Maison Solutions Inc. Reports 125.3% Revenue Growth to $31.0 Million Amid Acquisition Challenges

Maison Solutions Inc. reported significant financial growth in its latest quarterly filing, with revenues reaching approximately $31.0 million for the three months ended October 31, 2024, a 125.3% increase from $13.8 million in the same period last year. The surge in revenue was primarily attributed to the acquisition of Lee Lee Oriental Supermart, which contributed $19.2 million to the total. However, the company also faced challenges, including decreased sales from its existing California supermarkets, which collectively saw a drop of about $2.0 million due to increased competition and the end of certain pandemic-related relief programs.

The company's gross profit for the quarter was approximately $8.2 million, up 161% from $3.1 million a year earlier, resulting in a gross margin of 26.3%. Operating expenses also rose significantly, totaling $7.5 million, a 160.7% increase compared to $2.9 million in the prior year. This increase was driven by higher selling expenses, including payroll and advertising costs, largely due to the integration of Lee Lee. Despite the increase in gross profit, Maison Solutions reported a net loss of $256,009 for the quarter, a stark contrast to the net income of $91,465 recorded in the same quarter of 2023.

In terms of operational metrics, the company’s total current assets increased to $14.3 million as of October 31, 2024, compared to $11.9 million at the end of the previous fiscal period. This growth was driven by higher inventory levels, which rose to $8.9 million, reflecting the company's strategy to bolster its product offerings. The total liabilities also increased slightly to $71.7 million, with current liabilities accounting for $30.0 million. The company’s accumulated deficit improved to approximately $2.37 million, down from $2.82 million, indicating a positive trend in managing losses.

Strategically, Maison Solutions has been expanding its footprint through acquisitions, including the recent purchase of Lee Lee for approximately $22.2 million. This acquisition is expected to enhance the company's market presence in Arizona, where Lee Lee operates three stores. The company is also focused on increasing its revenue through enhanced marketing efforts, expanding its sales force, and potentially seeking additional funding to support its growth initiatives. However, the company has expressed concerns regarding its ability to continue as a going concern, citing a working capital deficit of $15.6 million and the need for further capital to sustain operations.

Looking ahead, Maison Solutions aims to strengthen its market position by opening new stores and acquiring additional supermarkets, particularly in less competitive areas. The company plans to invest approximately $35 million to $40 million in expansion efforts, with a significant portion of this funding expected to be required within the next year. Management remains optimistic about the company's growth potential but acknowledges the challenges posed by market conditions and competition in the grocery retail sector.