Goodfood Market ((TSE:FOOD)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Goodfood Market’s recent earnings call painted a mixed picture of the company’s financial health. While the company reported positive adjusted EBITDA and free cash flow, alongside successful product launches and improved sales per customer, these achievements were overshadowed by a significant decline in net sales and active customers. This decline is attributed to ongoing demand challenges in the meal-kit market, which continue to affect Goodfood and its competitors.
Positive Adjusted EBITDA and Free Cash Flow
Goodfood Market reported a positive adjusted EBITDA for the full year, marking 11 consecutive quarters of positive results. The fiscal year 2025 saw an adjusted EBITDA of $6 million, representing a 5% margin. Additionally, the company achieved positive adjusted free cash flow in six of the past eight quarters, highlighting its ability to generate cash effectively.
Genuine Tea Acquisition Success
The acquisition of Genuine Tea has proven to be a strategic success for Goodfood. The brand is experiencing over 30% annual sales growth and is contributing positively to the company’s EBITDA, making it both growth and margin accretive.
Increased Net Sales Per Active Customer
Net sales per active customer saw a significant increase of 12% year-over-year, reaching $379. This growth was driven by larger basket sizes and reduced incentives, indicating stronger customer engagement and spending.
Improved Gross Margin
Goodfood’s gross margin improved to 40.3% for the quarter, an increase of 220 basis points from the previous year. This improvement reflects the company’s efforts to enhance operational efficiency and cost management.
Successful Launch of Heat & Eat
The Heat & Eat product line is making significant strides, nearing $4 million in annualized sales. This product launch provides Goodfood with a promising new growth avenue, diversifying its product offerings.
Decline in Net Sales and Active Customers
Despite these positive developments, Goodfood faced a decline in net sales for the fourth quarter, which stood at $25 million, down $9 million year-over-year. The active customer base also decreased significantly, from 101,000 last year to 66,000.
Challenges in Meal-Kit Demand
The meal-kit market continues to face headwinds, with persistent demand challenges impacting Goodfood and its competitors. These challenges are expected to continue, posing a significant hurdle for the company’s growth prospects.
Forward-Looking Guidance
Looking ahead, Goodfood remains focused on maintaining its positive adjusted EBITDA and free cash flow. The company is navigating a challenging environment but is committed to strategic investments, such as the acquisition of Genuine Tea, to drive growth. The focus will remain on increasing net sales per active customer and improving gross margins to sustain financial health.
In conclusion, Goodfood Market’s earnings call highlighted a mix of achievements and challenges. While the company has made strides in improving its financial metrics and launching successful products, it continues to grapple with declining net sales and a shrinking customer base. The ongoing demand challenges in the meal-kit market remain a significant concern, but Goodfood’s strategic initiatives provide a glimmer of hope for future growth.