Canadian retailer Fire & Flower Holdings Corp. (TSX: FAF) (OTCQX: FFLWD) bumped up sales during its third quarter as it opened new locations, but was hit by the surge of competitors’ store openings in Ontario.
On Tuesday, the Toronto-based company reported results for its fiscal third quarter ended Oct. 30, with total revenue rising 6 per cent to $45.4 million from $43.3 million in the previous quarter.
It says the bump in revenue came from expanding its retail network, but same-store sales were offset by aggressive pricing strategies from new deep-discount competitors in Ontario.
During the quarter, Fire & Flower opened seven locations, and completed the acquisition of a pot shop in Orangeville. During that timeframe, cannabis store openings in the province increased by 27 per cent or 262 stores.
The firm’s total gross profit fell by 3 per cent to $15.7 million. Cash and cash equivalents at the end of period totalled $16.5 million, a 44 per cent drop from $29.3 million in the previous quarter.
The company’s Hifyre digital retail and analytics platform made $3.8 million in revenue.
Total loss was $2 million, a 90-per-cent decrease from $19.5 million in the previous quarter. The company also repaid $2.3 million outstanding prior to maturity under a term loan facility with ATB Financial.
Positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) fell by 32 per cent to $2.1 million from $3.1 million in the previous quarter.
Company stock dipped 5 per cent Tuesday to $5.77 on the Toronto Stock Exchange.
The company says it will continue to solidify its “high-margin, asset-light” business model by advancing growth opportunities such as acquisitions of online cannabis platforms PotGuide and Wikileaf.
“In addition, we expanded our Circle K co-location program to create additional strategically-located, asset-light stores to complement our existing retail network. Finally, last week, we announced our acquisition of Pineapple Express Delivery, the cannabis industry’s leading logistics provider for the delivery of legal cannabis,” CEO Trevor Fencott said in a statement.
“With these accomplishments, we are rapidly transforming into a cannabis consumer technology platform which allows us to deliver a seamless customer experience from online customer acquisition through to fulfillment via same-day delivery to customers at our 100+ stores across North America.”
In October, the company said it would expand a deal with Canadian multinational Alimentation Couche-Tard, the parent company of Circle K, to open Fire & Flower locations next to Circle K stores in Canada.
Fire and Flower owns 102 stores across British Columbia, Yukon, Alberta, Saskatchewan, Manitoba and Ontario.
Last week, the company completed the acquisition of Pineapple Express Delivery Inc., one of the country’s largest cannabis delivery companies.