Alcanna Inc. (the “Company” or “Alcanna”) (TSX: CLIQ) today
reported its financial results for the three months and year ended
December 31, 2020.
Fourth Quarter Financial Results and
Business Update
In Q4 2020, Alcanna’s liquor stores continued
the strong performance achieved in the previous three quarters.
Gross margin dollars from the Company’s core
liquor division increased 14.0% from $32.6 million to $37.2
million.
Same-store sales from continuing operations rose
by 7.6%. The Company believes this is primarily a result of: (i)
the change in pricing strategy that was implemented in 2019 and
continued into 2020, which was designed to regain lost market share
and grow the customer base; and (ii) shifting customer consumption
habits due to more people dining and entertaining at home and
continuing to stay away from on-premise liquor establishments
(restaurants, bars, lounges, sports venues, etc.). The Company
believes these new consumer behaviour patterns have become
entrenched in people’s lifestyle choices and expects consumer
behaviour will continue in this manner as long as the COVID-19
pandemic remains a threat to the health of Canadians and thereafter
as well.
Alberta and British Columbia both implemented
strict lockdowns and a ban on social and household gatherings
during the traditional Q4 holiday period, which served to partially
moderate the double-digit sales growth experienced in Q2 and Q3
2020.
Over the past fifteen (15) months, the Company
has been implementing a strategy to sell or close low or
under-performing convenience-format liquor stores in Alberta. The
Company has exited twenty-eight (28) stores in Alberta during that
time frame – which resulted in total sales from continuing
operations in the fourth quarter to rise at a more moderate rate to
$181.6 million from $174.5 million in 2019.
- Total gross
margin dollars rose 17.4% to $42.5 million for the fourth quarter
from $36.2 million in the prior year.
- Operating
profit before amortization, remeasurements and provisions for Q4
2020 rose 122.8% to $13.0 million from $5.8 million in the prior
year.
- Profit before
income taxes for Q4 2020 rose to $1.5 million, compared to a loss
of $20.1 million in the prior year.
- Total cannabis
store sales for the fourth quarter rose 32.8% to $17.3 million from
$13.0 million in the prior year, and total gross margin dollars
grew 48.5% to $5.3 million from $3.5 million.
The same-store liquor sales increase for January
and February 2021, as compared to the prior year, continued to be
strong and was comparable with the same-store liquor sales
increases reported by the Company for the second and third quarter
of 2020. However, we anticipate that same-store liquor sales
over the entire first quarter of 2021, as compared to the prior
year, will be comparable with the increase reported for the fourth
quarter of 2020. This is as a result of the significantly higher
than normal sales that were recorded by the Company over the last
three weeks of March 2020, starting March 11, 2020 when COVID-19
was declared a pandemic by the World Health Organization, when
customers were ‘stockpiling’ prior to being assured by provincial
governments that liquor stores would be classified as essential
services and would remain open.
The Company’s annual audited consolidated
financial statements and management’s discussion and analysis
(“MD&A”) for the year ended December 31, 2020 will be available
in the “Investor Centre – Financial Reports” section of the
Company’s website at www.alcanna.com and will be filed on SEDAR and
available at www.sedar.com.
FINANCIAL RESULTS
(In thousands of Canadian dollars except per share amounts,
unaudited) |
Three months ended December
31, |
Year ended December 31, |
2020$ |
2019$ |
2020$ |
2019$ |
|
|
(Restated)(i) |
|
(Restated)(i) |
Sales |
181,588 |
174,475 |
680,291 |
582,462 |
Operating profit before
amortization, remeasurements and provisions |
13,004 |
5,836 |
47,196 |
8,339 |
Adjusted operating profit before
amortization, remeasurements and provisions(ii) |
13,004 |
5,836 |
47,196 |
10,873 |
Net earnings (loss) from continuing operations |
9,587 |
(15,993) |
9,711 |
(42,753) |
Basic earnings (loss) per share from continuing operations |
0.24 |
(0.39) |
0.25 |
(1.10) |
Diluted earnings (loss) per share from continuing operations |
0.23 |
(0.39) |
0.24 |
(1.10) |
- The financial results for the three months and year ended
December 31, 2019 have been restated to exclude the results of the
Company’s discontinued operations comprised of the Alaska
operations, which were sold on June 1, 2020, and British Columbia
operations, which are being disposed as part of the Company’s
coordinated plan to exit the British Columbia convenience-format
retail liquor store business.
- Adjusted operating profit before amortization, remeasurements
and provisions are non-IFRS measures that do not have a
standardized meaning prescribed by IFRS. For more information and a
reconciliation of non-IFRS measures to the closest IFRS measure see
the ‘Non-IFRS Financial Measures’ section of the MD&A.
CONFERENCE CALL
Alcanna Inc. will host an analyst and investor
conference call on March 26, 2021 to discuss the financial results
for the three months and year ended December 31, 2020. The
conference call will take place at 10:00 a.m. M.T.
To participate in the call, please dial (416)
406-0743 or toll-free (800) 806-5484 and use the required
participant access code: 7494265#. An archived recording of the
conference call will be available approximately four hours after
the event, by dialling: (905) 694-9451 or toll-free (800)408-3053.
The required passcode is: 3883793#.
ABOUT ALCANNA INC.
Alcanna is one of the largest private sector
retailers of alcohol in North America and the largest in Canada by
number of stores – operating 196 locations in Alberta and British
Columbia. The Company’s majority-owned subsidiary, Nova Cannabis
Inc. (TSXV: NOVC), also operates 53 cannabis retail stores in
Alberta, Ontario, and Saskatchewan.
Alcanna’s common shares and convertible
subordinated debentures trade on the Toronto Stock Exchange under
the symbols “CLIQ” and “CLIQ.DB”, respectively.
Additional information about Alcanna Inc. is
available at www.sedar.com and the Company’s website at
www.alcanna.com.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking
statements or information (collectively “forward-looking
statements”) within the meaning of applicable securities
legislation. Forward-looking statements are typically identified by
words such as “continue”, “anticipate”, “will”, “should”, “plan”,
“intention”, and similar words suggesting future events or future
performance. All statements and information other than statements
of historical fact contained in this news release are
forward-looking statements. In particular, this news release
contains forward-looking statements pertaining to the impact that
the COVID-19 pandemic may have on sales and customer shopping
habits in the future and the anticipated same-store liquor sales
increase in the first quarter of 2021 as compared to the prior
year.
With respect to forward-looking statements
contained in this news release, the Company has made assumptions
regarding, among other things, the COVID-19 pandemic and the impact
it may have on consumer behavior in Alberta and British Columbia,
and the anticipated same-store liquor sales increase in the first
quarter of 2021 as compared to the prior year.
Although the Company believes that the
expectations reflected in the forward-looking statements, and the
assumptions on which such forward-looking statements are made, are
reasonable, especially given the unprecedented uncertainty of the
full extent and impact of COVID-19, there can be no assurance that
such expectations and assumptions will prove to be correct. Readers
should not place undue reliance on forward-looking statements
included in this news release. Forward-looking statements are not
guarantees of future performance and involve a number of risks and
uncertainties that may cause actual performance and financial
results to differ materially from any estimates, forecasts or
projections. These risks and uncertainties include, among other
things, the duration and severity of the COVID-19 pandemic on the
business, operations and financial condition of the Company; the
risk that Alcanna will be unable to execute its strategic plan and
growth strategy, including the capital allocation, as planned
without significant adverse impacts from various factors beyond its
control; dependence on suppliers; potential delays or changes in
plans with respect to capital expenditures and the availability of
capital on acceptable terms; risks inherent in the liquor retail
and cannabis industries; competition for, among other things,
customers, supply, capital and skilled personnel; changes in labour
costs and markets; incorrect assessments of the value of
acquisitions; general economic and political conditions in Canada
(including Alberta), and globally; industry conditions, including
changes in government regulations; fluctuations in foreign exchange
or interest rates; unanticipated operating events; failure to
obtain regulatory and third‐party consents and approvals when
required; changes in tax and other laws that affect us and our
security holders; the potential failure of counterparties to honour
their contractual obligations; stock market volatility; and the
other factors described in the Company’s public filings (including
the Annual Information Form) available at www.sedar.com. Readers
are cautioned that this list of risk factors should not be
construed as exhaustive.
The forward-looking statements contained in this
news release are made as of the date hereof. Except as expressly
required by applicable securities legislation, Alcanna does not
undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. The forward-looking statements
contained in this news release are expressly qualified by this
cautionary statement.
For Further Information
James BurnsVice Chair and Chief Executive
OfficerAlcanna Inc. (587) 460-1026
Alcanna (TSX:CLIQ)
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