Goodfood Market sales fell 38% in the third quarter

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Market Sales ; Goodfood fell 38% in the third quarter

Business is tough these days for Goodfood, which specializes in delivering boxed lunches.

Goodfood Market sales have declined by 38% in the third quarter, as consumers eat more away from home while worrying about rising prices at the grocery store.

Canadians' eating habits are changing as health measures ease, Goodfood CEO Jonathan Ferrari explained in a phone call with financial analysts on Wednesday.

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“Customers and Canadians from coast to coast are spending more time traveling and thus spending less time the House. This has an influence on online commerce as a whole and on our activities as well. »

— Jonathan Ferrari, CEO of Goodfood

The ready-to-cook meals and online grocery specialist had 35,000 fewer active customers over the past quarter that ended on June 4 compared to the same period last year, when sanitary measures were stricter. The company had 211,000 active customers in the third quarter of 2021.

The 38% drop in the company's revenues, established at $67 million, represents the largest drop recorded by this Montreal company and the fourth consecutive quarter of decline, according to analyst Martin Landry, of Stifel GMP, which judges that the path to return to growth is unclear.

Soaring grocery prices may partly explain the decline, Landry believes. We believe tough economic conditions are hitting customers as households increasingly watch their food spending.

To deal with inflation, Goodfood has raised prices by just under 10% in June, after the end of the third quarter. So far, however, this increase would have a limited effect on unsubscribes and orders.

When asked about it, Mr. Ferrari said Goodfood's prices compared favorably to those of grocers. He acknowledged that it was difficult to be more specific as food prices are rising rapidly week by week.

Mr. Ferrari, however, hypothesized that the convenience food offering stands out compared to the restaurant industry. Our research shows that many consumers compare convenience foods to the cost of a restaurant visit or delivery. They see that our offer represents a 30% to 50% discount on the costs of a restaurant meal.

Mr. Ferrari for its part underlined that the last quarters have been compared to the previous year, which had been exceptional due to the sanitary restrictions. I think we are coming to the last quarters where the comparison with last year will be difficult because of the COVID. I think this normalization will show in our results.

He also mentioned that the number of active customers in the online grocery segment increased by 41% to 38,000 in the regions served, namely Montreal, Toronto and Ottawa. The company estimates that the grocery market is worth $140 billion in Canada and that a growing share of demand will move online.

The Montreal company recorded a loss of 21 million, more than the two million recorded in the same period last year. Adjusted diluted loss per share was 25 cents, compared to 3 cents.

Prior to the earnings release, analysts had expected revenue of 73.79 million and an adjusted loss per share of 23 cents, according to the firm Refinitiv.

Despite the results below expectations, analyst Frédéric Tremblay, of Desjardins Capital Markets, points out that the results show that the company has achieved operational improvements.

He gives as an example the gross margin of 26.2%, higher than the 24% threshold in the previous quarter but still lower than the 35% recorded two years ago. There is still work to be done, but the initial progress in managing operations and optimizing costs is encouraging, commented the analyst.

The x27;share was down 1 cent, or 0.68%, at $1.45 when the Toronto Stock Exchange closed on Wednesday.

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