Shares of Goodfood Market Corp. plunged by as much as 32 per cent Wednesday after the company swung to a loss in its fourth quarter as easing economic restrictions dampened demand for meal kits.
The Montreal-based company posted a net loss of $22.1 million in the summer quarter, compared to a profit of $1.2 million for the same period in 2020.
Goodfood benefited from pandemic-related economic restrictions, which upended Canadians’ dining habits and led to an increase in at-home meals.
But as vaccine rates rose during 2021 and governments relaxed lockdown measures, Canadians eagerly returned to restaurants.
Over the course of the company’s fiscal fourth quarter alone, it reported a net loss of 19,000 subscribers.
“Subscribers that were active during the quarter ordered less frequently while a number of others opted to not place any orders,” wrote Luke Hannan, an analyst at Canaccord Genuity Capital Markets, in a note to clients.
Goodfood warned the slowdown in demand for its meal kits may continue into next year, but said it expects these headwinds to stabilize as the economy returns to normal, although Hannan believes there could be more hurdles on the horizon.
“Combined with the likely continued absorption of supply chain costs, which will weigh on margins, we believe [2022] could prove to be a challenging year for Goodfood,” he wrote.
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