John Schroyer
Canada-based High Tide Inc. (Nasdaq: HITI) (TSXV: HITI) (FSE: 2LYA) drastically improved its revenue for its second fiscal quarter, which ended April 30, by a whopping 46%, but the company still fell short of profitability, with a $1.6 million net loss.
High Tide hit $118.1 million in revenue for the quarter, up year-over-year from $81 million in Q2 last year. The increase was driven by both cost reductions and sales increases, the company reported.
While High Tide also shrunk its losses year-over-year, to $1.6 million from $8.2 million, it also had negative cash flow of minus $1.9 million for the quarter.
The 153 storefronts across Canada run by High Tide are likely to grow in number this year, the company reported, with a continued focus on expanding its retail footprint in particular as it attempts to become cash-flow positive by the end of this calendar year.
“Our bricks-and-mortar margins have increased by approximately 1% every quarter for the last five quarters, and we feel there is further opportunity to increase margins in most markets where we operate,” CEO Raj Grover said in a press release. “We believe there remains a significant opportunity to continue moving towards our goal of capturing 15% of this market.”
In its quarterly outlook, High Tide noted that it expects more market contraction across the Canadian marijuana industry as harsh market conditions persist, which will provide more opportunities for acquisition targets.
High Tide “expects that this shakeout will likely continue over the coming 12 months as we pass the pivotal five-year anniversary of cannabis legalization and many expiring leases are not renewed,” the company stated.
The business “currently plans to open more stores in the second half of calendar 2023 than in the first half of the year. However, considering the macro environment, this growth will still be relatively muted compared to its historical pace. Regarding potential future M&A, there is currently a heightened level of opportunities coming to market,” it said in a release.
Other highlights from High Tide’s latest quarter and subsequent months include:
- Reaching 4.5 million customers globally and more than 1 million Canna Cabana members for its retail operations in Canada.
- Opened a new Canna Cabana retail store in Edmonton.
- Debuted its new customer loyalty program, ELITE, which has more than 13,500 members as of June 14.
- Launched 13 new product sku’s under its Cabana Cannabis Co product line in Manitoba, Ontario and Saskatchewan.
- Hit $2 million in retail sales on the marijuana holiday of April 20.
