Trees Corporation (NEO:TREE.AQN) posted a revenue of $1.7 million in the year to March 31, 2022, a 225% jump from the $500,000 it recorded in the year-ago period.
The cannabis company said revenue growth was driven by an increase in the corporate-owned store count— from two stores in the year-ago period to seven stores in the quarter just ended, including the acquisition of Metro Cannabis in May 2021, which added four stores and $900,000 of revenue for 1Q.
"The Trees team has done an exceptional job in executing on our business plan," Jeff Holmgren, president and CFO of Trees said in a statement. "In recent months, Trees has taken giant steps forward to strengthen the balance sheet through substantive debt settlements reducing corporate debt.”
Trees said increased price competition led by the entry of multiple value retailers in early 2021 who substantially reduced margins in pursuit of market share drove retail gross margin to 31% in 1Q from 36% a year ago.
However, Trees said it “has demonstrated a resilience to these competing factors through exceptional customer service, product selection and convenience, successfully mitigating the margin reduction to only 14% from the same period in the prior year”.
The company had a cash balance of $210,333 at the end of March 2022, compared to $1,316,517 on December 31, 2021, largely as a result of the use of cash towards operations and growth initiatives.
Net working capital showed a deficit of $3,776,672 versus $765,973 at the end of the fourth quarter of 2021 after the reclassification of shareholder loans to current in 1Q.
Since then, Trees said it has strengthened its balance sheet substantially through the combined initiatives of debt settlement negotiations and a previously announced private placement financing.
“Trees is well positioned to move forward with confidence as it continues to execute on its growth strategy," Holmgren added.
Contact the author at jon.hopkins@proactiveinvestors.