Roots sells majority stake

Co-founders remain with the iconic Canadian company as it looks to fuel expansion here and abroad.

From left to right: Roots co-founder Michael Budman, Searchlight co-founders Erol Uzumeri and Eric Zinterhofer and Roots co-founder Don Green.

Private investment firm Searchlight Capital Partners has made a “significant investment” in Roots Canada, becoming the fashion company’s majority shareholder.

Michael Budman and Don Green, who founded Roots in 1973, have ceded control of the company to Searchlight, which will support its growth within Canada and internationally and across multiple distribution channels. Financial terms of the deal were not disclosed.

A press release said Budman and Green would “remain actively involved” with the company, with a post on the Roots website saying they will continue to be “substantial shareholders.” The website also says Searchlight, which has offices in New York, London and Toronto, has no plans to move Roots’ head office, factory and distribution centre from Toronto. Roots currently operates 245 retail locations across North America and Asia.

The press release and website both enforce that Canadian heritage will remain an important part of the company under Searchlight. That has been a major element of the Roots brand over the years, from inspiring Budman and Green to launch the company, to its partnership outfitting Olympic athletes, to its marketing. In addition, Roots currently employs over 1,500 people in Canada (down from 2,000 in 2009), and, until 2004, most of its products were made in Canada. A rarity in consumer fashion, a significant amount of what it sells, particularly leather goods, is still made in Canada, although much of its apparel is now imported from international suppliers.

When the company closed down one of its Toronto apparel suppliers in 2004, Budman cited financial concerns, and an open letter posted to the company’s website in 2009 cited cheaper offshore manufacturers, globalization and the presence of international retailers as making it more difficult to find suitable suppliers within Canada. Today, as Roots faces competition from inexpensive retailers like H&M and the impending opening of upscale retailers like Saks Fifth Avenue and Nordstrom, the deal is an effort to support growth in an increasingly crowded marketplace.

“Before making this decision we had extensive discussions and meetings with Searchlight’s co-founders over a period of several months,” Budman said in the press release. “We were impressed by how well they understood and respected our brand. Not only do they have relevant experience, international expertise and financial resources to draw on, but they are also committed to Roots staying true to its longstanding values, culture and quality products.”

The Roots website points out that Searchlight co-founder Erol Uzumeri was born and raised in Toronto and currently works out of the company’s office in the city. The firm has previously invested in Canadian company M&M Meat Shops in July 2014 and U.K. fashion brand Hunter Boots in 2011.

Image courtesy CNW Group/Roots Canada Ltd