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Organic grocer reported gross margin increase for fiscal second quarter despite lower sales as impact of coronavirus pandemic eased
Organic Garage (TSX-V: OG, FRA: 9CW1) Ltd said its shift to a decentralized distribution model and the phasing out of its warehouse resulted in additional savings and improved bottom lines.
The organic grocer reported an increase in gross margin for its fiscal second quarter despite declining sales as the impact of coronavirus (COVID-19) overstocking eased.
READ: Organic Garage says it started seeing significant additional savings from shifting to a decentralized distribution model as it releases first quarter results
In April, the company completed the shift to a decentralized distribution model and successfully agreed to sublet its warehouse for the remainder of the lease term. He said this resulted in additional savings of approximately $ 238,000 for the quarter, primarily savings related to wages and benefits, transportation and rent.
For the three months ended July 31, 2021, Organic Garage (TSX-V: OG, FRA: 9CW1) recorded a 16% drop in sales to $ 6.8 million, from $ 8.1 million a year earlier. Gross profit rose 2.5% to $ 2.25 million from $ 2.19 million, and its net loss widened to $ 383,130 from $ 201,724 in 2Q 2021.
The company said the decline was primarily related to non-cash stock-based compensation offset by improved gross margins, lower in-store salaries and benefits, administrative salaries and benefits, and related transportation costs. the phasing out of the company’s warehouse operations.
It ended the quarter with working capital of $ 1.9 million versus a working capital shortfall of $ 0.3 million a year earlier. Its cash balance improved to $ 2.5 million from $ 0.9 million.
He said customers have responded positively to a new partnership for online deliveries that was announced this summer, as they can now order online from a significantly larger geographic footprint. The company’s Future of Cheese operations continue to grow rapidly and the company has stated that it is focused on launching the first short-term products soon.
“We are very pleased with our strong second quarter results which built on our first quarter performance and put the company on a promising path for the remainder of the year,” said Organic Garage CEO Matt Lurie, in a statement.
“The improvement in our gross margin is a testament to management’s attention to our strategic purchasing process. We’ve received great feedback on expanding our handpicked list of partners, which now includes Cheese Boutique and Tori’s Bakeshop.
The company has announced that it will hire Octagon Media Corp. to provide communications and corporate strategy services for an initial period of three months. The commitment is expected to begin in October 2021 and will provide for the granting of 800,000 stock options at an exercise price which will be the greater of $ 0.40 and the market price before the grant date. , plus a fee of US $ 47,500.
It has also engaged North Equities to provide advisory and investor engagement services for an initial period of three months from October 2021 and will grant 200,000 stock options at an exercise price that will be the greater of $ 0.40 and the market price before the date of grant, plus a monthly fee of $ 12,500.
Contact the author at stephen.gunnion@proactiveinvestors.com
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