According to a report by ReportLinker, operators in the beer, wine and liquor stores industry have remained positive over the five years to 2015. This even as they have had to grapple with a challenging macro environment that has resulted in no revenue growth over the period.
With the economic outlook improving and consumer confidence bouncing back in North America, the outlook for liquor store operators is robust. ReportLinker notes in its report that as a result of improving consumer confidence, more consumers have purchased high-margin products such as craft-beer, bolstering industry profitability. The industry has also benefited from deregulation, according to ReportLinker.
The robust outlook for the industry certainly augurs well for Rocky Mountain Liquor Inc. (TSX-Venture:RUM), which is the parent company of Andersons Liquor Inc. Based in Edmonton, RUM owns and operates 45 private liquor stores in the province. This morning, the company reported its financial results for the quarter ended September 30.
For the quarter, RUM reported net income of $388,511, compared to $318,173 reported for the same period in the previous year. The company’s sales for the quarter were $13.3 million, compared to $15.3 million reported for the same period in the previous year.
RUM’s gross margin percentage for the quarter increased to 26.5% from 23.6% reported for the same period in the previous year. Operating margin for the quarter, however, decreased. RUM’s EBITDA for the quarter also decreased. EBITDA for the September quarter was $791,471, compared to $988,531 reported for the same period in the previous year.
For the nine-month period ended September 30, RUM reported net income of $375,704, compared to $9,849 reported for the same period in the previous year. The company’s sales for the nine-month period were $37.4 million, compared to $42.2 million reported in the same period last year.
The decline in sales during the three-month and nine-month period was due to the sale and closure of four stores, the company said. Sales also dropped due to a decrease in commercial liquor service sales as a result of management’s decision to reduce the number of accounts it services.
The company’s sales were also impacted by a slowdown in the local economy, which is dependent to a large extent on the energy sector. The drop in oil prices since last year have hurt the Energy sector in Canada, and with crude oil prices still in the low $40 U.S. range per barrel, this component may hold back revenues in the near term.
Shares of RUM are up over 8% today, on stronger than average volume. That being said, shares are trading at the bottom range of its 52-week stock chart, likely reflecting the local economy’s struggles.
