Montreal-based online meal solutions provider Marché Goodfood is beginning its new financial year by reversing a negative trend that has persisted for 24 months. The number of active customers just increased quarter over quarter for the first time in two years.
Management revealed Tuesday that it had 124,000 active customers in the first quarter, up from 116,000 in the previous quarter.
To be considered an active customer, a customer must have placed an order within the last three months.
“The sequential quarterly growth in the number of active customers can be explained by the usually more active back-to-school period,” said finance manager Roslane Aouameur during the conference call organized with analysts on the sidelines of the presentation of the most recent financial performance.
“The increase in customer activity was also due to successful re-engagement campaigns that encouraged more customers to place orders,” she said.
Roslane Aouameur says Goodfood has made a big change in how it gets customers to order. “The incentive previously was very much about getting people to try the concept. The concept is a little better known today. So it’s about seeing how it fits into the customers’ lifestyle, so that the incentives are spread across multiple boxes, which has lowered the amount of incentive per box, which increases the margin and profitability. »
She says it also helps attract customers who really want to see if this meal planning tool is useful for their lifestyle rather than customers who are looking to get a free box and then have a little less reason to stick around afterwards.
Competition
Analyst Martin Landry at Stifel/GMP notes that credits and incentives reached 21% of net sales for the quarter, the highest level in four years, which may suggest that competition for new customers is intensifying in the industry.
Despite the rebound observed, the number of active customers remains much lower than it previously was. At one point during the height of the pandemic, Goodfood boasted more than 300,000 active customers.
The change in consumer behavior coming out of the pandemic may help explain the decline in customers over the past two years.
The refocusing of activities and the exit from the market for on-demand grocery products may also have affected the number of active customers and therefore turnover.
Sales in the autumn months, that is to say October, November and December, fell by 14% to 40 million year-on-year.
The decline in turnover must, however, be analyzed taking into account the fact that sales for the same period a year ago still included some revenue from on-demand, an activity abandoned by Goodfood at the end of 2022 which was to embody the future of the company at its launch.
Management nevertheless managed to increase its margins during the fall by lowering its costs (payroll, rental contracts, maintenance, etc.). Gross margin was up 4% to 39% compared to the previous quarter. The net loss of two million generated by activities during the fall was significantly reduced. It stood at 12 million a year earlier.
Seasonality
Goodfood says it now offers a wider variety of ready-to-cook meals and says it prioritizes ready-to-cook meal solutions that feature ready-to-eat meals and grocery items as complements.
Analyst Frédéric Tremblay, at Desjardins Securities, says he continues to have “limited visibility” on the incentives and marketing investments necessary to relaunch “significant and sustainable” growth in sales over the coming quarters.
As Goodfood’s activities are seasonal, sales for the current quarter are likely to suffer from the holiday season which has just passed and during which the number of active customers is usually more modest given that a higher proportion of customers chooses to suspend the delivery of its baskets.
Goodfood’s stock closed Tuesday’s session up 10% at 32 cents on the Toronto Stock Exchange, giving the company a value of $24 million.