Debra Borchardt
Fire & Flower Holdings Corp. (TSX: FAF) (OTCQX: FFLWF) announced its financial results for the fiscal 2023 first quarter ending March 31. First-quarter revenue increased 5.3% to C$43.1 million versus last year’s C$40.9 million for the same time period in 2022.
All dollar figures are in Canadian dollars.
Fire & Flower delivered a net loss of $10.1 million, slightly higher than last year’s net loss of $9.9 million. The company had cash and cash equivalents balance of $8.2 million at the end the quarter.
“Once again, we saw same-store sales and gross margin growth. As we look towards 2023 as a transformational year, the company is focused on our core retail business, supported by Hifyre, which enables us to deliver higher gross margin percentages and the best available products to our customers,” CEO Stéphane Trudel said.
Retail Detail
Retail revenue for the quarter noted that increased 9.1% from $29.6 million last year to $32 million this year despite having nine fewer stores. The company also stated that the year-over-year same-store sales increased of 17.2%. The company had 92 stores open and in operation at the end of March.
Wholesale sales fell from last year’s $8.4 million to $7.8 million and revenue from the digital platform was flat at $2.9 million.
Cash Crunch
As of March 31, the company had negative working capital of $12.8 million (As of Dec. 31, 2022, working capital was negative $9.8 million). Fire & Flower also had a net loss of $10.1 million and negative cash flow from operating activities of $2.6 million (April 30, 2022: $6 million).
At the end of the quarter, the company’s accumulated deficit was $314.3 million (Dec. 31, 2022: $304.2 million). The company said it is actively pursuing additional financing options to raise additional capital to fund its operations and meet its future growth targets, including ongoing negotiations in respect of both nondilutive debt financing and equity financing at preferred rates.
The company did note in its filing that it received an $11 million loan that matures in December 2023. The investor that provided the loan has first priority security on all of the assets of the company.
“Consolidation opportunities in the industry that are fully accretive to our business are a key priority as we look to a long-term goal of achieving 10% market share,” Trudel said. “While keeping our eye on our long-term vision, our teams are working diligently to generate savings in SG&A expenses by simplifying our business and building value in core assets.”
