The North West Co Inc (NNWWF) Q1 2025 Earnings Call Highlights: Strong Sales Growth Amidst ...
Net Earnings Increase: Up 2.2% compared to last year.
Same-Store Sales Gains: 4% increase in food sales.
Gross Profit Increase: Up 7.2% with a 103 basis point increase in gross profit rate.
Expenses Increase: Up 8.7%, including $2.1 million in onetime costs for the Next 100 program.
Adjusted Net Earnings: Increased 14.2% excluding share-based compensation and onetime costs.
Canadian Operations Sales Increase: Up 2%, with a 5.1% increase in same-store food sales.
Canadian Operations Gross Profit Increase: Up 5.1% due to higher sales and changes in sales blend.
Canadian Operations EBIT Decrease: Down 6.2% due to higher expenses.
Adjusted EBITDA for Canadian Operations: Increased 5.8% excluding onetime costs.
International Operations Same-Store Sales Increase: Up 2.8%, with 2.6% in food and 5.2% in general merchandise.
International Operations Gross Profit Increase: Up 5.4% due to higher sales and increased gross profit rate.
International Operations EBIT Increase: Up 11% for the quarter.
Warning! GuruFocus has detected 6 Warning Sign with NNWWF.
Release Date: June 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Consolidated sales increased by 3.9% and net earnings rose by 2.2%, building on a strong performance from the previous year.
Same-store food sales in Canada saw a 5.1% increase, driven by increased consumer demand from initiatives like the Inuit Child First Initiative.
International Operations experienced strong results with same-store sales gains of 2.6% in food and 5.2% in general merchandise.
Gross profit dollars increased by 7.2% due to sales gains and a 103 basis point increase in the gross profit rate.
The Next 100 program is yielding financial benefits, including more effective promotions and cost savings initiatives.
Expenses rose by 8.7% due to higher staff and technology costs, as well as increased depreciation and foreign exchange impacts.
The Next 100 program incurred $2.1 million in onetime costs for professional fees, impacting overall expenses.
Wildfires in Northern Canada have negatively impacted sales, affecting approximately 10% of the company's sites.
Payments from the First Nations drinking water settlement are expected to be slightly less than last year, impacting revenue.
The Inuit Child First Initiative funding has been limited, potentially reducing access to nutritious foods and impacting sales.
Q: How many communities does North West operate in Northern Canada, and how are they affected by the wildfires? A: North West operates in about 140 communities in Canada. The wildfires have affected roughly 10% of these sites, with sales significantly reduced in the affected areas. However, some stores remain open to service emergency workers and residents still in the community.
Q: Are the payments to individuals from the First Nations drinking water settlement less in 2025 than in 2024? A: The growth rate of payments is about on par with last year, but we anticipate that the total payments will be slightly less than in 2024.
Q: How is the Inuit Child First Initiative affecting food same-store sales growth? A: The program has slowed down significantly compared to last year, impacting access to nutritious foods. There is ongoing effort to restore the program to its previous state, but no interim measures are currently in place.
Q: Can you provide an update on the performance of North Star Air and its impact from the wildfires? A: North Star Air had a good quarter, meeting expectations. The wildfires have not negatively impacted its operations; instead, the airline has been able to assist communities due to its operational flexibility.
Q: How should we expect the benefits of the Next 100 program to ramp up, and when will we see a full run rate? A: The program is expected to mature by 2026, with benefits ramping up steadily through the year. By the latter end of 2026, we will be able to provide a more definitive outlook on the program's impact.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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