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SNDL Grows Retail Revenue 985% in Q3

SNDL is Canada’s largest private sector cannabis retailer, operating 183 locations under its two retail banners: Spiritleaf and Value Buds. The combined market share of these two chains represents 9.9% in the privatized provincial markets.

Gross revenue from their cannabis retail segment for the third quarter of 2022 ended September 30, 2022, was $66.2 million, compared to $6.1 million in the third quarter of 2021, a 985% increase. The Nova Cannabis Inc. acquisition and Value Buds sales were the material driver of the increase with $58.9 million of revenue during the third quarter of 2022.

Gross margin in Q3 for the retail division was $14.5 million, or 22% of sales, compared to $3.7 million in the third quarter of 2021, which is primarily due to Value Buds’ new locations and aggressive pricing strategy.

The company partnered with Nova for Value Buds’ private label products, expected to launch in November 2022. The private label strategy focuses on keystone segments, specifically large format, uniquely curated for the Value Buds consumer, and drives meaningful differentiation through the retail network.

Further Expansion

SNDL entered into a purchase agreement to acquire substantially all of the business of Superette Inc., a cannabis retail operator with six locations in Ontario that went into creditor protection in the summer. On August 29, Superette Group entered into a stalking horse agreement with SNDL Inc and expects the transaction to close before the end of the year, subject to a final court order.

“As a result of our team’s focus on operational execution and sustainable profitability, we delivered record revenue and cash flow from operations in the third quarter,” says Zach George, Chief Executive Officer of SNDL. “Our vertically integrated cannabis business is in the early stages of providing the scale and results that we believe are required for SNDL to be a strong member of a future oligopoly in Canada. Our integration work and cost control initiatives will continue into 2023 as we remain focused on opportunities related to the Alcanna assets and look to close the proposed acquisition of Valens in the first quarter of 2023.”

SNDL’s retail strategy is predicated on its quality store locations, wide range of products, and differentiated retail experiences. As of November 11, 2022, the Spiritleaf store count is 98 (23 corporate stores and 75 franchise stores), and the Value Buds store count is 85 corporate stores.

Tags: cannabis retailer (79), SNDL (7), Spiritleaf (30), Sundial Cannabis (1), Superette (8), Value Buds (14), Zach George (6)