Roots Corp Q1 2021 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Congratulations on the hard work in this quarter and the narrowing of the loss. I've got a couple of questions. The first one is, what more can you tell us about your experience in Q1 in the U.S. Now that you've got an -- for all intents and purposes, an online-only strategy there? What did you see in the markets where you closed stores? And did your -- the revenue in the U.S. in the quarter, did it get in line with what you expected would happen along the lines of this new strategy or approach to the U.S. market?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. And then secondly, on -- you noted in the quarter that you had higher marketing expenses. I guess I have 2 questions around that. What is the outlook for marketing for the remainder of the year? And then secondly, presumably, given the strong sales that you have with that marketing efforts really provided some fuel to drive the top line and was a worthwhile investment for you?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : And if I may, I'll ask a third question. So Q1 was a very -- was a quarter where you accomplished a lot in terms of creating excitement, and you pointed out all the number of things that you did with the collaboration and partnerships. Should we expect that, that same level of innovation or new products and partnerships, et cetera, as we move through the remainder of the year? Or was this just a particularly concentrated effort? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 11, 2021 / 12:00PM, ROOT.TO - Q1 2021 Roots Corp Earnings Call

Question: Stephen MacLeod - BMO Capital Markets Equity Research - Analyst : I must have -- didn't hear that. I just wanted to follow-up on a couple of things here. Specifically, gross margin performance was quite strong in the quarter. You sort of came out of Q4 expecting gross margin to be flat year-over-year. So I'm just curious sort of where you saw out-performance against your expectations through Q1?

Question: Stephen MacLeod - BMO Capital Markets Equity Research - Analyst : Okay. That's great. So maybe expanding beyond Q2. The way we're thinking about gross margins through the year was this reduced promotional activity continuing, but then maybe kicking in again a little bit in Q4, assuming more of a normalized environment. Is that still your expectation for the year?

Question: Stephen MacLeod - BMO Capital Markets Equity Research - Analyst : Right. Okay. That's helpful. Can you give a little bit of color around your channel profitability in-store versus e-commerce? Just trying to assess how much -- how mix through the pandemic and coming out of the pandemic will impact margins as you see shifts between in-store versus e-commerce sales?

Question: Stephen MacLeod - BMO Capital Markets Equity Research - Analyst : Okay. And then maybe just finally, it sounds like you're opening only 26 of 62 stores in Ontario as stores are allowed to reopen today. Maybe is there any reason why you're not opening 62? And then, I guess, as you think about ongoing openings, when would you expect to have your full store network opened in Ontario?