Earlier this week, we highlighted Indiva Limited (TSXV: NDVA) (OTCQX: NDVAF) after it reported fourth quarter financial results and today, we want to highlight a leading Canadian cannabis retailer after it reported earnings.

The company, Fire & Flower Holdings Corp. (TSX: FAF) (OTCQX: FFLWD) reported $175.5 million of consolidated revenue for the 2021 fiscal year. $130.8 million of the revenue that was generated was from retail stores and we are bullish on how the management team has opened additional retail locations across Canada.

During the last year, the Canadian cannabis retailer has been executing on an organic and inorganic growth strategy and we are favorable on the assets that we acquired by it. Through the acquisition of Pineapple Express Delivery, PotGuide and Wikileaf, Fire & Flower was able to expand logistics capabilities and web traffic as part of the asset light e-commerce strategy.

During the fourth quarter, Fire & Flower generated $42.7 million of revenue and negative $2.4 million of adjusted EBITDA. Going forward, we want to see how the management team can make the business profitable and believe this is a key metric to be focused on.

A few months ago, the Canadian cannabis retailer announced a major milestone and completed one of the final steps in order to list on the Nasdaq. Although we expect a Nasdaq listing to be significant for the company, one of its competitors is already listed on the Nasdaq and has not benefited too much from it (from a stock performance standpoint).

One of the developments we are excited about is Fire & Flower’s Spark Select program which is a highly competitive product and pricing strategy to further expand its customer base. The rationale behind the launch was the targeting of the value-oriented cannabis consumer segment which is a base that has been growing rapidly.

Although Fire & Flower reported a decline in retail revenue due to increased competitive pressures within the Canadian cannabis retail landscape, we believe the management team is taking the steps that are needed to grow the business and expand its total addressable market (TAM). Going forward, we expect the company to put a larger emphasis on its digital business as well as revenue opportunities in the United States (US)

During the last month, Fire & Flower has been under heavy pressure and has lost almost a third of its value. Over the next year, we will monitor how the business is able to bounce back and will keep an eye on how its Spark Select program supports the growth of the entire business. We classify Fire & Flower as a unique growth story and believe it owns several attractive assets.

If you are interested in learning more about the Fire & Flower’s earnings report, please send an email to support@technical420.com with the subject “Fire & Flower” to be added to our distribution list.

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.