Maison Solutions Reports Fiscal 2024 Third Quarter and Nine-Month Financial Results
- None.
- Revenue decline in Q3 due to competition, end of relief programs, and store renovation slow-down
- Operating loss increased in Q3 compared to the previous year
- Net loss reported for both Q3 and nine-month period of fiscal 2024
- Higher selling and general administrative expenses led to an operating loss for the nine-month period
Insights
The specialty grocery sector, particularly those focusing on ethnic foods, is a niche yet growing segment of the retail industry. Maison Solutions' strategic expansion through store renovations and acquisitions is a bold move to capture more market share. However, the reported decline in revenues and net loss for the third quarter of fiscal 2024, compared to the prior year, indicates competitive pressures and the end of COVID-19 relief programs are impacting the company's bottom line.
While the increased cash and equivalents position following their IPO and private placement suggests a strong liquidity position, the net cash used in operating activities raises concerns about the company's cash flow sustainability. Investors should monitor whether the new store openings and renovations can reverse the trend of declining sales and create a positive cash flow from operations.
Maison Solutions' financial performance shows a concerning trend with net losses widening in the third quarter. The decrease in gross margin, from 25.6% to 23.4%, suggests that the company is facing margin compression, likely due to increased competition and possibly inefficient cost management. The drop in perishable goods revenue is particularly noteworthy as these items typically drive store traffic and can indicate reduced customer loyalty or shifts in consumer behavior.
Investors should consider the long-term viability of the company's expansion strategy against the backdrop of these financial results. The opening of a flagship store could be a significant growth catalyst, but it also represents a substantial investment at a time when profitability is under pressure. The balance between growth and profitability will be key in assessing Maison Solutions' financial health.
Renovations and new store openings in the retail sector are often a double-edged sword. While they can attract new customers and increase sales, they also require significant capital investment and can disrupt existing operations, as seen with the temporary slowdown at Maison Solutions' El Monte store. The challenge for Maison Solutions will be to ensure that these investments translate into a superior shopping experience that drives increased foot traffic and customer retention.
The use of a recently purchased software suite to optimize store layout and shelf displays is a positive step towards leveraging technology for revenue growth. It's essential that Maison Solutions effectively integrates this technology to enhance the customer experience and streamline operations, thereby improving financial outcomes in future quarters.
MONTEREY PARK, CA / ACCESSWIRE / March 18, 2024 / Maison Solutions Inc. ("Maison Solutions" or the "Company"), (Nasdaq:MSS), a U.S.-based specialty grocery retailer offering traditional Asian food and merchandise to modern consumers, today announced financial results for the third quarter and first nine months of fiscal 2024 ended January 31, 2024.
"We continue to make considerable operational progress through store renovations, new store openings, and acquisitions of additional stores to efficiently grow our footprint," said John Xu, President and Chief Executive Officer of Maison Solutions. "Our El Monte store, which is the first of our planned store renovations, is on track to be completed later this month, and will provide a vibrant, contemporary shopping experience for customers, while leveraging our recently purchased software suite to drive revenues through optimization of store design, layout and shelf displays. Additionally, we remain on schedule to open our flagship, 37,000 square-foot, store in Rowland Heights, California later this year, which we believe will become one of the largest and most advanced Asian grocery supercenters in the state.
Fiscal 2024 Third Quarter Financial Results
Total revenues, net, were
Total cost of revenues, which includes rental expense, depreciation, the direct costs of purchased merchandise, shrinkage costs, store supplies, and inbound shipping costs, decreased 10.5 percent to
Gross profit for the fiscal 2024 third quarter equaled
Operating loss was approximately
Net loss attributable to Maison Solutions was approximately
At January 31, 2024, the Company had cash and equivalents of
Net cash used in operating activities was approximately
Nine-Month Fiscal Year 2024 Financial Results
Total revenues, net, were
Total cost of revenues were
Gross profit was
Operating loss was approximately
Net loss attributable to Maison Solutions was approximately
About Maison Solutions Inc.
Maison Solutions Inc. is a U.S.-based specialty grocery retailer offering traditional Asian food and merchandise to U.S. consumers, particularly to members of Asian-American communities. The Company is committed to providing Asian fresh produce, meat, seafood, and other daily necessities in a manner that caters to traditional Asian-American family values and cultural norms, while also accounting for the new and faster-paced lifestyle of younger generations and the diverse makeup of the communities in which the Company operates. Since its formation in 2019, the Company has acquired equity interests in four traditional Asian supermarkets in the Los Angeles area, and has been operating them under the brand name HK Good Fortune. To learn more about Maison Solutions, please visit the Company's website at www.maisonsolutionsinc.com. Follow the Company on LinkedIn and X.
Cautionary Note Concerning Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including the Company's ability to grow organically and through acquisitions, improve efficiencies throughout the organization, reduce costs related to operating and opening new stores, and, over the longer term, use knowledge gained from implementing the software to open new revenue streams. No assurance can be given that the proceeds will be used as indicated. Forward-looking statements are subject to numerous conditions, many of which are beyond the control of the Company, including those set forth in the Risk Factors section of the Company's registration statement for the initial public offering filed with the SEC. Copies are available on the SEC's website at www.sec.gov. Maison Solutions undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.
Investor Relations and Media Contact:
PondelWilkinson Inc.
Judy Lin or Laurie Berman
310-279-5980
info@maisonsolutionsinc.com
(financial tables follow)
MAISON SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended January 31, | Nine Months Ended January 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
Net Revenues | ||||||||||||||||
Supermarket | $ | 13,598,479 | $ | 15,637,095 | $ | 41,116,998 | $ | 41,215,255 | ||||||||
Total Revenues, Net | 13,598,479 | 15,637,095 | 41,116,998 | 41,215,255 | ||||||||||||
Cost of Revenues | ||||||||||||||||
Supermarket | 10,410,684 | 11,626,723 | 31,699,886 | 31,815,554 | ||||||||||||
Total Cost of Revenues | 10,410,684 | 11,626,723 | 31,699,886 | 31,815,554 | ||||||||||||
Gross Profit | 3,187,795 | 4,010,372 | 9,417,112 | 9,399,701 | ||||||||||||
Selling Expenses | 2,438,846 | 2,664,054 | 6,984,543 | 6,670,088 | ||||||||||||
General and Administrative Expenses | 1,056,118 | 1,394,570 | 2,702,660 | 2,649,419 | ||||||||||||
Total Operating Expenses | 3,494,964 | 4,058,624 | 9,687,203 | 9,319,507 | ||||||||||||
(Loss) Income from Operations | (307,169 | ) | (48,252 | ) | (270,091 | ) | 80,194 | |||||||||
Other Income, Net | 898 | 1,277,741 | 383,949 | 1,321,533 | ||||||||||||
Investment Loss from Equity Method Investment | (51,204 | ) | - | (63,982 | ) | - | ||||||||||
Interest Expense (Income), Net | (19,425 | ) | 76,052 | (95,956 | ) | 15,705 | ||||||||||
Total Other Income (Expenses), Net | (69,731 | ) | 1,353,793 | 224,011 | 1,337,238 | |||||||||||
Loss (Income) Before Income Taxes | (376,900 | ) | 1,305,541 | (46,080 | ) | 1,417,432 | ||||||||||
Income Tax Provisions | 158,656 | 99,070 | 424,722 | 189,151 | ||||||||||||
Net (Loss) Income | (535,556 | ) | 1,206,471 | (470,802 | ) | 1,228,281 | ||||||||||
Net Income Attributable to Noncontrolling Interests | 13,398 | 217,997 | 91,626 | 307,655 | ||||||||||||
Net (Loss) Income Attributable to Maison Solutions Inc. | $ | (548,954 | ) | 988,474 | $ | (562,428 | ) | $ | 920,626 | |||||||
| (Loss) Income per Share Attributable to Maison Solutions, Inc. | ||||||||||||||||
- Basic | $ | (0.03 | ) | $ | 0.06 | (0.03 | ) | $ | 0.06 | |||||||
- Diluted | $ | (0.03 | ) | $ | 0.06 | (0.03 | ) | $ | 0.06 | |||||||
| Weighted Average Number of Common Stock Outstanding | ||||||||||||||||
- Basic | 19,405,797 | 16,000,000 | 17,334,541 | 16,000,000 | ||||||||||||
- Diluted | 19,435,915 | 16,000,000 | 17,347,630 | 16,000,000 | ||||||||||||
MAISON SOLUTIONS INC.
CONSOLIDATED BALANCE SHEETS
| January 31, 2024 (Unaudited) | April 30, 2023 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 9,406,626 | $ | 2,569,766 | ||||
Accounts receivable | 756,341 | 315,356 | ||||||
Accounts receivable - related parties | 407,446 | 289,615 | ||||||
Inventories, net | 3,020,220 | 2,978,986 | ||||||
Prepayments | 20,000 | 1,547,243 | ||||||
Other receivables and other current assets | 993,976 | 550,836 | ||||||
Other receivable - related parties | 33,995 | 33,995 | ||||||
Total Current Assets | 14,638,604 | 8,285,797 | ||||||
Restricted cash - non-current | 1,101 | 1,101 | ||||||
Property and equipment, net | 789,937 | 671,463 | ||||||
Intangible assets | 3,071,463 | 197,329 | ||||||
Security deposits | 457,491 | 457,491 | ||||||
Investment under cost method | 75,000 | - | ||||||
Investment under cost method - related parties | 203,440 | 203,440 | ||||||
Investment under equity method | 1,736,018 | - | ||||||
Operating lease right-of-use assets, net | 21,004,764 | 22,545,190 | ||||||
Goodwill | 2,222,211 | 2,222,211 | ||||||
Total Assets | $ | 44,200,029 | $ | 34,584,022 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 1,654,221 | $ | 3,105,592 | ||||
Accounts payable - related parties | 492,480 | 465,310 | ||||||
Note payable | - | 150,000 | ||||||
Current portion of loan payables | 121,942 | 370,828 | ||||||
Accrued expenses and other payables | 858,342 | 867,796 | ||||||
Contract liabilities | 308,326 | 449,334 | ||||||
Other payables - related parties | 241,585 | 241,585 | ||||||
Operating lease liabilities - current | 1,850,310 | 1,761,182 | ||||||
Income taxes payable | 1,069,281 | 961,034 | ||||||
Total Current Liabilities | 6,596,487 | 8,372,661 | ||||||
Long-term loan payables | 2,512,674 | 2,561,299 | ||||||
Security deposit from sub-tenants | 111,314 | 105,637 | ||||||
Operating lease liabilities - non-current | 21,309,934 | 22,711,760 | ||||||
Deferred tax liability, net | 34,273 | 40,408 | ||||||
Total Liabilities | 30,564,682 | 33,791,765 | ||||||
Stockholders' Equity | ||||||||
Class A Common stock, | 1,745 | 1,376 | ||||||
Class B Common stock, | 224 | 224 | ||||||
Additional paid in capital | 13,313,523 | - | ||||||
Retained earnings (accumulated deficit) | (39,718 | ) | 522,710 | |||||
Total Maison Solutions, Inc. Stockholders' Equity | 13,275,774 | 524,310 | ||||||
Noncontrolling interests | 359,573 | 267,947 | ||||||
Total Stockholders' Equity | 13,635,347 | 792,257 | ||||||
Total Liabilities and Stockholders' Equity | $ | 44,200,029 | $ | 34,584,022 | ||||
MAISON SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Nine Months ended January 31, | ||||||||||
| 2024 | 2023 | |||||||||
Cash flows from operating activities | ||||||||||
Net (loss) income | $ | (470,802 | ) | $ | 1,228,281 | |||||
| Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||||||||
Depreciation and amortization expenses | 274,476 | 312,549 | ||||||||
Bad debt reversal | (105,322 | ) | - | |||||||
Provision for inventory shrinkage reserve | (1,088 | ) | 29,479 | |||||||
Investment loss | 63,982 | - | ||||||||
Changes in deferred taxes | (6,135 | ) | (8,229 | ) | ||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | (440,985 | ) | (880,952 | ) | ||||||
Accounts receivable - related party | (219,260 | ) | 85,981 | |||||||
Inventories | (40,147 | ) | 242,560 | |||||||
Prepayments | 1,065,243 | 703,023 | ||||||||
Other receivables and other current assets | 124,182 | (238,475 | ) | |||||||
Security deposits | - | 5,654 | ||||||||
Accounts payable | (1,451,371 | ) | (1,290,541 | ) | ||||||
Accounts payable - related party | 128,599 | 94,193 | ||||||||
Accrued expenses and other payables | (9,454 | ) | (156,804 | ) | ||||||
Contract Liabilities | (141,009 | ) | (127,138 | ) | ||||||
Operating lease liabilities | 227,728 | 149,489 | ||||||||
Taxes payables | 108,247 | 192,391 | ||||||||
Other long-term payables | 5,677 | 22,764 | ||||||||
Net cash (used in) provided by operating activities | (887,439 | ) | 364,225 | |||||||
Cash flows from investing activities | ||||||||||
Payment for acquisition of subsidiary | - | (2,500,000 | ) | |||||||
Payment for leasehold improvement of the supermarket | (307,427 | ) | ||||||||
Payments of equipment purchase | (9,656 | ) | (24,185 | ) | ||||||
Payments of intangible assets purchase | (2,950,000 | ) | - | |||||||
Loans repaid from third parties | - | 4,410,270 | ||||||||
Investment into TMA Liquor Inc | (75,000 | ) | - | |||||||
Investment into HKGF Market of Arcadia | (1,800,000 | ) | - | |||||||
Net cash (used in) provided by investing activities | (5,142,083 | ) | 1,886,085 | |||||||
Cash flows from financing activities | ||||||||||
Bank overdraft | - | (281,941 | ) | |||||||
Repayments on loan payables | (297,510 | ) | (261,923 | ) | ||||||
Repayments to related parties | - | (62,932 | ) | |||||||
Repayment of note payable | (150,000 | ) | - | |||||||
Borrowings from related parties | - | (34,600 | ) | |||||||
Net proceeds from issuance of common stock | 13,313,892 | - | ||||||||
Net cash provided by (used in) financing activities | 12,866,382 | (641,396 | ) | |||||||
Net changes in cash and restricted cash | 6,836,860 | 1,608,914 | ||||||||
Cash and restricted cash at the beginning of the period | 2,570,867 | 972,431 | ||||||||
Cash and restricted cash at the end of the period | $ | 9,407,727 | $ | 2,581,345 | ||||||
Supplemental disclosure of cash and restricted cash | ||||||||||
Cash | $ | 9,406,626 | $ | 2,580,244 | ||||||
Restricted cash | 1,101 | 1,101 | ||||||||
Total cash and restricted cash | $ | 9,407,727 | $ | 2,581,345 | ||||||
Supplemental disclosure of cash flow information | ||||||||||
Cash paid for interest | $ | 81,369 | $ | 29,577 | ||||||
Cash paid for income taxes | $ | 322,610 | $ | 8,481 | ||||||
SOURCE: Maison Solutions Inc.
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