High Tide: An Underappreciated Canadian Cannabis Growth Story
September 17, 2022

By Michael Berger, technical420.com

2022 has been a challenging year for the cannabis industry and we continue to closely follow the sector to better understand the investment landscape.

Cannabis retailers have been especially impacted by the downturn and we have seen an uptick in consolidation as a result. From price compression to inflationary concerns, the cannabis sector faces several headwinds and we expect to see further consolidation in the industry.

Earlier this week, High Tide Inc. (Nasdaq: HITI) (TSXV: HITI) (FSE: 2LYA) reported financial results for the period that ended on July 31st and recorded positive adjusted EBITDA for the tenth consecutive quarter

We have been closely following the retail-focused cannabis company and want to issue an update on the business after it reported earnings. Today, we have highlighted 5 important takeaways from the earnings report and want our readers should be aware of these facts.

  1. During the quarter, same-store sales increased by 46% when compared to the same quarter last year. When compared to the prior quarter, High Tide reported 18% growth and we find this to be significant
  2. When compared to last year, High Tide has more cash on hand (more than $18 million) and this should help the company survive a continued pullback
  3. High Tide’s Cabana Club Loyalty Program surpassed 750,000 members and reported that more than 90% of company transactions are by this group
  4. When compared to the same period last year, gross margin fell to 27% from 35% and we find the decrease to be significant. The business has been impacted by a softer cannabis market and will continue to monitor the trend
  5. Although gross margin decreased, the amount of gross profit increased to $25.8 million from $16.7 million (on a year-over-year basis) and we want our readers to be aware of this.