Fiscal Year 2021 Results with 200% Year-Over-Year Growth VANCOUVER, BC, Oct. 26, 2021 /CNW/ - Choom Holdings Inc. ("Choom" or the "Company") (CSE: CHOO) (OTCQB: CHOOF), a fast-expanding Canadian retail cannabis Company is pleased to report its financial and operating results for the 2021 fiscal year, ending June 30, 2021.
Fiscal 2021 Financial Highlights:
- FY 2021 Revenue of $22.05M
- Increase of $14.7M and 200% over FY 2020 revenue of $7.4M
- FY 2021 Gross Margin of 36.9%
- Increase of 6.31% over FY 2020 gross margin of 30.59%
- FY 2021 General and Administrative of $4.04M or 18.33% of revenue
- Versus $5.85M or 79.52% of revenue in FY 2020
- FY 2021 Salary and Wages of $4.22M or 19.13% of revenue
- Versus $2.53M or 34.38% of revenue in FY 2020
- FY 2021 Adjusted EBITDA1 of -$0.12M or -0.56% of revenue
- Versus -$6.13M or -83.31% of revenue in FY 2020
"I am thrilled with the year-to-date performance of the brand, growing topline revenue by 200%, increasing gross profit at a faster rate than revenue with a 262% increase, and reducing our total SG&A spend on the year by 1.45%" says Choom CEO, Corey Gillon, "As COVID-19 restrictions continued to affect the broader retail landscape, Cannabis retail was not exempt; from capacity restrictions to provincial lockdowns, the market was marred by its affects. Despite these headwinds, Choom continued to successfully execute on its strategy".
Fiscal 2022 Strategic Pillars:
- Finance: Drive profitable sales through responsible new store growth and optimization of the existing business.
- People: Enabling and rewarding a culture of high performance.
- Product: Ensure the best product is in the right place in the right quantity at the right time.
- Marketing: Propelling the Choom story and unifying the in-store and online experience.
- Operations: Investing and building best in class retail infrastructure.
Year-to-date Operational Highlights:
Finance:
Choom's momentum continues with its year-over-year sales increase, rightsizing of expenditures, improving margins, and operational efficiencies through its centralized business model.
Sales results varied by province, over the 4th quarter, with exceptionally strong growth coming from the B.C. market, with a 1860% YoY increase. Sales in the Ontario market slowed in Q3 & Q4, impacting overall results. This was due to a significant increase in new Cannabis Retail Store openings, COVID-19 closures and new value players entering the market. These new players have impacted not only the broader Ontario market, but Alberta as well.
Choom believes that there will be a market normalization on store count in Ontario in 2022, like what was seen in Alberta. Choom has employed a price matching guarantee of local competitor pricing and has seen strong customer loyalty as a result. Choom remains committed to its strategy of providing customers with an elevated brand experience, including best-in-class educators in-store, whilst not diluting margins.
Subsequent to the year, the Company entered into a series of agreements with debenture holders to restructure debt in the amount of $25.9M and concurrently completed an offering for gross proceeds of $3.5M. The offering and restructuring significantly improves Choom's balance sheet and are critical milestones to accelerate growth. The restructuring and concurrent offering will be reflected in Q1 2022.
Highlights of the restructuring include:
| Aurora Debenture | Pre-restructuring | Post-restructuring |
| Principal | $20,000,000 | $6,000,000 |
| Interest Rate | 6.5% | 7.0% |
| Interest Due Date 2 | Annually | Maturity |
| Maturity Date | November 2022 | December 2024 |
| Restructuring Fee 3 | N/A | 1.25% |
| Aurora Ownership % 4 | 3.0% | 19.9% |
| | | |
| December 2019 Debenture | Pre-restructuring | Post-restructuring |
| Principal | $4,100,000 | $4,100,000 |
| Interest Rate | 10% | 10% |
| Interest Due Date | Bi-annually | Bi-annually |
| Maturity Date | December 2021 | December 2024 |
People:
Choom's Retail and Store Support Centre continued to attract, retain, and enable top talent, dedicated to the success of the Company, and strengthened its talent pool with key new hires in inventory management, central operations, and finance. Choom continued to expand its store performance bonus program, rewarding its store managers and educators for their efforts.
Product:
Choom gained significant efficiencies in its inventory management, decreasing total inventory by 9%, and increasing inventory turns from 5 in 2020 to 15.3 in 2021. These efficiencies were the direct result of the centralization and optimization of its product operations.
Gross margins for the year increased by 6.31% as a result of Choom's pricing and assortment strategy, which proved resilient against new value priced players who recently entered the market. Margins continued to increase in Q4 to 38.35%.
2021 saw the launch of Choom's vendor portal, allowing for 152+ licensed producer requests for partnership in-store and online.
Marketing:
Since the re-platforming of its website by Choom's internal digital team, PlatformWD, ecommerce sales were approximately $1M at the date of this report and since its launch in March 2021. The SEO strategy employed has allowed for the realization of a 136% increase in clicks from Google, 508% increase in Google Search impressions, 70.7% engagement rate on the website, and over 80K monthly product impressions.
Choom Plus, the brand's new digital loyalty program was launched, and is now optimizing its current database, whilst exponentially growing it through the acquisition of new subscribers to the program.
Operations:
During the year there were increased COVID-19 related restrictions across all provinces, with Ontario being the most impacted, seeing closures for a significant part of the calendar 2021 year, reducing locations to curbside pick-up and delivery only. Throughout the continued time of uncertainty, Choom remained committed to ensuring safety in all its locations.
Subsequent to year end, Choom opened 2 additional locations in Ontario: Toronto's Liberty Village and Hamilton. Both locations continue to see growth since both their openings.
Building permits remain in review for both its Ottawa and Downtown Vancouver locations. Once the permits are secured, construction for the locations will go out for tender.