Fire & Flower Holdings Corp. (TSX: FAF) saw its revenues rise 24 per cent over the summer as competition heated up among Canada’s biggest weed retailers.
On Tuesday, the Edmonton-based company said total revenues were $28.6 million for the second quarter ended Aug. 1, up from $23.1 million during the prior thirteen-week span.
Fire & Flower was operating a total of 51 stores at the beginning of August, with 40 stores in Alberta, seven in Saskatchewan, two in Ontario, and a store each in Manitoba and the Yukon.
While the company remains the country’s largest cannabis retailer by store count and revenue, Calgary-based High Tide Inc. (CSE: HITI) is poised to take over those bragging rights in November when it closes an acquisition of Meta Growth Corp. (TSXV: META). The newly combined retail footprint will boast a total of 63 shops in four provinces with annualized sales estimated at $133 million.
With more than 1,100 pot shops open across Canada, monthly retail sales continue to climb — hitting the $200 million mark in June.
Both High Tide and Fire & Flower are trying to balance meeting further expansion targets while tightening up on operating expenses.
While Fire & Flower’s general expenses dropped 27 per cent sequentially in the second quarter to $12.5 million, the firm reported a total net loss of $29.1 million. The sizable loss was boosted by the revaluation of derivative liabilities totalling $18.3 million and finance costs of $8.2 million, it said.
The company improved its adjusted earnings before interest, taxes, depreciation, and amortization loss to $0.3 million in the second quarter from a loss of $2.7 million in the prior quarter.
“Fire & Flower continues to drive towards delivering positive adjusted EBITDA and during our second quarter of fiscal 2020, we have made meaningful progress towards this critical goal,” CEO Trevor Fencott said in a statement.
Fire & Flower says it’s focusing on having all of its stores deliver positive margins. Reported gross margin for the quarter came in at 43.8 per cent.
The retailer held $20 million in cash as of Aug. 1, and with convenience store giant Alimentation Couche-Tard (TSX: ATD.B) upping its ownership stake to 15 per cent in the quarter, Fire & Flower says it has access to $19 million more.
In July, the retailer opened two weed shops adjacent to Circle K locations in Alberta as part of a new pilot project between the two businesses.
The company says it’s in good shape to expand in Ontario, with seven locations listed as “in progress” and one “authorized to open” on the provincial regulator’s website. Fire & Flower said it opened a downtown Toronto location close to Yonge-Dundas square
Ontario promised to double store authorizations to 40 a month after the pandemic slowed the province’s store rollout in the spring.
Fire & Flower also received two store licences in Vancouver, B.C. that it “intends to open… at the earliest opportunity.”
The retailer says cannabis consumers are no longer loading up like they did at the start of the Covid-19 crisis, but sales of bulk value products, vapes, beverages and edibles increased from May to July.
Following the quarter, Fire & Flower teamed up with producer WeedMD Inc. (TSX-V: WMD) to launch private label brand Revity CBD in Saskatchewan.
The company says it’s gained 45,000 new members since May on its Hifyre Sparks Perks loyalty program, bringing the total up to 145,000 members.
On Monday, Fire & Flower’s competitor Meta Growth reported its fiscal third quarter results, booking a $ 23.2 million net loss on revenues of $13.7 million.
As of May 31, Toronto-based Meta Growth operated 23 stores in Alberta, eight in Manitoba — including three in partnership with First Nations — and one in Saskatchewan.
Top image via Fire & Flower