Roots Corp Q3 2020 Earnings Call Transcript

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

Question: Stephen MacLeod - BMO Capital Markets Equity Research - Analyst : I just wanted to just talk a little bit about Q4. You talked about momentum was strong. Can you just talk a little bit about how things have progressed into Q4, maybe ahead of store closures? And then what you've seen during the period of government restrictions? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 09, 2020 / 1:00PM, ROOT.TO - Q3 2020 Roots Corp Earnings Call

Question: Stephen MacLeod - BMO Capital Markets Equity Research - Analyst : Right. Okay. That's helpful. And then are you able to comment -- like are you able to quantify kind of what the take-up is in terms of e-commerce and curbside pickup to offset the lower in-store sales of the 23 stores that have been closed?

Question: Stephen MacLeod - BMO Capital Markets Equity Research - Analyst : Okay. No, that's fair. And then maybe just turning to the gross margin. And obviously, very strong gross margin growth in the quarter on the promotional -- I guess, reduction in promotional breadth and depth. Can you talk a little bit about sort of how you see that evolving as you turn the page into calendar 2021?

Question: Stephen MacLeod - BMO Capital Markets Equity Research - Analyst : Okay. That's great. And then maybe just finally, when you think about SG&A, Mona, you mentioned in your prepared remarks that a portion of the savings will continue. Am I right to believe that the wage subsidies and rent abatements, will those continue into Q4 and into the next fiscal year? Or are those going to be sort of concluded by the time you exit -- having exited Q3?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Just 2 quick questions. You referenced in your remarks that people are coming to -- that are visiting the stores are really coming with an intent to purchase, and so that you had higher conversion rates. Are you willing to share what the conversion rate was in the quarter? And then secondly, was the conversion rate higher in Q3 versus Q2?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. Excellent. And then is there anything you can talk about Partners and Others? And any particular trends you saw in the international piece of the business in Q3 that differed substantially from Q2?

Question: Sabahat Khan - RBC Capital Markets, Research Division - Analyst : Just a quick follow-up. I know you shared some color on the inventory position. I guess what's sort of your strategy to make sure, given that some of the store closures, how do you enter the next year with kind of a good inventory position to start 2021? Just some additional color on your thoughts, how you might promote or things like that during Q4?

Question: Sabahat Khan - RBC Capital Markets, Research Division - Analyst : Okay. Great. And then just trying to do some arithmetic on the rent abatement and the CEWS that Roots received during the quarter. I think the -- so just want to understand the capitalized amount of about $0.5 million during the quarter, just how that works? And then is it correct that, that $0.5 million is probably not backed out of the $11.3 million that we're looking at? Just want to understand kind of the -- what that number is and what's reflected in the $11.3 million?

Question: Sabahat Khan - RBC Capital Markets, Research Division - Analyst : Okay. Great. And then just 1 last 1 from me on the e-commerce, I guess, and I'm just kind of following up on Brian's question earlier around the store footprint and where traffic is going. Do you foresee maybe the need to add some infrastructure capacity on the e-commerce side, as presumably, you'll have a greater mix of e-commerce sales going forward relative to pre-pandemic? I want to understand how you feel about your capabilities? And what else you may need to add on that front as we think about the next few years?

Question: Sabahat Khan - RBC Capital Markets, Research Division - Analyst : Okay. So just, I guess, at the current level of traffic, the capacity in your e-commerce sort of infrastructure is not stretched or anything, you're kind of comfortable with where you are now?