Roots Corp

F:4RO

Sales growth: Roots said Q1 sales rose to $42.6 million, up 6.5% year over year, with growth in both direct-to-consumer and partner channels.

Margin pressure: Gross margin slipped to 59.9% from 61.5% as the company cleared aged inventory ahead of its distribution center transition and absorbed a foreign-exchange headwind.

Cost drag: SG&A increased 12% to $37.3 million, mainly because of $1.8 million of distribution-center transition costs and $0.6 million of strategic review expenses.

Balance sheet: Net debt improved to $23.4 million, down 20.7% year over year, and liquidity ended at $53.7 million.

Brand momentum: Management highlighted strong demand for Cloud, Activewear, outerwear and collaborations, while saying the customer base remains sticky and omnichannel shoppers generate higher lifetime value.

Watch items: Management said the DC transition is on track for completion this summer and reiterated that it will not comment further on the strategic review process.