessories because of their lower labour costs. 

While the latest rounds of tariffs don’t impede goods moving between those countries and Canada, domestic brands that ship supplies and stock directly to their U.S. stores from those countries are affected.

According to its website, Roots only has two stores in the U.S. and produces leather goods like handbags, backpacks and jackets at a Toronto facility. 

Some of its clothing is sourced from countries in Asia and Europe, but the company does not disclose how much comes from each region, Roach said in an email to The Canadian Press.

“Given that we ship all of our goods to Canada, these products are not impacted by the tariffs set out by the U.S. on other countries,” she wrote.

Its Canadian heritage also makes Roots more likely to benefit from the growing wave of shoppers supporting domestic businesses.

So far, Roach said the movement has boosted searches for products on the company’s website, but it’s hard to parse out how many of the company’s recent wins stem from the buy Canadian sentiment.

“What we saw was momentum in the Q4 period continuing into Q1, so it’s very difficult for us to tell specifically what any uplift might be from Buy Canada as opposed to our businesses continuing to trend well out of the fourth quarter,” Roach said on the analyst call.

Roots said Wednesday that its fourth-quarter total sales amounted to $110.8 million, up from $108.2 million in the same quarter last year. 

Direct-to-consumer sales for the period ended Feb. 1 totalled $101.2 million, up from $97.8 million a year ago, while partner and other sales amounted to $9.6 million, down from $10.5 million.

Roach attributed some of the bumps to new marketing initiatives and artificial intelligence-based inventory management. 

They and a $50-million impairment charge on intangible assets, which Roach said was a non-cash accounting adjustment, contributed to a quarter that saw Roots incur a loss of $21.7 million or 54 cents per share. 

The result compared with a profit of $14.6 million or 36 cents per share a year earlier.

On an adjusted basis, Roots earned 40 cents per share in its latest quarter compared with an adjusted profit of 36 cents per share a year earlier.

Given that apparel businesses plan so far in advance, Roots also had confidence in how it will handle fall and winter.

The merchandise stocked at these times of year tends to include products it can push year-round, so inventory “won’t go bad at the end of the season,” Roach said.

This report by The Canadian Press was first published April 9, 2025.

Companies in this story: (TSX:ROOT)