With a pandemic-related collapse in tourism, Las Vegas cannabis retailer Planet 13 Holdings Corp. (CSE: PLTH) says sales have been cut by more than half since mid-March, even after introducing 24-hour delivery for locals.
Late Monday, the Nevada-based company released its financial results for the three months ending March 31, booking net revenues of US$16.8 million, which grew by US$300,000 from the previous quarter.
Planet 13 said its SuperStore, located on the Las Vegas Strip and touted as the world’s largest dispensary, generated US$2.5 million in earnings before interest, taxes, depreciation and amortization. The single location accounted for 10.9 per cent of all of Nevada’s legal cannabis sales in February, according to the company.
Co-CEO Larry Scheffler said in a statement the store was headed for a month of record sales, but “generated almost no revenue in the last two weeks of March as all operators were adjusting to the new reality” of COVID-19.
On March 18, Nevada ordered all physical cannabis storefronts to shutter allowing delivery as the only option to serve customers.
Planet 13 said they responded to the state’s emergency order by implementing same-day delivery service that was extended to 24 hours with 20 cars and drivers.
“Since March, we’ve increased our average daily sales from US$10,000 pre-COVID to over US$100,000 per day as of the end of April,” Scheffler said during the company’s earnings call. “While that doesn’t go all the way to replacing the US$200,000 per day we were generating at our peak pre-COVID it’s a fantastic result.”
On May 9, Nevada allowed cannabis retailers to open their doors again albeit with added safety protocols including curbside pickup.
Scheffler said after seeing a “complete elimination” of tourist traffic in Las Vegas, they’ve already seeing signs of a gradual return to normalized activity.
The executive said in the last few weeks sales at the SuperStore have started to increase above the daily rate of US$100,000. But due to state reopening restrictions, only 10 customers are allowed in the store despite the fact it is 112,000 square feet, he added.
Planet 13 said it believes those restrictions will be soon reduced. And Robert Groesbeck, the company’s other co-CEO, said Las Vegas could see “meaningful traffic” resume in the short term with tourists coming from nearby California by car.
“There is significant pent-up demand for entertainment experiences,” Groesbeck said.
After the first quarter, the company noted that it renegotiated and closed an acquisition for a cannabis store in Santa Ana, a suburban city in Southern California.
“We’ve long believed that Southern California was the natural location for Planet 13 to expand given the volume of visitors Las Vegas receives each year from California,” Groesbeck said.
The company said renegotiation of the deal saved it US$5 million.
As of March 30, Planet 13 said it had US$13.9 million in cash, which increased by nearly US$1 million from the end of 2019 as the company generated positive cash flow.
After the first quarter, Planet 13 said it had to spend about US$2 million to ramp up its delivery fleet and close the Santa Ana acquisition.
The company reported a net loss of US$1.4 million in the first quarter, along with operating expenses of US$7 million
Shares of Planet 13 traded flat Tuesday closing at $1.70 on the Canadian Securities Exchange.
Top image via Planet 13