eResearch | On June 29, Organic Garage Ltd. (TSXV: OG), released its FQ1/2021 results, for the quarter ending April 30.
Organic Garage is a leading organic grocer offering a wide selection of healthy and natural products at affordable prices. Founded in 2005, Organic Garage is headquartered in Toronto, operates four stores in the GTA, with a fifth store opening in early 2021, and also operates a supply chain through its centralized distribution centre.
FQ1/2021 Financial Results
Organic Garage announced revenue increased 19% to $8.0 million in FQ1/2021 from $6.7 million in FQ1/2020. Gross margins increased to 30.6% in FQ1/2021 compared with 29.4% from the FQ1/2020.
Organic Garage online sales nearly doubled to 6.6% of overall sales in April, up from 3.5% in March and up from 1.3% of overall sales in February 2020. The Company has partnered with Uber (NYSE:UBER) affiliate Cornershop to use their digital app or website to order online and get delivery from all Organic Garage retail locations.
The Company posted a quarterly gain of $0.2 million, up from a loss of $0.2 million in FQ1/2020. The gain was primarily due to higher revenue and expense management. Total expenses as a percentage of sales decreased to 28.2% during FQ1/2021 from 33.1% in the same quarter a year ago even though Wages & Benefits increased in the quarter due to increased staffing due to COVID-19.
EBITDA
EBITDA improved to $1.1 million in FQ1/2021, up from $0.4 million in FQ1/2020. The Company continues to focus on improving cash flows from operating activities, including optimizing accounts receivable and accounts payable balances.
At the end of the quarter, Organic Garage cash position was $1.2 million up from $0.2 million in FQ1/2020 and undrawn operating credit facility of $150 thousand.
Organic Garage CEO Matt Lurie stated, “Clearly Q1 presented certain operational challenges related to COVID-19. However, the Company was extremely pleased with how management and staff embraced the challenges to keep our customers and staff safe and healthy, while at the same time continuing to provide the products and services in which Organic Garage takes such great pride.”
After the quarter, the Organic Garage continued to experience high demand volumes because of the COVID-19 pandemic and this demand should positively affect revenue and cash flows in FQ2/2021. In response to the COVID-19 health crisis and to capture a new customer preference, the Company also implemented a “Curbside Pickup” option at its Oakville and Thornhill stores.
GRAPH 1: Organic Garage Quarterly Revenue
In early 2021, the Company expects to open its fifth store, located in the Leaside neighborhood of Toronto. The opening was previously scheduled to open in 2019 but was delayed due to redevelopment issues with the property owner. Because of the delays, Organic Garage has negotiated substantial benefits in favour of the Company, which should help with the store’s profitability.
Organic Garage believes that Ontario can support 25-30 Organic Garage locations and continues to evaluate possible expansion locations.
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