Pointed consolidation efforts and increased participation in its member loyalty program drove High Tide‘s (Nasdaq: HITI) (TSXV: HITI) third-quarter revenue to nearly double what was reported last year.
Canada’s largest non-franchised retailer released its financial report card for its fiscal third quarter ended July 31.
High Tide’s third-quarter revenue totaled C$95.4 million, up 18% over the second quarter and up 98% the same period last year. The company shaved its net loss down to C$2.72 million versus C$12 million a year ago and C$8 million sequentially.
Earnings went for a loss of five cents per share versus a loss of three cents per share in the same period last year.
“These impressive numbers come despite hypercompetitive cannabis retail markets across Canada and a global softening of e-commerce sales as pandemic-related restrictions are continuing to be lifted,” CEO Raj Grover said in a news release. “High Tide now sits within striking distance of having the highest revenue of any cannabis company reporting in Canadian dollars.”
C$80.7 million of revenue was earned in Canada, while C$12.7 million worth of revenue streamed in from the United States and C$1.9 million internationally. Revenues rose by 110% in Canada, 33% in the United States, and 1,486% internationally since the same time last year.
High Tide’s brick-and-mortar success comes in large part from its discount club model, which saw an 18% rise in daily same-store sales over the prior quarter and a 46% gain since last year.
The company’s Cabana Club loyalty program for its Canna Cabana stores has more than 750,000 members, “which represents more than 12% of the cannabis users across the country, excluding Quebec, per Statistics Canada data,” Grover added.
“This membership number was our initial goal when we launched our discount club model last October, and we have now met our target in under a year,” Grover said.
“We look forward to rolling out our Cabana Elite program in the near term. This program will let members access additional benefits for a small recurring fee, while the existing Cabana Club program will remain free of charge,” he said.
Additionally, High Tide’s CEO steered the company’s focus toward consolidation, but not just in its brick-and-mortar turnkeys. High Tide also has completed diverse portfolio grabs, such as its CBD expansion play with NuLeaf Naturals in the United States and Blessed CBD in the U.K.
“On the mergers and acquisitions front, subsequent to the end of the quarter, we added nine stores from Choom Holdings and currently have many other prospects which are both accretive and strategic that we are in the process of analyzing,” Grover said.
High Tide’s gross profit rose by 54% to $25.8 million, representing 27% of revenue for the third quarter, versus $16.7 million, or 35% of revenue, in the same quarter last year.
The shift in the gross margin was due to a change in retail pricing strategy to a discount club model, the company said. Sequentially, the gross profit margin was relatively in line with the previous quarter, which closed at 28%.
Adjusted EBITDA saw a 77% gain of $4.2 million over the quarter. The company had $18.3 million worth of cash and cash equivalents, up from $14 million at the end of the last fiscal year.
“I have always strived to underpromise and overdeliver,” Grover said. “This is a value that I consistently instill in our team. We set targets and are held accountable as a team if we do not meet them. I am happy to report that based on our latest financial results, we are consistently outperforming our targets as communicated to the market.”