Fire & Flower Holdings Corp. (TSX: FAF) (OTCQX: FFLWD) announced its financial results for the fiscal 2022 first quarter ending April 30, 2022. Fire & Flower reported revenue fell 7% to $40.9 million for the quarter from $44.1 million in the previous year. Fire & Flower attributed the drop to increasing competition from new licenses issued and pricing pressures in the cannabis retail market. The company trimmed its net losses to $9.9 million versus last year’s net loss of $61.6 million.
“Fire & Flower has delivered impressive growth in the early stages of our business and now we are moving forward to focus on the next phase of our evolution. As we evolve, our goal is to deliver positive Adjusted EBITDA and free cash flow. These goals will be achieved through a focus on operational excellence in all our business segments, continual growth in our Hifyre cannabis consumer technology platform, and expansion of our Pineapple Express Delivery service, now integrated in our Wholesale and Logistics segment. Deep retail expertise and our close partnership with Alimentation Couche-Tard, combined with our industry-leading cannabis consumer technology platform and competitive pricing strategy, are key drivers of value for the Company,” said Stéphane Trudel, Chief Executive Officer of Fire & Flower. Trudel was recently named Chief Executive Officer on June 1, 2022. Prior to joining Fire & Flower, Trudel held the position of Senior Vice President of Operations for Alimentation Couche-Tard Inc. and was a member of its Executive Leadership Team.
Breaking down the businesses, retail revenue decreased 12% to $29.6 million from $33.6 million in the prior year comparative period. Wholesale and Logistics revenue of $8.5 million was an increase of $0.8 million or 11% compared to the same quarter of the prior year. Digital revenue of $2.9 million grew slightly from last year’s $2.8 million in the same quarter.
The company has made improvements to its balance sheet. Free cash flow for the quarter was negative $8.7 million, an improvement from a negative $11.6 million in the previous fiscal quarter ending January 29, 2022, as a result of lower SG&A expenses and a reduction in capital expenditures. The cash and cash equivalents balance of $28.4 million as of April 30, 2022, increased by $8.6 million from the fiscal year ended January 29, 2022.
“Competitive pressures, license expansion outpacing market growth, and a growing value-oriented customer base have created challenging market conditions for the industry as a whole. With these market conditions, we look to optimize our retail network and have already seen favorable indications on our expanded Spark Perks Member Pricing program. As the market continues to grow, novel offerings such as the Firebird Rapid Delivery service, which brings cannabis products to consumers’ doors within hours, will become important service differentiators for our customers. We remain focused on improving near-term financial performance and remain steadfastly focused on our ultimate goal of financial sustainability through driving towards positive free cash flow.”