Fire and Flower’s first quarter results for 2022 are likely a disappointment for the retail giant. The company’s $40.9 million in sales for the quarter ended April 30, 2022 was a 7% drop from last year’s revenue of CA$44.1 million in the same three-month period.
It is believed this decline is because of rising competition from new licenses issued and pricing pressures in the cannabis retail market. Gross profit is also down 26% for F&F from the same quarter last year, coming in at $12.2 million compared to $16.5 million for the same period in 2021.
Compounding these discouraging figures is an adjusted EBITDA of negative $2.3 million for Q1 of the fiscal year 2022 and a net loss of $9.9 million for the quarter.
There is, however, a cash and cash equivalents balance of $28.4 million for the quarter, which represents an increase of $8.6 million from the fiscal year ended January 29 of this year. And free cash flow for the 13 weeks ended April 30, 2022 came in a minus $8.7 million, an improvement from negative $11.6 million in the previous fiscal quarter ended January 29, 2022. This is a result of lower SG&A expense and a reduction in capital expenditures.
New CEO Remains Upbeat
Despite these figures, new Fire and Flower Chief Executive Officer (CEO) Stéphane Trudel struck a defiant tone.
“Fire & Flower has delivered impressive growth in the early stages of our business and now we are moving forward to focus on the next phase of our evolution. As we evolve, our goal is to deliver positive Adjusted EBITDA and free cash flow. These goals will be achieved through a focus on operational excellence in all our business segments, continual growth in our Hifyre cannabis consumer technology platform, and expansion of our Pineapple Express Delivery service, now integrated in our Wholesale and Logistics segment. Deep retail expertise and our close partnership with Alimentation Couche-Tard, combined with our industry leading cannabis consumer technology platform and competitive pricing strategy, are key drivers of value for the Company,” says Trudel.
“Competitive pressures, license expansion outpacing market growth, and a growing value-oriented customer base have created challenging market conditions for the industry as a whole. With these market conditions, we look to optimize our retail network and have already seen favourable indications on our expanded Spark Perks Member Pricing program. As the market continues to grow, novel offerings such as the Firebird Rapid Delivery service, which brings cannabis products to consumers’ doors within hours, will become important service differentiators for our customers. We remain focused on improving near term financial performance and remain steadfastly focused on our ultimate goal of financial sustainability through driving towards positive free cash flow.”