Release Date: April 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Goodfood Market Corp (GDDFF, Financial) achieved positive adjusted EBITDA for the ninth consecutive quarter, demonstrating the resilience of its business model.
- The company maintained a strong gross margin of 43%, supported by cost efficiencies and process optimization.
- Customer baskets reached an all-time high, driven by enhanced digital experience features and product customization options.
- Goodfood Market Corp (GDDFF) launched a new Heat & Eat line, receiving strong early reviews and meeting demand for convenient, healthy meals.
- The company achieved B Corp certification, highlighting its commitment to ethical business practices and environmental stewardship.
Negative Points
- Net sales for the quarter declined by 23% year-over-year, primarily due to a lower active customer count.
- Active customers decreased to 84,000, reflecting cautious consumer spending and macroeconomic headwinds.
- Adjusted free cash flow was negative CAD1.5 million, compared to positive CAD0.3 million in the prior period.
- The adjusted EBITDA margin declined year-over-year to 4.5% due to a decrease in net sales.
- The company faces challenges with lower order rates, impacting both sales and active customer counts.
Q & A Highlights
Q: Can you elaborate on the reasons behind the decline in active customer count during the quarter? Are customers leaving for competitors or due to perceived lack of value?
A: Jonathan Ferrari, CEO: The decline in active customer count is primarily due to lower seasonal order rates rather than cancellations. We've actually seen an improvement in customer churn rates year-over-year. The reduced order rates in December and January were the main drivers of the decline in active customer count.
Q: Have you been able to onboard new customers during the quarter, and how has customer acquisition cost (CAC) been affected?
A: Jonathan Ferrari, CEO: Yes, we have continued to acquire new customers. Our customer acquisition cost has seen a slight reduction year-over-year. We've also made improvements in churn rates through product and digital experience enhancements. However, the lower order rates have been the key driver of reduced sales and active customer counts.
Q: What factors are contributing to the lower order rates from customers?
A: Jonathan Ferrari, CEO: The lower order rates are attributed to more pronounced seasonality in December and continued lower rates in January, partly due to the consumer spending environment and macroeconomic uncertainties. Despite these challenges, we've seen improvements in basket sizes, which help offset some of the impact.
Q: Can you provide insights into the ready-to-eat offering and its potential impact on your business?
A: Jonathan Ferrari, CEO: The ready-to-eat segment, specifically our Heat & Eat meals, is a growing area of focus. We've learned from past iterations and now prepare meals in-house, improving quality and margins. This segment is complementary to our ready-to-cook offerings and is seeing strong demand, with over 1,000 meals delivered weekly in Quebec.
Q: How is the current macro environment affecting your supply chain, and are there any notable impacts on your sourcing strategy?
A: Neil Cuggy, COO: Our supply chain remains stable, with most sourcing being local. While some suppliers face cost increases, we've managed to maintain menu stability. The recent tariff announcements have not significantly impacted us, and we've been able to secure supply and favorable pricing.
Q: What are your current capital allocation priorities, especially in light of the debenture repayment in shares?
A: Roslane Aouameur, CFO: We prioritize capital allocation based on return profiles and remain prudent in cash deployment. While we maintain flexibility for high ROI opportunities, we are cautious in the current environment to ensure clarity on the North American landscape.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
