Nova Cannabis recently announced its fourth quarter and year-end 2022 results. The company reported fourth quarter sales growth of 4.2% and increased gross margin percentage to 20.8% from 18.9% compared to the third quarter of 2022. The company also reduced its net loss in fiscal year 2022 to $11.2 million, compared to a loss of $20.6 million in 2021.
“Our revenue growth is accompanied by gross margin growth, as we’ve started to adjust pricing in certain areas where the competitive pressures have waned,” says Marcie Kiziak, CEO. “This, along with growing revenues from data analytics licensing and the successful launch of our private label products in partnership with SNDL, gives us levers to drive future gross margin growth as we capture greater market share, further validating our strategy.”
Fourth Quarter 2022 Highlights
Nova reported record revenue of $61.4 million in Q4, a 28.9% increase from the same quarter in the prior year. The company had a net loss of $4.8 million, compared to a net loss of $5.1 million in Q4 2021.
Store sales increased 2.7% in Ontario and 1.8% in Alberta in the fourth quarter compared to the third quarter of 2022. As of March 28, 2023, Nova had 91 stores operating, an increase of 17 stores since the beginning of 2022.
Nova’s market share was an estimated 26.4% in Alberta and 7% in Ontario in Q4.
In November 2022, Nova launched four private label products in Alberta under the Value Buds brand in large format 14-gram and 28-gram offerings of blended whole flower. Private label sales represented approximately 2.6% of Alberta retail sales in Q4.
Value Bud 28-gram offerings launched in Ontario in February 2023 and the 14-gram format is expected to launch later this year.
Fiscal Year 2022 Highlights
Nova reported revenue of $226.4 million in their 2022 fiscal year, a 68.5% increase from $134.4 million in 2021. The company reduced its net loss to $11.2 million in 2022, compared to a loss of $20.6 million in 2021.
Strategic Outlook
Nova’s strategy is to be one of the largest and fastest-growing cannabis retailers in Canada. The company says, “Its goal is to disrupt and solidify the cannabis retail market by promoting a wide range of cannabis products at everyday best-value prices, while encouraging greater migration from the illicit cannabis market. The company’s strategy is rooted in the quality of its store footprint and locations, the sales efficiency of Nova stores, and the appeal of the Value Buds brand.”
In 2022, Nova partnered with SNDL for its Value Buds’ private label strategy. The company continues to remain aggressive with its pricing strategy to capture further market share.
Nova has opened or acquired an additional three stores in 2023, one in Alberta and two in Ontario. Pending completion of the strategic partnership with SNDL, announced by the company on December 20, 2022, Nova will acquire an additional 26 stores located in Alberta, Saskatchewan, and Ontario from SNDL’s retail network, increasing the company’s store footprint by more than 28%. On April 3, SNDL and Nova Cannabis amended their agreement, increasing the number of stores acquired from 26 to 31.