Kiaro Holdings, a Vancouver-based, omnichannel cannabis retailer, may not be announcing its 100th store, but that doesn’t mean it hasn’t been growing. Since Q2 2020, the independent brand has grown its revenue by 55% and made some lucrative deals.
In its recently released second-quarter financial results, Kiaro reported a 55% increase in revenue, due in part to a few different factors.
First, the brand added a new segment to its reports: e-commerce. While it was only earning money for around two weeks during the quarter, this arm of the business managed to bring in $140,000 in that time. Revenue for the quarter totalled $6.19 million, $3.72 million from retail and $2.32 million from wholesale, compared to $4 million the year before.
Not only that, but same-store sales increased 21% and sales from the brand’s wholesale branch, National Cannabis Distribution, are up 92%.
According to Kiaro, the team also managed to decrease operating expenses from 34% of revenue down to 29%. Pinching pennies and making strategic budgets paid off, because gross profit increased from $1.24 million last year to $1.68 million this year, a 35% increase.
“Our team continues to deliver fantastic financial results as proven by our record second quarter,” said Daniel Petrov, CEO of Kiaro. “Now that we have closed on the acquisition of Hemisphere Cannabis and have 16 stores in operation we look forward to achieving our $43 million annual revenue target.”
Acquisitions and Partnerships
While the monetary value of Kiaro’s operating expenses in Q2 2021 is higher than in Q2 2020 ($2.46 million versus $2.09 million), the brand hasn’t been playing fast and loose with its cash—it’s been spending money to make money.
In March 2021, Kiaro completed the first of its acquisitions this year, purchasing Grasshopper Cannabis, a brand with one nearly operational store in Kelowna, BC and three other retail spaces. The first store is only waiting on provincial approval to open, while the other three are still under construction. While they wait, the team at Grasshopper Cannabis is continuing to be active at local events to get the word out and entrench themselves as members of the community.
A few months later, in July, Kiaro acquired its e-commerce arm after purchasing Sculthorp SEO Inc, getting one operational brick-and-mortar storefront in Toronto, and three e-commerce business platforms in Canada, the US, and Australia, which has already seen a 16.2% net profit in July. E-commerce businesses across North America and the Commonwealth are becoming hot commodities now, with other retail giants snatching them up as well.
Most recently, Kiaro purchased Hemisphere Cannabis from Aegis Brands in an all-stock transaction, giving Aegis around 25% of the combined entity. The transaction, worth $6.13 million, was paid for using 61.3 million in common shares of the company, bumps Kiaro’s retail footprint up to 16 stores, with more scheduled to open by the end of 2021 and early 2022.
While Kiaro’s adjusted EBITDA is still in the red, it’s quickly ticking back into the black. With its new strategic acquisitions and ‘slow and steady wins the race’ attitude, Kiaro has the potential to build a strong root system from which to grow.