Canadian Chic? What We Can Learn from the Failed Roots IPO

By Rita Silvan*

TLDR: Roots’ public offering is the latest in a long line of Canadian fashion disappointments, while Canada Goose remains the most successful Canadian fashion IPO. The success of Canadian fashion depends on mixing our utilitarian style with global palatability.

What images does “Canada” evoke? Pristine nature, low-key people who say “sorry” a lot, and a hottie Prime Minister with lustrous eyelashes to make a drag queen cry.

Fashion capital? Not so much.

And, yet…in their own, unassuming, way, Canada’s fashion brands are a rare, bright spot in the IPO market– except for one. (More on that later.) That’s quite a feat from a nation best known for back bacon, maple syrup, and the “Canuck Tuxedo”—an ensemble of head-to-toe denim that just happens to be rocking the fashion world right now. “Sorry” world.

There’s no shortage of fashion talent here but to really ‘make it’ on the global scene requires more than just raw talent; it means leaving Canada for more fashion positive places like London (Erdem Moralioglu), Paris (Rad Hourani), or Milan (Dean and Dan Caten/DSquared). Perversely, it’s only when our high-end designers find success abroad, do they gain renewed respect (and sales) in the domestic market. Canadian consumers want recognized labels, and, after all, retailers need to keep the lights on. It’s just easier to pack the racks with the Michael Kors. “Sorry.”

Yet, the picture brightens for mid-price brands, especially in the athletic leisure or utilitarian categories. Riffing on Canada’s outdoorsy, low-key image, Canada Goose, Lululemon, ROOTS, Club Monaco, and Aritzia have wisely avoided competing head-on with Dior and Gucci.

One of the first successes out of the gate was Club Monaco, a purveyor of aspirational designer-lite garb. It was purchased by Polo Ralph Lauren Corporation in 1999 as part of the firm’s “growth strategy.” Club Monaco was expected to see explosive growth by offering Euro-inflected, fashion-forward designs to younger consumers who found Lauren’s classic looks too conservative. According to the company, Club Monaco was going to be the next Banana Republic or Gap, which at the time were hot brands. Club Monaco, while still around, has a reduced retail footprint amidst declining revenues. It never lived up to the hype. “Sorry.”

Lululemon Athletica, the Vancouver-based active wear company, was a stock market darling, jumping 53 percent on its first trading day in 2007. Six years later it went “downward dog” when its signature black yoga pant exposed more than what wearers had intended, a misstep abetted by founder Chip Wilson putting the blame on women’s fat thighs.

Aritzia, another Vancouver-based fashion retailer that sells up-market contemporary designs—Meghan Markle is a fan—remains a relatively bright spot in a landscape littered with also-rans like Le Chateau, Reitmans, Danier, and Mexx Canada.

By far, the biggest success remains Canada Goose, which started off making snowmobile suits, raincoats and woolen outerwear before specializing in fur-trimmed parkas that sell for $1,000 or more. It went public in March 2017, popping an astonishing 40 per cent. Its goal now is to expand its offerings beyond the winter season like its competitor Moncler, a luxury Italian brand.

Which brings us to Roots. The founders, Michael Budman and Don Green, have never lacked for chutzpah. They parlayed a windfall in 1973 from another line of business into one product: Earth shoe. This footwear horror was a bulky, negative heel shoe that forced the wearer to clomp around with what felt like dead codfish on her feet. I had 2 pairs. It was an instant hit. Ever since, Roots has been serving up Canadiana realness: beavers, moose, Muskoka cabins, canoes, and the flag, on an array of clothing and accessories.

Why did Canada Goose’s IPO soar while Roots’ dived?

Canada Goose is a luxury utilitarian brand that is also fashionable. Its outerwear is popular in top cities like Paris, Milan, Tokyo, London and New York. It’s distributed in luxury department stores like Saks Fifth Avenue and has a strong e-commerce platform.

Roots, on the other hand, is not as fashion forward as Canada Goose. Although it has a strong retail presence in North America and Asia, there’s a lack of clarity about Roots’ long-term growth strategy, particularly how it plans to compete against the Amazon juggernaut. Investors were none too pleased to see that none of the proceeds from the Roots IPO were reinvested back into the company, but went directly to the sellers’ pockets. Not a strong vote of confidence for the brand. Hence, like its short-lived airline venture, Roots Air, the company’s recent IPO went south, dropping nearly 17 per cent on its first trading day. It was one of the worst debuts in Canada.

Canada’s history of fashion IPOs shows that, today, it’s not enough to have a solid brand. A company needs to have global reach and a strong e-commerce platform. And, having fans in Tokyo, London and Paris doesn’t hurt either.


* Rita Silvan is the former editor-in-chief of ELLE Canada magazine. After a successful career in women’s consumer publishing, Rita has pursued her interest in finance, especially in the areas of personal finance and investing for women. She obtained the Chartered Investment Manager (CIM) designation from the Canadian Securities Institute. Rita is the editor-in-chief of and a finance writer for Canada’s leading credit card comparison site

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