Nova Cannabis Inc. (TSX: NOVC) posted upbeat results after the market closed on Thursday. The company is pivoting toward more competitive pricing under a new discount banner.
The Canadian cannabis company released its financial report card in the period ending June 30, 2021.
Nova delivered approximately $56.3 million in total revenue during the period, a 90% gain compared to the same period last year. This beat the Yahoo Finance Average analyst estimate for revenues of $38.66 million.
Nova reported that second-quarter sales rose 90% to $56.3 million over last year and saw a 13% increase over the first quarter of 2022. The company attributed the sales growth to the 29 retail cannabis stores that were opened since March last year and rising sales from stores re-branded to the Value Buds discount banner at various times throughout 2021.
“The performance of our Value Buds stores continues to outpace the growth of the industry as we reported record sales for the second quarter of 2022, underpinned by equally strong sales and gross margin growth that is driving greater operating leverage to the bottom line,” said CEO Marcie Kiziak.
Nova recorded a net loss of $1.4 million, compared to a net loss of $7 million in the same period last year. The reduction is primarily due to the increase in sales and gross margin over the period.
Gross margin for the period was $10.6 million, up $5.4 million or 105.0%, from $5.2 million for the same period in the prior year. The gross margin as a percent of sales was 18.8% for the period.
During the comparative period of 2021, the stores operated under the Nova Cannabis, YSS, and Sweet Tree banners with a different operating, pricing, and margin strategy than in the second quarter of 2022, when sales came primarily from the stores converted to the Value Buds discount banner.
Since then, the company has revised prices at specific retail locations where the competitive response has waned, leading to gross margin percentage increases,
Nova has an uncommitted revolving credit facility with Sundial, with an aggregate principal amount not exceeding $15 million. The credit facility has an outstanding $8.7 million in principal and accrued interest.
The company currently has $6.2 million worth of cash.
Last month, Nova launched an at-the-market equity offering program, allowing the company to issue up to $20 million of common shares from treasury to the public at the company’s discretion and subject to market conditions and regulatory requirements.
“Delivering superior value to cannabis consumers will become increasingly important in the current economic environment, and Value Buds is purpose built for this,” said Kiziak. “We will stay the course by being disciplined in how we expand our footprint, remaining customer focused and choosing the best real estate for our strategy, whether through acquiring stores or building our own.”
Disclaimer: https://www.greenmarketreport.com/nova-cannabis-beats-on-revenue-bets-on-value/
Posted by: Times Of Hemp, TOH, #TOH, #TimesOfHemp, https://www.timesofhemp.com
