Roots names new CEO

The retailer makes Meghan Roach's leadership role permanent as it begins to grapple with the fallout of COVID-19.
Roots_store_on_Bloor_St._in_Toronto

As it prepares to reverse its fortunes in the fallout of a pandemic, Roots has looked internally for its new leadership, naming Meghan Roach its new CEO, effective immediately.

Roach was selected after a search by an unnamed international search firm. As a result of the pandemic, she will not collect a salary or bonus payments for the remainder of 2020.

Roach was first named interim CEO of Roots in January, replacing Jim Gabel, who had been CEO since Feb. 2016. The company’s board said at the time that it needed “new leadership to carry the company into its next phase,” which would include executing on growth opportunities while reducing expenses.

For the company’s most recent fiscal year, which ended Feb. 1, Roots’ comparable sales were relatively flat at a 0.3% decline (with increased ecommerce sales failing to offset drops in in-store traffic), with a $15.8 million drop in adjusted EBITDA to $26.1 million. The company attributed the decline to increased expenses and underperformance of U.S. stores, which its says contributed $6 million to the loss on their own.

As a result of the loss, and facing the spectre of an “increasingly challenging retail environment” due to the pandemic, the company is permanently closing seven stores in the U.S. and liquidated its subsidiary in the country – a market it had previously tapped as a major growth opportunity. It will continue to serve U.S. customers through ecommerce, as well as two better performing stores in Michigan and Utah.

Like other retailers, Roots is currently grappling with the business impacts of COVID-19. Its retail locations were closed since mid-March, resulting in the temporary lay offs of store and leather factory staff. As of May 22, all of its 114 stores in Canada have reopened (except for those in Newfoundland & Labrador and Nova Scotia), operating at reduced hours, installing hand sanitization stations, outfitting staff in PPE and keeping changing rooms closed. It has also reduced inventory purchases, minimized discretionary expenditures and “effectively halted” capital spend.

The leather factory has been repurposed to produce non-medical grade masks, and Roots has donated $500,000 in products and 3,000 medical-grade masks to healthcare facilities.

Before stepping into the chief executive role, Roach had been made interim CFO at Roots in August 2019, and was previously managing director at private equity firm Searchlight Capital Partners, Roots’ largest shareholder.