Nova announces results for the second quarter of 2021
Average annual revenue for stores converted to Value Buds is now $ 3.5 million, compared to $ 1.4 million prior to the changeover
EDMONTON, AB, Aug. 12, 2021 / CNW / – Nova Cannabis Inc. (the “Company” or “Nova”) (TSX: NOVC) today released its unaudited condensed consolidated interim financial statements (the “Interim Financial Statements”) and management discussion and analysis (“MD&A”) for the three and six months ended June 30, 2021.
In the second quarter, we successfully continued our growth strategy of capturing market share at an aggressive pace. Two months after the move, our Value Buds stores are already generating average annual sales¹ of $ 3.5 million, which we estimate is at least three times the sales volume of the average cannabis retailer in Alberta.
Darren Karasiuk, Nova CEO
Value Buds is clearly resonating with cannabis users in Alberta, attracting customers from the illicit market as well as legal cannabis dealers. We expect the same response in Ontario as we accelerate our pace of openings in Canada’s largest market. All signs indicate that our high-volume, value-conscious consumer strategy is disrupting the market, and we expect to benefit disproportionately from the tailwind of growth in our markets.
¹The annual term is a non-IFRS financial measure that does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures from other issuers. For more information on non-IFRS financial measures, please see the “Non-IFRS Financial Measures” section and the “Non-IFRS Financial Measures” section in our MD&A for the three and six months ended June 30, 2021 posted on the Company’s website are available (www.novacannabis.ca) and on the SEDAR website (www.sedar.com).
Business and operational highlights
- Completed on the TSX Venture Exchange and started trading on the TSX on July 15, 2021
- Converting Thirty-six (36) Shops from Legacy Banners to Value Buds
- Nine (9) new Value Buds stores opened: six (6) in Ontario and three (3) in Alberta
- Nova now has sixty (60) stores operating and an additional twenty-five (25) new stores are under development / construction and thirty (30) more in Ontario are in active negotiations
- Launch of Nova Cannabis Analytics, an additional revenue stream offering comprised of a proprietary, lawful data and analytics platform with multiple subscription contracts signed since its launch and after the end of the fiscal quarter
- Strengthening the composition of the Board of Directors through the election of Marvin Singer, former Senior Partner at Norton Rose Fulbright
The company expects an aggressive and disciplined growth strategy focusing on:
- Organic stores opened
- Opportunistic and sensible acquisitions to complement organic growth
- Sales growth in the same business
- Private label
- Basket size growth
In terms of both organic growth and acquisition opportunities, the company focuses on stores that management believes will be profitable in the long term. Management acknowledges that in Ontario, due to the historically slow adoption of cannabis retail stores, many existing cannabis retail locations have enjoyed monopoly-like positions in very large trading areas. These monopolies have generated revenues for many cannabis retailers that we believe are unsustainable as the competition and vulnerability to new retailers who can offer better prices, as well as traditional retail fundamentals such as visibility, parking, and proximity to other customer attractions are unsustainable.
It is expected that all existing stores will switch to Value Buds by the end of the third quarter of 2021 and that all new stores will open with the Value Buds banner. Value Buds stores are designed to accommodate the significantly increased customer base in these high-volume stores.
The company continues to anticipate having built and / or opened at least eighty-five (85) stores by the end of 2021.
Financial highlights of the second quarter of 2021
The interim financial statements for the three and six months ended June 30, 2021 reflect the results of the transactions previously owned by Alcanna Inc. and the results of the transactions that were owned by the company (when it was still known as YSS Corp. was known) from the closing of the reverse acquisition transaction on March 22, 2021 (the “RTO”) through June 30, 2021. The comparative period for 2020 in the interim financial statements only shows the financial results of the businesses owned by Alcanna Inc. . and operated under the Nova Cannabis banner with a different operating, pricing and margin strategy than they operated in 2021. Therefore, the interim financial statements for the three and six months ended June 30, 2021 and 2020 are not directly comparable.
Revenue increased 106.6% compared to the second quarter of 2020 to $ 29.7 million from $ 14.4 million. The increase is mainly due to the seven (7) cannabis retail stores opened since the 31st in the fourth quarter of 2020 and the first six months of 2021.
For more information, see the company’s interim financial statements and MD&A for the three and six months ended June 30, 2021, available on the company’s profile on SEDAR, at www.sedar.com, or on the company’s website at www.novacannabis .approx.
Management will hold a conference call on August 13, 2021 at 12:00 noon. ET (10:00 AM MT) to discuss second quarter operating and financial results. To participate, please dial (416) 406-0743 or (800) 806-5484 and use the required participant access code: 2286294 #. The playback will be made available approximately four hours after the event at (905) 694-9451 or (800) 408-3053, required access code: 5616005 #.
ABOUT NOVA CANNABIS INC.
Nova Cannabis Inc. (TSX: NOVC) is one of Canada’s largest and fastest growing cannabis retailers aiming to revolutionize the retail cannabis market by offering a wide range of high quality cannabis products at the best daily prices. The company currently operates sixty (60) locations in Alberta, Ontario and Saskatchewan, primarily under its Value Buds and Nova Cannabis banners. The company is majority-owned by Alcanna Inc. (TSX: CLIQ).
Additional information about Nova Cannabis Inc. is available at www.sedar.com and on the company’s website at www.novacannabis.ca.
NON-IFRS FINANCIAL MEASURES
The average annual turnover is not a key figure recognized by IFRS and has no standardized meaning as prescribed by IFRS. Investors are cautioned that this metric should not be used as a substitute for sales, net profit or loss (as per IFRS) as an indicator of the company’s performance, its cash flow from operating, investing and financing activities, or as a measure of its liquidity, and cash flows. The Company’s method of calculating the above non-IFRS financial metric may differ from the methods used by other issuers. Therefore, the metric may not be comparable to similar metrics from other issuers.
Annual Average Sales is calculated by multiplying the average of actual weekly sales for July 2021 for stores that have been converted to Value Buds for at least eight (8) weeks by fifty-two (52nd) weeks. This is one of the key metrics the company uses to assess performance and is a useful benchmark against the performance of these stores that have switched to our Value Buds discount banner. Management believes that presenting annual average sales provides useful information for investors and shareholders as it provides greater visibility into the current performance of these deals.
Original press release
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