Goodfood Sees Q2 Net Sales Dip While Customer Base Increases

Goodfood Market Corp., a Canadian online grocery company delivering fresh meal solutions and grocery items, has released its financial results for the second quarter of fiscal 2022, ended March 5.

Net sales were CAD $73.4 million, compared with $77.8 million in the first quarter of fiscal 2022 and $100.7 million in the second quarter of fiscal 2021.

Despite the slight dip in net sales, company progress has been made in key areas. By meeting Canadians’ appetite for fast delivery of a unique selection of products, Goodfood has increased on-demand active customers by 108% since the first quarter.

“Only Goodfood, through our vertically integrated on-demand grocery and meal solutions network, allows Canadians to fulfill their meal-planning needs in minutes with no markup to in-store prices,” said Jonathan Ferrari, CEO of Goodfood, whose main production facility and administrative offices are in Montreal.

Goodfood has also expanded its micro-fulfillment center footprint. It’s now operating six centers in the dense urban areas of Toronto, Montreal and Ottawa, Canada’s capital city, and where the company’s first automated facility opened in March.

The company also saw CAD $1 million adjusted-EBITDA improvement and a CAD $5 million reduction in net cash used in operating activities versus the first quarter of 2022.

Other earnings reported included a gross margin of 24.0%, stable compared with the first-quarter gross margin of 24.0% and lower than the gross margin of 30.4% logged in the second quarter of fiscal 2021. Net loss was $20.6 million, lower than the first- quarter net loss of $21.6 million and higher than the net loss of $4.3 million in the second quarter of fiscal 2021.

“I am pleased with the quarterly progress we are making across our three key value-creating drivers,” said Ferrari. “Beginning with our focus to improve profitability and cash flow, we have made continued improvements in our cost structure and working capital management, leading to cash flow used in operating activities of $13.7 million, a significant improvement over the $18.9 million and $23.7 million used in the first quarter of fiscal 2022 and last quarter of fiscal 2021, respectively. From an operational perspective, we successfully implemented a series of efficiency initiatives that offset inflationary pressures and other macroeconomic headwinds to come inline from a gross-margin perspective when compared to the first quarter of 2022. During the quarter, we also continued to sequentially reduce our fixed cost structure, having now fully realized the previously announced $12 million in annualized savings from headcount reduction.”

Meanwhile, Goodfood has welcomed John Khabbaz to its board of directors, replacing Hamnett Hill, who stepped down for personal reasons but will continue to be an important shareholder of the company.

Khabbaz is the founder and chief investment officer of Phoenician Capital, an investment management firm with headquarters in New York City.

“As an entrepreneur and founder myself, I understand the challenges and opportunities faced by young, growing businesses,” said Khabbaz. “Working with my fellow board members, I will seek to guide this dynamic team to cement its leadership in the Canadian online grocery market. Goodfood is currently selling at an attractive valuation, and, in the long run, the market will recognize its unique competitive advantages.”