GABY (GABLF) – Market Conditions Remained Challenging in 2Q22

Retail and Consumer
0 min read

Monday, September 12, 2022

GABY Inc. is a California-focused retail consolidator and the owner of Mankind Dispensary, one of the oldest licensed dispensaries in California. Mankind is a well-known, and highly respected dispensary with deep roots in the California cannabis community operating in San Diego, California. GABY curates and sells a diverse portfolio of products, including its own proprietary brands, Lulu’s™ and Kind Republic™ through Mankind, manufactures Kind Republic, and distributes all its proprietary brands through its wholly owned subsidiary, GABY Manufacturing. A pioneer in the industry with a multi-vertical retail foundation, and a strong management team with experience in retail, consolidation, and cannabis, GABY is poised to­­­ grow its retail operations both organically and through acquisition.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

2Q22 Revenue. Note: GABY switched to the U.S. dollar for reporting purposes this quarter from the Canadian dollar previously. All figures are now in U.S. $, unless noted. Reported second quarter revenue fell 44% to $5.2 million, from $9.2 million reported last year, although adjusted for the closure of the wholesale distribution business, revenue was down 26%. On a sequential basis, revenue declined 10.4%. A still difficult operating environment due to lower pricing and reduced demand, combined with increased competition, impacted results.

But GM Held. In spite of the decline in revenue, gross margin was stable. 2Q22 GM was 43.2% versus 44.4% sequentially and 35.0% in the year ago period. Higher sales of proprietary products, control over supplier costs, and overall cost controls contributed to the stable GM. GABY reported a net loss of $3.0 million, or breakeven EPS for the quarter, compared to a net loss of $1.3 million, or breakeven EPS, in 2Q21.

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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 


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