Canadian cannabis retailer Fire & Flower reported a loss of 21.6 million Canadian dollars ($16 million) on plunging sales for the quarter ended July 30, 2022.
Revenue of CA$40.7 million for the quarter was 6% lower than the same period one year ago, even though overall industry sales grew substantially over the same period.
The results were below expectations of analysts, who attributed the weaker-than-expected performance to a reduction in store count.
The company had 101 operational stores in the previous quarter, but that number fell to 92 after the closing of underperforming locations, according to a report by Alberta-headquartered ATB Financial.
“Fire & Flower remains focused on the transformation of our business and strategic opportunities with a goal to deliver positive adjusted EBITDA and free cash flow,” CEO Stéphane Trudel said.
He noted that the Toronto-headquartered company is focusing on near-term initiatives, such as its membership pricing program.
“Our member pricing program has generated success by getting customers back in our stores, and we will look to maximize the margin opportunities from all programs focused on driving gross profit dollars,” Trudel said.
Fire & Flower’s retail revenue fell 5% year-over-year to CA$30.4 million in the second quarter.
A bright spot, however, is retail revenue increasing 2.7% quarter-over-quarter despite the reduction of nine retail stores.
Digital revenue continued to fall.
Digital sales were CA$1.9 million in the second quarter compared with CA$3.7 million in the same quarter last year.
The company also announced a change to its board.
Suzanne Poirier, an executive at Quebec-based Alimentation Couche-Tard, joined the board, replacing Guillaume Léger on Aug. 12.
Shares of Fire & Flower trade on the Toronto Stock Exchange as FAF.
The retailer plans to list its shares on the Nasdaq exchange.