Roots’ New York-based suitor lays out global plans for the Canadian retailer

The New York private equity firm that has signed an agreement to buy Roots Corp. ROOT-T wants to take the storied Canadian brand and export it to the rest of the world.

If the proposed deal goes through, Marquee Brands, the firm behind Martha Stewart, Laura Ashley and Roberto Cavalli, says growth will be a top priority.

Chief executive Heath Golden said Friday that he envisions his company bringing Roots to big markets like Korea, India and Mexico and expanding the small presence it already has in the U.S. and China.

“Many of our partners around the world want to be a part of bringing Roots into different markets,” he said in an interview. “So we think the sky is the limit for this brand.”

Roots has more than 100 corporate-owned stores in Canada but just two in the U.S., where it’s been working to expand. A partner operates another 100 shops in Asia and the brand also has a presence on T-mall, Alibaba Group’s BABA-N popular Chinese platform. 

But Golden won’t just lean on global markets for growth. He also wants Roots to build out its home, camping and hospitality businesses without forgetting, well, its roots.

The retailer was started by Michigan natives Michael Budman and Don Green, who met at an Ontario summer camp in the sixties and decided to open what eventually became Roots north of the border in 1973. The brand, which sells apparel like sweatpants and leather accessories including bags, has since become a beloved symbol of Canadiana.

“The DNA of the brand is incredible,” said Golden, who labelled himself a “long-time admirer of Roots and father of two girls who have the company’s clothing in their closets.

“It is loved in its home market and it is loved around the world, so nothing here is broken. This is really about just continuing to build it out.”

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He offered his insights into Marquee’s hopes for the brand a day after Roots announced it has agreed to be acquired for $4.10 per share in cash – the result of a strategic review the retailer kicked off in March.

Its shares were up more than 10 per cent or roughly 35 cents to $4.06 in mid-morning trading Friday.

The deal still needs shareholder and regulatory approval but if it proceeds, Marquee will use JM&A Design and Development Inc. to develop, manufacture and distribute Roots clothing for Canadian and U.S. stores. 

JM&A is led by Joseph Mimran, the Canadian fashion visionary behind Joe Fresh, Club Monaco and Alfred Sung. He’s also the chairman of hat brand Tilley Endurables, clothing retailer Kit and Ace and toy shop Mastermind Toys.

Mimran was drawn to the partnership, in part because of how involved Marquee gets in its brands.

“When you have a partner like that, as opposed to somebody who just looks at a brand as a cash cow, it makes a huge difference,” he said in the same interview with Golden. 

“This is a very emotional brand. It’s an emotional brand for Canada and if you don’t have vested emotional owners, this thing can go terribly wrong.”

For now, it appears the two are on the same page, sharing a goal of figuring out how they can best steward the brand but also tailor it to a global audience.

It’s a lofty task, Mimran admits, but one he feels more than prepared for, especially because founder Green sent him a “beautiful” note expressing confidence in the arrangement.

“I always feel pressure,” Mimran said. “This is a pressure-filled industry. It’s season by season, it’s a product at a time, but I’ve been doing it for a long time.”

The key will be nailing the product side of the business because that’s what customers care about, Mimran said.

While the specifics of how the brand could transform under its possible new ownership are still taking shape, Roots CEO Meghan Roach signalled she doesn’t expect anything dramatic.

“I don’t think you going to see a Roots brand that doesn’t look like the brand you expect,” she said. 

“I think you’re going to see this team putting in place a lot exciting things that are going to bring the brand forward in really good ways.”

Roach and Golden demurred when asked if she’d be staying in the top role following a sale. Roach said it was too early for such decisions.

She joined Roots as interim chief financial officer about seven years ago, rising later to its top job. 

Before that, Roach had worked at private equity firm Searchlight Capital Partners L.P., which bought a majority stake in Roots from its founders in 2015.

Under Roach, the goal was to return the retailer to a position of strength. She worked to do that by moving the retailer away from markdowns and fashioning itself into more of a prestige brand that occasionally partnered with the popular franchises like the Toronto Blue Jays and Toronto Tempo.