Goodfood relies on its best customers to counter the slowdown in demand
Goodfood is launching a VIP program for its best customers, those who spend between $5,000 and $10,000 a year.
To at a time when consumers have less appetite for convenience foods, Goodfood wants to focus its promotional efforts on its best customers in order to achieve profitability.
The Montreal company intends to rely on a loyalty program aimed at customers who generate the most revenue.
We want to focus our efforts on engaging our customers and growing our base of subscribers who generate the most value, said the President and CEO Goodfood's Jonathanok Ferrari on a conference call to discuss the latest quarterly results.
Our VIP program will target customers who spend between $5,000 and $10,000 per year with us.
As a sign that it is focused on the most profitable customers, the gross margin of the company peaked in the first quarter (ended Dec. 3), even though its revenue declined 39%, compared to the same period last year, to 47 million dollars.
After a period of enthusiasm where Goodfood attracted several new subscribers during the confinement period, the company lost subscribers for several quarters, while consumers resumed their exits and food inflation makes households more price sensitive.
The company's subscriber base appears to be stabilizing in the first quarter. Excluding the 11,000 subscribers tied to the grocery service, a segment the company dropped in October, the company had about 137,000 subscribers, down from 136,000 in the fourth quarter.
We are encouraged by the stabilization after several quarters of client losses, reacted Desjardins Capital Markets analyst Frédéric Tremblay.
M. Ferrari also reiterated its objective of generating adjusted earnings before interest, tax and amortization (EBITDA) in the next quarter.
In the first quarter, the company posted a loss of $11.7 million, compared to a loss of $21.6 million in the same quarter a year earlier.
Diluted loss per share was to 16 cents, compared to 29 cents in the same period last year.
Ahead of the earnings release, analysts had expected a loss per share of 7 cents and revenue of $47 million.
The stock lost 4 cents, or 6.78%, to 55 cents on the Toronto Stock Exchange in the morning.