Roots Corp Q3 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 : Yes. Good morning, everyone. So thank you for providing us with the data on your promotional base. I think that really goes a long way to just showing how far you've come and how you've really dramatically changed the promotional stance. So if we look at that 4 versus 49 versus 81, is that 4 kind of a good proxy for what we can expect going forward that you try to maintain promotional days at that level?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. And then just I understand fully though Q4 being more the promotional, that's kind of the clearance quarter. But on a relative basis, we can anticipate that promotional days in Q4 2021 would be fewer than they would have been in '20 and '19, right? Is that fair to say?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. And then a second question, if I may. With respect to these higher freight costs and the airfreighting of inventory to ensure that you have product and inventory on the shelves and in stock, how long do you anticipate you'll be engaging in freighting the goods over?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. I'm going to throw in -- yes, go ahead. 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 14, 2021 / 1:00PM, ROOT.TO - Q3 2021 Roots Corp Earnings Call

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : No, that makes perfect sense. And then just speaking about holiday, and you noted that with things opening up that you are seeing good traffic to the stores, has that been maintained through the holiday season?

Question: Stephen MacLeod - BMO Capital Markets Equity Research - Analyst : A couple of questions I just wanted to follow up on here. With respect to the supply chain, obviously, you cited some issues or some pressures on supply chain costs. Do you think you lost out on any sales because of the supply chain issues? And if so, is that something you're able to quantify even directionally?

Question: Stephen MacLeod - BMO Capital Markets Equity Research - Analyst : Okay. That's helpful. But I guess as you think about Q4, given the fact that you were getting ahead of the supply chain issues, you wouldn't expect there to be sales left on the table because there's a bunch of issues given the airfreighting, is that right?

Question: Stephen MacLeod - BMO Capital Markets Equity Research - Analyst : Okay. That's great. And then just following up on the NCIB. Can you just talk a little bit about sort of what your intentions are with respect to pursuing buybacks? Is it something that you're going to pursue on a more opportunistic basis? Or is it going to be kind of an automatic repurchase program? And then how do you think about the NCIB and buying back shares as it relates to the float that's out there right now?

Question: Stephen MacLeod - BMO Capital Markets Equity Research - Analyst : Okay. That's great. And then maybe just finally, this is more kind of strategic or high level. But as you think about into next year and exiting the pandemic, hopefully, is there anything we should expect on the store networks front, whether it's adding stores, closing stores or potentially any refresh investments that need to be made for the stores specifically?

Question: Sabahat Khan - RBC Capital Markets, Research Division - Analyst : Just following up on that SG&A question earlier. I guess in terms of the in-store costs and just operational costs, should we assume those are sort of back at run rate levels? Or would you say those are still kind of somewhat below? And then how do you think about that going forward? Like is there an opportunity to maybe keep them at current levels, even just excluding any sort of subsides or any of that?

Question: Sabahat Khan - RBC Capital Markets, Research Division - Analyst : Okay. And then I guess, just as the business evolves between sort of the stores opening and the e-commerce mix changes, is that having sort of an impact on just overall margins? How are you thinking about that going forward in terms of our run rate for e-commerce? I think you indicated it's still above pre-pandemic levels. How is that expected to impact just overall, whether you think about gross margin or just down to the EBITDA line?

Question: Sabahat Khan - RBC Capital Markets, Research Division - Analyst : Okay. And then I guess just on inventory, if I understood that correctly, you indicated that the inventory you have for Q4 is sort of in the right place. And I guess the only headwind we should really think about is maybe just the additional costs you had to sort of incur to get that inventory here in North America. Is that sort of the right way to think about it? Or is there -- are there any products that you're like sizes or products that we wish we had, but it just might not be available in Q4?