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Pallets of GoodFood boxes are brought into trucks for shipping in Montreal on July 14, 2020.Christinne Muschi/Christinne Muschi/The Globe and

Shares of Goodfood Market Corp. (FOOD-T) fell by as much as a third after the online meal kit and grocery delivery company reported a quarterly loss and said its revenues slipped as consumers emerged from the pandemic lockdowns that had previously fuelled the business.

The stock closed at $5.30 on Wednesday, down $1.90 or 26.4 per cent, well below its all-time high of $14.72 in January. In early trading, the stock fell by as much as 34 per cent.

The Montreal-based company said sales fell 5 per cent to $79.4-million for its fourth quarter ended Aug. 31, which was below analysts’ expectations of $91.4-million, according to S&P Capital IQ, and down from $83.7-million a year ago.

The company cited “accelerated removal of lockdown restrictions and increased vaccine coverage” for the sales decline. It also noted that July and August are traditionally slower sales periods.

The online grocery company also reported a net loss of $22.1-million, or 30 cents a share, versus net income of $1.2-million, or 2 cents, a year ago. Analysts were expecting a loss of 6 cents a share for the most recent quarter.

The company said selling, general and administrative expenses increased to 47.2 per cent of net sales compared with 27.5 per cent last year, primarily owing to higher wages and salaries to support investments and higher marketing spending. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at a loss of $17.7-million, much worse than the consensus expectation of a loss of about $1-million.

Goodfood said it expects “these headwinds to stabilize as the year progresses and the return to normalcy continues.”

In an investor conference call on Wednesday, Jonathan Ferrari, Goodfood’s chief executive officer, said the recent launch of its one-hour on-demand delivery service in Toronto, and soon in other Canadian cities, will help to boost future sales. He described the on-demand delivery option as “truly unique in terms of value proposition, and it will drive online grocery penetration and position Goodfood to be the Canadian leader in the field.”

Mr. Ferrari positioned the fourth-quarter quarter sales drop as “a sign of resilience in the business,” noting they were “well ahead of prepandemic levels despite unprecedented pent-up demand for outside-of-home activities.” (Revenues for the fourth quarter of fiscal 2019 were $45.3-million.)

Canaccord Genuity analyst Luke Hannan described the fourth-quarter results as a “substantial miss” relative to his firm’s and consensus estimates on both revenue and adjusted EBITDA.

Mr. Hannan described the company’s outlook for its 2022 fiscal year as “discouraging,” noting that the company said the slowdown in demand it saw during the latest quarter may persist into the next fiscal year.

“Combined with likely continued absorption of supply chain costs which will weigh on margins, we believe fiscal 2022 could prove to be a challenging year for Goodfood,” he wrote.

While the results were below expectations, Desjardins analyst Frederic Tremblay sees progress with the company’s one-hour delivery service to meet consumers’ growing appetite for fast delivery of grocery items.

“Beyond the soft quarterly results, we continue to appreciate the potential for Goodfood to build on its strength in meal kits and position itself to capitalize on opportunities in e-grocery,” Mr. Tremblay said in a note to clients.

Stephen Takacsy, CEO and portfolio manager at Lester Asset Management in Montreal, a long-time Goodfood Market shareholder, sold his stock a few months ago when it was rallying back up to $10.

“We were getting concerned about the lack of focus on meal-kit subscriber growth and decline in subscribers despite higher basket size per subscriber, which in our mind was key to cross-selling valued-added, higher-margin grocery items,” he said in an e-mail to The Globe and Mail.

He bought the shares in the summer of 2017 at $1.46 apiece, not long after it went public in the summer of 2017.

Asked whether he would consider buying the stock again after the drop on Wednesday, Mr. Takacsy said: “We would prefer to wait for results to turn around first, including the resumption of topline growth and improvement in margins.”

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