SNDL is Canada’s largest private sector cannabis retailer, operating 197 locations under its four retail banners: Value Buds, Spiritleaf, Superette, and Firesale Cannabis.
It acquired Alcanna in March 2022, creating the largest private sector liquor and cannabis retail network in Canada. In the fourth quarter of 2022, Value Buds, Spiritleaf, and Superette’s combined market share represent 9.9% of provincial markets.
The company recently announced its full-year and fourth-quarter 2022 financial and operational results.
Gross revenue from their cannabis retail segment was $205.6 million in 2022, compared to $16.1 million in 2021, an increase of 1,177.01%. Gross revenue was $68.4 million in the fourth quarter of 2022, compared to $10.0 million in the fourth quarter of 2021, an increase of 584%.
Gross margin from the cannabis retail segment was $47.3 million in 2022, or 23% of sales, compared to $6.5 million in 2021. Gross margin was $15.7 million, or 23% of sales, in the fourth quarter of 2022, compared to $2.8 million in the fourth quarter of 2021. The increase is primarily due to Value Buds’ new locations and discount pricing strategy.
$372.4 Million Net Loss in 2022
While revenue may have increased, SNDL saw a net loss of $372.4 million for 2022, compared to $226.8 million in the previous year.
Net loss for the fourth quarter of 2022 was $161.57 million compared to $98.8 million in the third quarter of 2022. The cannabis retail segment saw a net loss of $98.37 million in the fourth quarter of 2022
The loss for 2022 was largely driven by fourth quarter non-cash charges including the ‘impairment of goodwill’ related to the Alcanna transaction, including Nova. Despite improving fundamentals for Nova, the share price decline of 53% since the acquisition date warranted a $88.0 million non-cash adjustment.
Private Label Products
In 2022, SNDL launched its private label program with Spiritleaf Selects and Value Buds. Value Buds private label made up 12% of total 28-gram sales and 36% of 14-gram sales in Alberta Value Buds stores in 2022.
The private labels are designed with each banner’s target shopper in mind and create differentiation within the cannabis retail space, while enhancing gross margins, brand awareness, and customer loyalty.
Amended Partnership with Nova Cannabis
Earlier this month, SNDL and Nova Cannabis announced they’re amending their previously announced strategic partnership. The proposed amendments include SNDL selling 31 stores to Nova versus the original 25, changes to equity, and reduced ownership.
In February 2023, SNDL announced the acquisition of five Superette stores in Ontario.
As of April 19, 2023, the Spiritleaf store count is 99 (22 corporate stores and 77 franchise stores), the Superette store count is five corporate stores, the Firesale store count is two corporate stores, and the Value Buds has 91 corporate stores.
Increase Share Prices Moving Forward
“2022 was another transformational year for SNDL. We increased the sustainability of our business model by achieving record-breaking revenue and gross margin as well as positive and increasing cash provided from operating activities in our two most recent quarters,” said Zach George, Chief Executive Officer of SNDL in a statement. “Despite the positive milestones and growth we have achieved, SNDL’s shares are trading at near all-time lows, well below our book value and materially less than 1X our annualized revenue. We must continue to find ways to unlock value and evaluate all options regarding the future of our business and operating segments.”