(Montreal) Despite headwinds, Marché Goodfood is posting an improvement in its financial results, as the ready-to-prepare meals specialist focuses on its highest-paying customers.
The context remains difficult for Montreal society at a time when consumers are closely monitoring their food spending and when the enthusiasm for online commerce is fading compared to the peak reached during the pandemic.
The company continued to lose customers and saw sales decline nearly 26% in the fourth quarter ended September 2. However, the company manages to protect its margins while it focuses on its best customers.
“We continue to see a deterioration in economic conditions that are having an effect on consumers, but also suppliers,” said President and CEO Jonathan Ferrari during a conference call Wednesday to discuss quarterly results. It’s a difficult environment, but I believe that the work we have done in recent months puts us in a good position to improve our profitability. »
Goodfood’s sales thus declined by 26%, still in the fourth quarter, to stand at 37 million.
The loss of customers largely explains this decline. The company served 116,000 active customers, compared to 157,000 during the same period last year. However, the trend seems to be slowing down since the company has only lost 3,000 customers over the last three months.
Desjardins Capital Markets analyst Frederic Tremblay points out that the loss of 3,000 customers occurred during the summer season. “Demand is lower during the summer,” he comments. We believe seasonality played a role in the decline. »
Despite everything, Goodfood reduced its net loss from 58 million to 4 million in the fourth quarter. The gross margin, for its part, also improved, going from 28.3% to 38.2%.
The company is also burning less cash with a cash loss of 1 million, compared to 12 million in the same period last year.
Goodfood changed its strategy last year, focusing on reaching profitability more quickly rather than increasing the number of subscribers. It also abandoned its online grocery service.
With interest rates rising, several technology companies have been forced to revise their strategies while creditors and shareholders have become less patient with growing companies that are not yet profitable.
Mr. Tremblay is positive about the progress made by Goodfood’s management strategy over the last fiscal year. “We believe that stimulating the number of customers will require advertising and promotional investments,” he adds. We appreciate the efforts made to reduce the cost of acquiring a customer and believe Goodfood will be selective in targeting customers with the potential for higher margins. »
Goodfood shares lost 2 cents, or 3.61%, to 40 cents on the Toronto Stock Exchange in the morning.
Company in this report: (TSX: Food)