Alcanna Reports 7.6% Growth in Same Store Liquor Sales and Strong Growth in Profitability in the Fourth Quarter 2020

EDMONTON, Alberta, March 25, 2021 (GLOBE NEWSWIRE) -- Alcanna Inc. (the “Company” or “Alcanna”) (TSX: CLIQ) today reported its financial results for the three months and year ended December 31, 2020.  

Fourth Quarter Financial Results and Business Update

In Q4 2020, Alcanna’s liquor stores continued the strong performance achieved in the previous three quarters.

Gross margin dollars from the Company’s core liquor division increased 14.0% from $32.6 million to $37.2 million.

Same-store sales from continuing operations rose by 7.6%. The Company believes this is primarily a result of: (i) the change in pricing strategy that was implemented in 2019 and continued into 2020, which was designed to regain lost market share and grow the customer base; and (ii) shifting customer consumption habits due to more people dining and entertaining at home and continuing to stay away from on-premise liquor establishments (restaurants, bars, lounges, sports venues, etc.). The Company believes these new consumer behaviour patterns have become entrenched in people’s lifestyle choices and expects consumer behaviour will continue in this manner as long as the COVID-19 pandemic remains a threat to the health of Canadians and thereafter as well.

Alberta and British Columbia both implemented strict lockdowns and a ban on social and household gatherings during the traditional Q4 holiday period, which served to partially moderate the double-digit sales growth experienced in Q2 and Q3 2020.

Over the past fifteen (15) months, the Company has been implementing a strategy to sell or close low or under-performing convenience-format liquor stores in Alberta. The Company has exited twenty-eight (28) stores in Alberta during that time frame – which resulted in total sales from continuing operations in the fourth quarter to rise at a more moderate rate to $181.6 million from $174.5 million in 2019.

• Total gross margin dollars rose 17.4% to $42.5 million for the fourth quarter from $36.2 million in the prior year.
• Operating profit before amortization, remeasurements and provisions for Q4 2020 rose 122.8% to $13.0 million from $5.8 million in the prior year.
• Profit before income taxes for Q4 2020 rose to $1.5 million, compared to a loss of $20.1 million in the prior year.
• Total cannabis store sales for the fourth quarter rose 32.8% to $17.3 million from $13.0 million in the prior year, and total gross margin dollars grew 48.5% to $5.3 million from $3.5 million.

The same-store liquor sales increase for January and February 2021, as compared to the prior year, continued to be strong and was comparable with the same-store liquor sales increases reported by the Company for the second and third quarter of 2020.  However, we anticipate that same-store liquor sales over the entire first quarter of 2021, as compared to the prior year, will be comparable with the increase reported for the fourth quarter of 2020. This is as a result of the significantly higher than normal sales that were recorded by the Company over the last three weeks of March 2020, starting March 11, 2020 when COVID-19 was declared a pandemic by the World Health Organization, when customers were ‘stockpiling’ prior to being assured by provincial governments that liquor stores would be classified as essential services and would remain open.

The Company’s annual audited consolidated financial statements and management’s discussion and analysis (“MD&A”) for the year ended December 31, 2020 will be available in the “Investor Centre – Financial Reports” section of the Company’s website at www.alcanna.com and will be filed on SEDAR and available at www.sedar.com.

FINANCIAL RESULTS

1. The financial results for the three months and year ended December 31, 2019 have been restated to exclude the results of the Company’s discontinued operations comprised of the Alaska operations, which were sold on June 1, 2020, and British Columbia operations, which are being disposed as part of the Company’s coordinated plan to exit the British Columbia convenience-format retail liquor store business.
2. Adjusted operating profit before amortization, remeasurements and provisions are non-IFRS measures that do not have a standardized meaning prescribed by IFRS. For more information and a reconciliation of non-IFRS measures to the closest IFRS measure see the ‘Non-IFRS Financial Measures’ section of the MD&A.

CONFERENCE CALL

Alcanna Inc. will host an analyst and investor conference call on March 26, 2021 to discuss the financial results for the three months and year ended December 31, 2020. The conference call will take place at 10:00 a.m. M.T.

To participate in the call, please dial (416) 406-0743 or toll-free (800) 806-5484 and use the required participant access code: 7494265#. An archived recording of the conference call will be available approximately four hours after the event, by dialling: (905) 694-9451 or toll-free (800)408-3053. The required passcode is: 3883793#.

ABOUT ALCANNA INC.

Alcanna is one of the largest private sector retailers of alcohol in North America and the largest in Canada by number of stores – operating 196 locations in Alberta and British Columbia. The Company’s majority-owned subsidiary, Nova Cannabis Inc. (TSXV: NOVC), also operates 53 cannabis retail stores in Alberta, Ontario, and Saskatchewan.

Alcanna’s common shares and convertible subordinated debentures trade on the Toronto Stock Exchange under the symbols “CLIQ” and “CLIQ.DB”, respectively.

Additional information about Alcanna Inc. is available at www.sedar.com and the Company’s website at www.alcanna.com.

FORWARD-LOOKING STATEMENTS

This news release contains forward-looking statements or information (collectively “forward-looking statements”) within the meaning of applicable securities legislation. Forward-looking statements are typically identified by words such as “continue”, “anticipate”, “will”, “should”, “plan”, “intention”, and similar words suggesting future events or future performance. All statements and information other than statements of historical fact contained in this news release are forward-looking statements. In particular, this news release contains forward-looking statements pertaining to the impact that the COVID-19 pandemic may have on sales and customer shopping habits in the future and the anticipated same-store liquor sales increase in the first quarter of 2021 as compared to the prior year.

With respect to forward-looking statements contained in this news release, the Company has made assumptions regarding, among other things, the COVID-19 pandemic and the impact it may have on consumer behavior in Alberta and British Columbia, and the anticipated same-store liquor sales increase in the first quarter of 2021 as compared to the prior year.

Although the Company believes that the expectations reflected in the forward-looking statements, and the assumptions on which such forward-looking statements are made, are reasonable, especially given the unprecedented uncertainty of the full extent and impact of COVID-19, there can be no assurance that such expectations and assumptions will prove to be correct. Readers should not place undue reliance on forward-looking statements included in this news release. Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that may cause actual performance and financial results to differ materially from any estimates, forecasts or projections. These risks and uncertainties include, among other things, the duration and severity of the COVID-19 pandemic on the business, operations and financial condition of the Company; the risk that Alcanna will be unable to execute its strategic plan and growth strategy, including the capital allocation, as planned without significant adverse impacts from various factors beyond its control; dependence on suppliers; potential delays or changes in plans with respect to capital expenditures and the availability of capital on acceptable terms; risks inherent in the liquor retail and cannabis industries; competition for, among other things, customers, supply, capital and skilled personnel; changes in labour costs and markets; incorrect assessments of the value of acquisitions; general economic and political conditions in Canada (including Alberta), and globally; industry conditions, including changes in government regulations; fluctuations in foreign exchange or interest rates; unanticipated operating events; failure to obtain regulatory and third‐party consents and approvals when required; changes in tax and other laws that affect us and our security holders; the potential failure of counterparties to honour their contractual obligations; stock market volatility; and the other factors described in the Company’s public filings (including the Annual Information Form) available at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking statements contained in this news release are made as of the date hereof. Except as expressly required by applicable securities legislation, Alcanna does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

For Further Information

James Burns
Vice Chair and Chief Executive Officer
Alcanna Inc.
(587) 460-1026