Nova’s 80 cannabis stores in Canada saw a 171% increase in revenue from the first quarter of 2022 compared to the same quarter in 2021, and a 5% increase from the fourth quarter of 2021 according to the company’s recent financial statements. Profit, however, is still elusive as the company recorded an operating loss of $0.2 million compared to $0.1 million for the first quarter of 2021. Gross margin was 18.8% of sales, up 1% from the previous quarter, but down from 26.0% in the first quarter of 2021.
The increase in sales is primarily due to the 27 retail cannabis stores that were opened since March 31, 2021, the 19 stores acquired late in the first quarter of 2021 as part of the business combination between YSS Corp. and Alcanna, and increased sales from stores that were re-branded to the Value Buds discount banner from “Nova Cannabis,” “YSS,” and “Sweet Tree” at various times throughout 2021.
“The company’s Value Buds stores experienced strong sales through the first quarter of 2022, and gross margin improved sequentially from the fourth quarter of 2021,” says Marcie Kiziak, recently appointed CEO of Nova. “Those results are a direct correlation of the consolidation and rationalization in the industry, which our disruptive pricing strategy was designed to withstand.”
Sundial’s Acquisition of Alcanna
Sundial indirectly acquired an approximately 63% ownership interest in Nova, when it acquired Alcanna in March 31, 2022, so Sundial is now Nova’s majority shareholder.
With ongoing losses, Nova is focusing on cost savings. Kiziak says, “It is our commitment to continue to improve operational efficiency and discipline in managing our retail stores while selling good cannabis affordably.” Thanks to the strong support and increased capital commitment from Sundial, Nova has financial backing and is planning to expand in Ontario.