Fire & Flower Q3 Revenue Increases 24% from Q2

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Fire & Flower Announces Third Quarter 2019 Financial and Operational Results

EDMONTON, Dec. 17, 2019 /CNW/ – Fire & Flower Holdings Corp. (“Fire & Flower” or the “Company”) (TSX: FAF), today announced its financial and operational results for the thirteen (and thirty-nine) weeks ended November 2, 2019.

Financial and Operational Highlights for the thirteen weeks ended November 2, 2019

  • As at the end of the quarter, the Company operated 30 cannabis retail stores across the provinces of Alberta, Manitoba, Saskatchewan and the Yukon, including 10 cannabis retail stores that commenced operations during the quarter. In addition, the Company provided consulting and licensing services to two branded cannabis retail stores in Ontario.
  • $18.6 million in system sales which includes corporate and licensed stores representing a 19.7% increase over Q2-2019.
  • Total revenue of $13.7 million at a gross profit of 34.7%, compared to $11.1 million in Q2-2019 at a gross profit of 36.5%.
  • Closed the strategic investment with Alimentation Couche-Tard Inc. (“Couche-Tard”) with an initial investment of $25.9 million (through its subsidiary). The strategic investment would result in Couche-Tard obtaining a controlling interest in Fire & Flower if all securities issued in connection with the strategic investment are converted/exercised in full.
  • Closed asset purchase agreements with wholly-owned subsidiaries of Cannabis Cowboy Inc. in relation to 8 cannabis retail stores in the province of Alberta including stores in the key urban market of Calgary.
  • HifyreTM launched the Spark PerksTM members program providing benefits such as Fastlane checkout, exclusive deals and access to member-only events. Since its launch the program has enrolled more than 50,000 members.

Subsequent Financial and Operational Highlights post November 2, 2019

  • Received 9 additional cannabis retail store licences and commenced operations at 3 additional cannabis retail stores in the province of Alberta. The Company is preparing to commence operations at the remaining 6 licensed cannabis retail stores prior to the Company’s fiscal year end.
  • Entered into the final stages of the application process for cannabis retail store licensing in the province of British Columbia.

With the emerging Canadian cannabis industry facing headwinds, Fire & Flower continues to deliver a track record of growth and meeting our objectives.

Trevor Fencott, Fire & Flower’s Chief Executive Officer.

We anticipate meeting our goal of 45 open and operating stores by the end of our fiscal year. Our industry-leading Spark Perks members program ensures that our customers are engaged with the Fire & Flower brand as their cannabis retailer of choice.

Selected Summary of Quarterly Results

During the thirteen weeks ended November 2, 2019, the Company generated revenue of $13.7 million including cannabis and cannabis-related accessory sales of $11.9 million in the retail channel, $1.2 million in the wholesale channel and digital development revenue of $0.6 million.

During the thirteen weeks ended August 3, 2019, the Company generated revenue of $11.1 million including cannabis and cannabis-related accessory sales of $9.7 million in the retail channel, $0.9 million in the wholesale channel and digital development revenue of $0.5 million.

Revenues are expected to continue to increase as the Company acquires new licences, opens additional retail cannabis stores, and continues to commercialize the HifyreTM digital retail and analytics platform subject to the issuance of new licences and the entry of the Company into new markets.

Total gross profit for the thirteen weeks ended November 2, 2019 was $4.8 million or 34.7% of revenue with retail and wholesale operations delivering $4.1 million, or 31.5%, gross profit, compared to $4.0 million with retail and wholesale operations delivering $3.6 million, or 33.6% of gross profit for the thirteen weeks ended August 3, 2019.

The Company recorded net comprehensive income of $10.2 million, or net income per share of $0.08 or $0.07 on a fully diluted basis for the thirteen weeks ended November 2, 2019. Net income for the quarter was attributable to accounting gains recorded in other income on the revaluation of the derivative liabilities associated with the convertible debentures.

Retail Platform Update

Fire & Flower continues to evolve its retail platform through a data-driven approach using the proprietary HifyreTM digital retail and analytics platform. The Company continues to focus on its existing markets of Alberta, Saskatchewan, Manitoba and Ontario and is in the licence application process in the province of British Columbia. The Company anticipates it will accomplish the following milestones across all addressable markets.

HifyreTM Digital Retail and Analytics Platform

Through its wholly-owned subsidiary, Hifyre Inc., the Company continues to commercialize and expand its digital retail and analytics platform that collects and analyzes consumer data to develop insights related to purchase preferences.

On September 19, 2019, Hifyre launched the Spark PerksTM members program. Member benefits within the program include: Fastlane checkout, exclusive deals and access to member-only events. Since the launch of Spark Perks in Fire & Flower retail stores, the program has enrolled more than 50,000 active members. Key success metrics of the program have included:

  • Spark Perks members spend 44% more per transaction than non-members on average.
  • 39% of the members have made more than two transactions since the launch of the program.
  • During Fire & Flower’s Cyber-Monday promotion, more than 50% of total transactions were from Spark Perks members.

The Hifyre Active Data platform provides real time reporting and analysis to the Company’s marketing, retail experience and merchandising teams and is supplied to licensed producers to assist in demand forecasting, product development and sales reporting. Throughout the thirteen weeks ended November 2, 2019, Hifyre has continued to commercialize this platform through external account sales.

Fire & Flower’s financial statements and management discussion and analysis for the period are available on Fire & Flower’s SEDAR profile at www.sedar.com and on Fire & Flower’s website at www.fireandflower.com/investor-relations/.

Conference Call

Fire & Flower will host a conference call today, December 17, 2019 at 8:30 AM ET to discuss these results. Trevor Fencott, Chief Executive Officer and Nadia Vattovaz, Chief Financial Officer will provide a management presentation by a question and answer session with research analysts.

Date: Tuesday, December 17, 2019

Time: 8:30 AM Eastern Time

Conference Call: 1-888-664-6383

Conference ID: 87723481

Webcast (and playback): https://event.on24.com/wcc/r/2149844/80E2B586DC7C8813F74736C71277BDDB

Playback Number: 1-888-390-0541

Playback Passcode: 723481#

About Fire & Flower

Fire & Flower is a leading purpose-built, independent adult-use cannabis retailer poised to capture significant Canadian market share. The Company guides consumers through the complex world of cannabis through education-focused, best-in-class retailing while the HifyreTM digital platform connects consumers with cannabis products. The Company’s leadership team combines extensive experience in the cannabis industry with strong capabilities in retail operations.

Fire & Flower Holdings Corp. owns all issued and outstanding shares in Fire & Flower Inc., a licensed cannabis retailer that owns or has interests in cannabis retail store licences in the provinces of Alberta, Saskatchewan, Manitoba and Ontario and the Yukon territory.

Through the strategic investment of Alimentation Couche-Tard (ATD.A, ATD.B), the Company has set its sights on the global expansion as new cannabis markets emerge.

Original Press Release

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Published by NCV Newswire
NCV Newswire
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