Raj Grover: Andrew, the trend is that our bricks and motor margins are not going down and yes, they can expand, albeit at a slower pace. Like I explained, it’s a strategic decision. We are the dominant chain in the country. And when you’re generating the amounts of cash flow over the last six months, we put up $10 million, we don’t really need to up the ante too quickly. If we do that, then the marginal players have a larger chance to just hang around, but it will just be adding to their own misery. And I think by just holding the line here and running a good business, we are going to expand that market opportunity for us. But 2025 and beyond, I’m sure in our mature stores and more mature markets, we are going to start expanding our gross margin profile.
In fact, even in the second half of 2024, I remain quite confident that we’ll be able to push the margin slightly higher. We’re just holding the line on them, because again, we’re managing our cost and our expenses really well. We are going to have our new store growth ramp up again. So we’re just being mindful on how we manage our mix.
Operator: Our next question comes from Doug Cooper with Beacon Securities.
Doug Cooper: I just want to circle back on Ontario and more particularly to Mississauga. So I think that’s just Virgin Real Estate. How many of the stores do you think that you’re planning would be in Mississauga? And what do you think the rush to open stores there will be from the competition and quite frankly, it probably doesn’t have a lot of capital to open such stores?
Raj Grover: So look, we already have one store open in Mississauga. We had acquired these sites in September, all of them, believe it or not, we have six leases that we’ve signed in Mississauga, very high quality leases. But we’re waiting for building permits. We just got two additional permits, so they are already in construction. We intend to have six sites in Mississauga as of present but we’re looking for more real estate now since Ontario’s announcement. And we think at the end of the day, we can have eight to 10 locations in Mississauga. And the one store that we opened in Mississauga is doing incredibly well. And that was anticipated, that was expected. It’s growing at the fastest pace I have seen for any new store, which is absolutely amazing.
So we’re going to take another six months or so to build out the Mississauga portfolio and we’re going to continue looking for a few more. We’ve seen some operators that have set up shops in Mississauga. But despite not being able to build, Doug, in Mississauga, because of the building permit restrictions, we’re a bigger operator, we got to do things by the rules. I noticed that since we announced these locations that this is where the locations are coming up, no one really bothered to open up their stores besides us. You could see the AGCO application profile and we have quite the area to ourselves. So whenever these stores open up, two are coming up in the next couple of months, we should have some really good revenue being generated out of these stores.
Doug Cooper: So can you share with us, maybe from a strategic perspective, if you’ve got 95 stores, give or take, to open in Ontario to hit the cap, you just mentioned eight to 10 is sort of in the immediate term in Mississauga, and I’m assuming some still in Toronto. Where else would you be targeting?
Raj Grover: There’s a lot of locations. Doug, I get excited when I think about the Ontario market. So there’s North Bay, there’s Kingston, there’s St. Catharines. There’s a whole bunch of locations, Pickering, more in Oshawa. We’re still building in all of these places and more in Toronto, of course, people call Toronto extremely saturated. That is true. But there’s not a Canna Cabana everywhere, right? So we want to make sure that we find the best locations even in the City of Toronto, whether that’s through organic bills or through M&A and be able to serve more customers in the City of Toronto. So we have a wide scale strategy for Ontario. It’s not limited to one market. We have two stores in Brampton now. We are looking for more real estate in Brampton.
Brampton is a great market for us. There is lots of markets that we don’t even have a presence yet, like St. Catharine’s, like Kingston, like North Bay, some of the other markets in Ontario. So there’s tons and tons of opportunity there for us. And I’m sure we will be able to put up these 96 stores in the next three to four years. But we are going to just make sure that we are selecting the highest quality real estate or doing the right type of M&A deal that is strategic and accretive to our shareholders.
Operator: Now I’d like to turn the session back over to High Tide’s Chief Executive Officer, Raj Grover, for final comments.
Raj Grover: Thank you, operator. And thank you to everyone for your interest and continued support for High Tide. We are very proud of what we’ve achieved this quarter and remain excited about the road ahead. With that, I’ll ask the operator to close the line. Have a great day, everyone.
Operator: Ladies and gentlemen, today’s call is now concluded. We’d like to thank you for your participation. You may now disconnect your lines.
