TORONTO – The co-owners of prominent clothing chain Roots Canada are selling off a majority stake in the company to a private equity firm as another wave of retail competition hits Canada.
Roots — known for emblazoning its famous beaver logo across sweatshirts and other garments and dressing Olympic Games athletes — will now be owned by Searchlight Capital Partners LP while the retailer’s co-founders, Michael Budman and Don Green, maintain a smaller stake.
The unspecified “significant investment” by Searchlight Capital, which has offices in Toronto, New York and London, will be used to launch the brand’s next stage of growth.
Budman and Green say they both intend to remain actively involved with Roots.
Searchlight Capital has invested in other Canadian companies, including rubber boot maker Hunter Boot Ltd. and Canadian frozen food retailer M&M Meat Shops.
In a statement, Budman said the duo met with the co-founders of Searchlight before signing the agreement.
“We were impressed by how well they understood and respected our brand,” he said.
“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 long-standing values, culture and quality products.”
Roots also has to contend with the soaring popularity of fast fashion retailers like H&M, Zara and trendy, lower-priced brands like Topshop.
And next spring Hudson’s Bay (TSX:HBC) plans to throw open the doors to the first Saks Fifth Avenue stores, while U.S. department store chain Nordstrom is also opening stores in big cities across the country.
Despite the competition, Roots hasn’t budged on embracing its Canadian identity and reputation for durability.
When Target Corp. entered Canada, Roots signed a partnership where the U.S. discount chain stocked its Beaver Canoe home decor offerings and some of its clothing.
Roots operates 245 retail stores across Canada, the United States and Asia.