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Thursday, Jul 25, 2024
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.

Industry update

Fire & Flower’s revenues rise despite pandemic

The owner of 67 Canadian pot shops saw Q3 sales jump 16% to $33M while recording net losses of $25.7M

Despite Covid-19 complications, national sales growth continues for major Canadian weed retailer Fire & Flower Holdings Corp. (TSX: FAF).

On Tuesday, the Alberta-based company reported $33.1 million in revenue for the quarter ended Oct. 31, representing a 15.8 per cent sales jump from the previous quarter.

Fire & Flower says the increase in revenue was driven by opening up more retail locations during the quarter, and stronger same-store sales. The firm operates 67 stores in Canada, including 37 stores in Alberta and 21 in Ontario.

But its net loss for the quarter was $25.7 million.

Fire and flower attributed most of the loss to $53.9 million in extinguishment losses related to amended debentures and warrants held by investor Alimentation Couche-Tard Inc. (TSX: ATD.B), the owner of Circle K convenience stores.

The company, however, did manage to hit one measure of profitability for the first time.

Adjusted earnings before interest, taxes, depreciation, and amortization for the third quarter was $1.2 million. That’s better than the adjusted EBIDTA loss of $300,000 recorded in the prior quarter.

“The achievement of positive adjusted EBITDA is a significant milestone and demonstrates our continued track record of delivering on our corporate objectives,” CEO Trevor Fencott said in a statement. “We continue to work at maintaining positive adjusted EBITDA and aggressively pursue growth opportunities for the company.”

Last November, Fire & Flower acquired Friendly Stranger, a legacy-to-legal cannabis retailer with 21 locations in the province of Ontario. Photo via Friendly Stranger

Last month, Fire & Flower acquired legacy-to-legal weed retailer Friendly Stranger, which gives the company a bigger presence in the key market of Ontario.

Read more: Fire & Flower to buy legacy-to-legal retailer Friendly Stranger

As Toronto and Peel regions recently went into a second lockdown, the retailer was able to pivot rapidly to curbside pickup and home delivery. It did so through its e-commerce platform called Hifyre. The company said Hifyre contributed $1.5 million in gross profit in the third quarter. Fire & Flower has been expanding its digital platform to offer market data analytics for the industry and media.

The company finished the quarter with $24.7 million in cash and cash equivalents.

Shares in Fire & Flower rose two cents to $0.90 Tuesday on the Toronto Stock Exchange.

Top image via Fire & Flower

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