Roots unveils brick-and-mortar expansion

Dive Brief:

Canadian apparel retailer Roots on Tuesday announced plans for an extensive brick-and-mortar expansion in the U.S., Canada and Asia. Roots is mulling 30 "high potential" locations in North America, with plans to open eight to 10 new stores in Canada and 10 to 14 in the U.S. by the end of 2019. The company also plans to renovate as many as 33 Canadian stores, according to a report from the Calgary Herald citing the company’s conference call with analysts.
The brand has already signed four new U.S. leases, including in Boston and Washington, D.C., for next year, according to the report. The retailer is also mulling "more than a dozen" potential markets outside North America, the Herald reports.
The company recently went public, raising C$200 million (about $160 million) in an initial public offering on Oct. 17, according to a report from Reuters. Roots priced its shares at C$12 on the Toronto Stock Exchange, down from a previous range of C$14 to C$16, Reuters reported.

Dive Insight:

Roots's physical retail growth is pushing beyond an existing expansion effort, which includes the opening of four net new retail stores since the third quarter of last year, the company said in a press release. The retailer has renovated or expanded five stores since then, including a new 5,000-square-foot customization boutique that sports DJ stations for special events, a lounge area where customers can hang out and order online and varying decor in changing rooms to encourage social media coverage.

Roots is something of a "slow fashion" retailer. While textile and apparel manufacturing has been speeding up since the Industrial Revolution, "fast fashion" has perfected speed, with Spain’s Zara arguably snagging the crown for speediest. Since the 1970s, Zara has prided itself on churning out small batches of quickly-made designs, preserving the retailer’s ability to react to the varying levels of demand for any one piece.

Roots, by contrast, is clearly not interested in speed so much as nurturing a level of personalization that entails slow-fashion levels of custom-ordered design elements. Roots Canada has cultivated a following thanks to its dedication to high-quality basics and a marketing push that includes relationships with several Canadian musicians.

Its effort in Toronto also seeks to add personalization through customization. It also allows the outdoorsy newly publicly held retailer, which Roots CEO Jim Gabel has said is outperforming overall apparel sales, to connect with more urban customers. On Tuesday, Gabel also said that there’s room to grow even in its home country. "Canada remains far from a mature market for Roots," Gabel told analysts, according to the Calgary Herald.

News of the company’s expansion plans comes as it reported total sales in the third quarter rose 13% compared to the third quarter last year to $89.7 million and same-store sales grew 10.1%. Gross margin in the quarter expanded 180 basis points over the year-ago period to 54.9%. Overall, executives considered it a strong quarter that showed early momentum of operational and e-commerce investments.

The company's recent IPO was something of a disappointment, however, as investors held back on jitters about retail's general prospects, but Gabel promised that it's early days in the company's growth. "While we are very proud of all that we have achieved thus far, we believe we are in the very early innings of unlocking our potential to capture the tremendous opportunity that lies ahead," Gabel said in a statement Tuesday.