Sundial is now the largest private sector cannabis and liquor retailer in Canada after acquiring Alcanna on March 31, 2022. The company has 354 retail stores operating under the banners Spiritleaf, Value Buds, Ace Liquor, Liquor Depot, and Wine & Beyond.
Net revenue for the first quarter of 2022 ending March 31, 2022 is $17.6 million, which represents an increase of 78% over the first quarter of 2021. Of that amount, $7.5 million is for cannabis retail operations (including $0.7 million for one day of revenue from Nova Cannabis’s 80 stores that were acquired as part of the Alcanna acquisition).
The total retail sales from all Spiritleaf stores reduced from $41.1 million in Q4 2021 to $34.6 million in Q1 2022. Only 20 corporate-owned stores show in Sundial’s revenue, since the other 83 stores are franchised.
Gross margin increased to $3.4 million for the first quarter of 2022 compared to a loss of $3.5 million in the first quarter of 2021, representing a 199% increase. Gross margin for retail operations in Q1 was $3.3 million.
Still in the Red
Despite a greatly improved gross margin, the company is still looking for a black bottom line. Net loss was $38.0 million for the first quarter of 2022 compared to a $134.4 million net loss in the first quarter of 2021, an improvement of 72%.
“The first quarter of 2022 was both transformational and transitional for Sundial,” says Zach George, Chief Executive Officer. “Sundial’s regulated products platform provides unique insights into evolving consumer preferences and value propositions. We continue to strengthen and transform our business while benefitting from vertical integration across our segments under a shared services model. In less than two months, we have been able to increase branded product distribution by shipping products to Value Buds stores and have started to realize synergies against an integration plan that will be a focus for the balance of the year.”
“Through cost structure improvements in our cannabis operations, we have created a more balanced and diverse product mix that focuses on higher-margin, higher-quality cannabis,” George adds.
Benefits of Vertical Integration
Sundial saw brand share increase for its house brands sold in Spiritleaf locations through the first quarter and expects that momentum to continue in the second quarter of 2022. Value Buds stores began carrying Sundial brand products immediately following the Alcanna acquisition.