Kiaro Hits 78% Same-store Sales Increase and 118% Gross Profit Increase Year-over-year in Q1 Fiscal Year 2022 Results

Published: June 30, 2021

Kiaro Hits 78% Same-store Sales Increase and 118% Gross Profit Increase Year-over-year in Q1 Fiscal Year 2022 Results

Kiaro Holdings Corp. announced its first-quarter financial results for the three months ended April 30, 2021, and 2020. All amounts, unless specified otherwise, are expressed in Canadian dollars.

“With the majority of our retail stores being open for over a year, it is exciting to be able to report same-store sales results with an incredible 78% increase year-over-year,” said Janet Hoffar, Chief Financial Officer. “Same-store sales is a financial KPI retailers rely on, and our results are remarkably impressive. This is a testament to the strength of our operations and retail teams in surpassing forecasts and continuously improving our customer experience while ramping up new stores in a changing environment.”

Daniel Petrov, Chief Executive Officer of Kiaro states “As the industry continues to grow and evolve, revenues are expected to dramatically increase for retailers in the regulated market. Kiaro has proven that its approach to community, customer experience, and financial performance has been well demonstrated with another record-breaking quarter”

Summary of the First Quarter Financial Results
For the three months ended April 30, 2021, Kiaro recorded revenues of $5.17 million, comprised of $3.82 million from the retail segment and $1.35 million from the wholesale segment. Comparatively, in the three months ended April 30, 2020, the Company recorded total revenues of $2.67 million, comprised of $1.56 million from the retail segment and $1.11 million from the wholesale segment. The 94% increase in revenue in comparison to the prior year is primarily due to the opening of two new retail locations, a full quarter’s results from a third new location, same-store sales increases of 78%, and an increase in the total addressable market and market presence for the wholesale segment.

For the three months ended April 30, 2021, Kiaro recorded a gross profit of $1.56 million, representing a 118% year-over-year increase when compared to the three months ended April 30, 2020, where gross profit was $0.72 million.

Total operating expenses for the three months ended April 30, 2021, were $2.46 million compared to $1.90 million in the three months ended April 30, 2020. The increase in operating expenses was primarily the result of having two additional retail stores, and a full quarter’s results from a third new retail store compared to the same quarter in the prior year. Salaries and employee benefits decreased as a percentage of revenue from 28% to 21% in the three months ended April 30, 2021.

Kiaro improved its adjusted EBITDA from negative $0.49 million in the three months ended April 30, 2020, to $0.18 million in the three months ended April 30, 2021. Strong revenue increases combined with fundamental management of operating expenses relative to revenue growth resulted in improvements towards profitability. Adjusted EBITDA is a non-GAAP financial measure and is not a recognized, defined, or standardized measure under IFRS. Refer to “Cautionary Note Regarding Non-GAAP Measures” below.

As at April 30, 2021, the Company had positive working capital of $2,626,453, an improvement since the last financial reporting period of January 31, 2021, of $1,108,870, which helped improve the Company’s short term liquidity by strengthening its current ratio to 2.18 from 1.45 last quarter.

Select Financial Information

Three months
ended

April 30, 2021

Three months
ended

April 30, 2020

$ Change

    % Change

$

$

$

%

Revenue

5,167,064

2,666,711

2,500,353

94%

Gross profit

1,557,611

715,285

842,326

118%

Operating expense

(2,457,900)

(1,899,298)

(558,602)

-29%

Loss from operations

(900,289)

(1,184,013)

283,724

24%

Other expenses1

(79,682)

(2,626,818)

2,547,136

97%

Net loss and comprehensive loss

(979,921)

(3,810,831)

2,830,910

74%

Adjusted EBITDA2

(179,964)

(494,016)

314,052

64%

Notes:

(1)

In the three months ended April 30, 2021, other expenses include accretion and interest expense on debt, and right of use depreciation.

(2)

Adjusted EBITDA is a non-GAAP financial measure and is not a recognized, defined, or standardized measure under IFRS. Refer to “Cautionary Note Regarding Non-GAAP Measures.”

First Quarter Highlights and Recent Developments:

  • On March 11, 2021, the Company completed a bought deal private placement of 18,750,000 units of the Company at $0.16 per unit, for aggregate gross proceeds of $3,000,000. Each unit consisted of one common share of the Company and one-half of one common share purchase warrant. Each warrant entitles the holder to purchase one common share at an exercise price of $0.23 at any time before March 11, 2024. The warrants are subject to the right of the Company to accelerate the expiry date of the warrants when certain conditions are met.
  • On March 15, 2021, the Company completed the acquisition of the assets of Grasshopper Cannabis Co. for $695,000. The acquired assets are located in the City of Kelowna, British Columbia and the Company expects the store to be operational by this summer.
  • On May 31, 2021, Kiaro announced that it had entered into a definitive agreement with Sculthorpe SEO Inc. (“Sculthorpe“), which currently operates both a highly desirable retail location in Toronto, and three eCommerce business platforms. The transaction provides an entry into the Ontario retail market; access to Canadian, American, and Australian consumers through Sculthorpe’s digital assets; and adds to Kiaro’s cash-generating assets while providing additional high-margin revenue streams.

tKiaro Holdings Corp.
Based in Vancouver, British Columbia, Kiaro is an independent, omni-channel cannabis retailer and distributor. Through existing storefronts across British Columbia and Saskatchewan, a wholesale distribution division servicing Saskatchewan, and immediate plans for national expansion, Kiaro is driven to introduce new and experienced consumers to a lifelong exploration of cannabis. With more than 40 years of collective retail-focused experience, Kiaro’s leadership team has a proven track record of growing retail brands across North America and plans to open multiple retail locations nationwide over the coming year.

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