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Highlights
- Stocks of Goodfood Market Corp (TSX:FOOD) nosedived on Wednesday, November 17.
- The Canadian grocery company saw its stock price shrink by more than 26 per cent.
- The decline came as it reported its latest financial results.
Stocks of Goodfood Market Corp (TSX:FOOD) nosedived on Wednesday, November 17, as it reported its latest financial results.
The Canadian grocery company, which markets produces and meal solutions, saw its stock price shrink by more than 26 per cent to close at C$ 5.3 apiece, after hitting a fresh 52-week low of C$ 4.75.
What is its earnings report could have triggered this decline? Let’s find out.
Goodfood Market Corp (TSX:FOOD) Q4 FY21 & FY21 results
Let’s discuss the positives first. Goodfood Market saw its net sales skyrocket by 33 per cent year-over-year (YoY) to a “record” C$ 379 million in the fiscal year ending August 31, 2021. Its gross profit in this period also surged by 34 per cent YoY to C$ 116 million.
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The food company also reported a robust financial position with a cash of about C$ 125.5 million on the books
Now coming to the negatives. Goodfood incurred a net loss of C$ 31.8 million in FY21, which was significantly up from that of C$ 5.3 million in the same period last year.
In the fourth quarter of FY21, Goodfood’s net sales also plummeted, shrinking by about five per cent YoY to C$ 79.3 million.
Its net loss also inflated from C$ 1.22 million to C$ 22.1 million in in Q4 FY21.
What could have contributed to Goodfood’s losses?
To understand this, we will have to go back in time a little bit.
When the COVID-19 pandemic hit, many people were forced to quit their habit of venturing out for readymade meal. While this urged some Canadians to light up their stoves and ovens, other resorted to the alternative comfort of ordering in.
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At this point, Goodfood’s services of providing on-demand grocery and meal solutions caught up demand, bolstering its revenues largely in the previous quarters.
But then came the vaccine campaign and the eventual easing of COVID-19 restrictions. While this move found several enterprises find their footing again, it dented Goodfood’s meal kit business, in turn hampering its subscriber count and sales largely in Q4 FY21.
What’s in store for FOOD stock?
Apart from hitting a new 52-week low, FOOD stock also noted a one-year low of nearly 36 per cent on Wednesday, while slipping about 52 per cent year-to-date (YTD).
It is also down by about 30 per cent this month.
While the loss of demand for its meal kits seems to have discouraged some investors, CEO Jonathan Ferrari believes that Goodfood’s on-demand delivery solutions is likely to capture significant interest in the long term.
