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Record 1 of 1 in CBCA Fulltext Business 7/99 - 1/01

TI:  Roots looks at IPO to fund growth: $70m expansion plan. US, Europe to be focus for new stores
AU:  Olijnyk-Zena
PN:  Financial-Post-National-Post
SO:  Financial Post (National Post), Je 5'00 pg C1,C14.
Illustrations
FA:  Fulltext: 638 words
IS:  1486-8008
CI:  Roots-Canada-Ltd
CZ:  Roots Canada Ltd
PT:  News-article
SF:  Illustrations
PD:  20000605
PY:  2000
AN:  4863868
LN:  SHORT
FT:  Roots Canada Ltd. is considering an initial public offering and looking at
other forms of outside financing as it sets off on a US$70-million plan to
expand its lifestyle franchise based on the wilderness image of Canada. 

"As the company looks at all the terrific opportunities for expanding, the
question obviously arises about how they would be financed," said Earl
Rotman, a managing director at investment bank CIBC World Markets, which
owns a minority interest in Roots. 

Mr. Rotman admitted in an interview it's "premature" to say exactly which
way Roots will go, but options include an initial public offering of
shares, or going to the CIBC and other investors for more funding. 

"Depending on the opportunities that are selected, we might have to think
about the different financing options." 

As well, said Mr. Rotman, it's "ultimately the decision" of Roots
co-founders, Don Green and Michael Budman, to make. 

Neither Mr. Green or Mr. Budman could be reached for comment. But in the
past, Mr. Budman has indicated a public offering wasn't the preferred way
to go. He told the Financial Post more than 18 months ago: "As long as we
can remain competitive and profitable, it's in our best interests to
remain private.' 

"Over the long run, we want to answer to our employees and our customers
first. We don't want to be managing to the tune of quarterly results." 

But Mr. Rotman said there is an "interesting palate of opportunities" to
choose from when it comes to financing Roots' expansion plans. 

"I think that when we [CIBC] get together with them, there is a certain
level of comfort when it comes to considering the alternatives and what
are the best alternatives," he said. 

Raising additional cash would be part of a five-year expansion plan for the
United States and Europe. Roots has 160 stores -- 25 of them in Asia,
where the image of Canada as the Great White North holds great allure --
and annual sales of about $170-million. While the company never discloses
its profit picture, it says it has made money every year, except one, over
the past 26 years. 

Roots already has stores in SoHo in New York City, as well as Aspen, Colo.,
and Beverly Hills, Calif. But plans are to add about 25 outlets,
concentrating on U.S. resorts such as Sun Valley and Vail. 

Mr. Rotman noted Roots has also had approaches from a couple of U.S.
retailers to add additional stores in more traditional street-front and
mall settings. 

"It would be along the lines of a joint venture, where Roots contributes
its brand image and creativity, while the retailer has the operating
expertise in the U.S." 

Already, Roots has been selling merchandise through Sears Canada Inc.'s
catalogue, with a fair bit of success, said Mr. Rotman. 

He noted if Roots goes the way of a joint venture as part of its expansion,
it's "very important" the company retain control over the brand and image.

It's likely U.S. stores would carry more leather goods than Canadian
stores, said Mr. Rotman, not only because of their sales appeal, but also
because there is a significant cost advantage in manufacturing the goods
in Canada. 

Richard Talbot, a retail consultant, said that despite the chill in
financing small-cap retailing, Roots would likely get a good response to
an initial public offering or a search for private investors for their
expansion plan. 

"They have a very clear image, one that's associated with a bit of glitz
and glamour." 

Copyright 2000, Financial Post from National Post (formerly the Financial
Post Company). All rights reserved.


FC:  Copyright 2000. All rights reserved by original publisher and copyright
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YC:  2000
UD:  20000726