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Organic Garage Posts COVID-Related Q3 Sales Decline as Gross Margin Expands

Canadian indie touts success of Hand-Picked Partners program, plant-based Future of Cheese products
Canadian Grocer’s Subsidiary Launches New Brand Identity Organic Garage Future of Cheese
Organic Garage's Q3 sales total didn’t include any material contribution from plant-based subsidiary Future of Cheese because of the timing of the launch of the company’s products at the end of the quarter.

For its third quarter ended Oct. 31, 2021, Canadian independent grocer and plant-based product developer Organic Garage Ltd. reported a sales decrease from CAN $6.9 million in the year-ago period to CAN $5.9 million as the impact of COVID-19 overstocking subsided. Q3 sales total didn’t include any material contribution from plant-based subsidiary Future of Cheese because of the timing of the launch of the company’s products at the end of the quarter. Despite this, Organic Garage’s gross profit margin grew from 30.4% to 31.3%.

Meanwhile, the company’s net loss went from CAN $-814,550 to CAN $-288,230. This was primarily related to a decrease in sales, noncash stock-based compensation and costs incurred during the renovation of one location, which also affected that location’s sales, offset by improved gross margins; a 10% decrease in administrative wages and benefits, due to improved efficiencies; and transportation costs related to the phase-out of warehouse operations.

The company completed its shift to a decentralized distribution model in April 2021, and successfully entered into an agreement to sublease the facility for the remainder of the lease term. During the three months ended Oct. 31, 2021, Organic Garage’s incremental savings were about $187,000, consisting primarily of savings related to wages and benefits, transportation and rent.

“We are pleased with our Q3 results and both the financial and strategic positions in which the company has finished the calendar year,” noted Organic Garage CEO Matt Lurie. “We continue to see strong results in our gross profit from management’s concise and methodic purchasing strategies. Having improved our margins while facing increased inflationary pressures, supply management issues and labor shortages was a significant accomplishment during the quarter.”

Added Lurie: “Our Hand-Picked Partners roster has garnered great feedback from our customers, and our recent addition of nonalcoholic beer, wine and spirits through our partnership with Rival House Limited will no doubt improve the shopping experience at our store locations.” 

He went on to discuss the company’s plant-based brand: “The Future of Cheese operations continue to ramp up, and we were extremely excited to officially launch our line of [dairy-free] butters across selected retailers in Ontario in October along with the successful launch of our plant-based brie and truffle-infused butter in December. The products have been in high demand and have been received very positively by retail customers and our restaurant partners. It has been very gratifying to see our products on the shelves of not only Organic Garage, but other retailers and partners, and we look forward to building on the success achieved to date.” 

Although Organic Garage “did incur certain significant noncash and nonrecurring expenses during the quarter, along with additional expenses incurred in renovating one of our older locations to conform with the company’s new locations,” Lurie expressed confidence that “these expenses and capital costs will translate into improved operations and an enhanced customer experience.”

He also pointed out that “[d]uring the quarter and subsequently, our online deliveries have seen strong demand and positive reactions from customers who are now able to complete online orders from a large geographical footprint.”

Founded in 2005 by a fourth-generation grocer, Organic Garage is based in Toronto. Currently operating five stores, the company is focused on continuing to expand its retail footprint within the greater Toronto area.

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