Goodfood Market (TSE:FOOD) reported first-quarter fiscal 2026 results for the period ended December 6, 2025, with management emphasizing cash preservation, margin protection, and operational discipline amid continued pressure in the meal kit category. The call was led by Executive Chairman Salim Bassoul—his first earnings call in the role—alongside Chief Financial Officer Ross Aouameur.
Leadership focus and CFIA update
Bassoul said he joined the company with a mandate to “stabilize the business, protect cash, and rebuild discipline,” adding that this work is underway. He also addressed a recent Canadian Food Inspection Agency (CFIA) announcement regarding the suspension of a license at Goodfood’s Montreal facility. Bassoul said the company worked constructively with the CFIA, addressed the identified issues, and that the license has been reinstated. He added that Goodfood continues working with the regulator to close pending issues and ensure required licenses are maintained.
Sales decline reflects fewer active customers and lower order rates
Active customers ended the quarter at approximately 66,000. Both Bassoul and Aouameur emphasized that the company has deliberately reduced marketing and incentives, prioritizing “profitable demand rather than chasing volume.” Aouameur said this approach weighs on near-term customer count but supports unit economics and margin protection. He also noted that net sales per active customer increased meaningfully year over year, reflecting record basket values in recent quarters and lower discounts.
Margin improvement supports positive adjusted EBITDA and cash flow
Management highlighted improved profitability metrics despite lower volume. Aouameur reported gross profit of CAD 11.6 million, with gross margin rising to 42.3% from 39.6% a year earlier. The improvement was primarily driven by higher average order value and lower incentives as a percentage of sales, partially offset by higher fulfillment and shipping costs as well as lower absorption of fixed costs on reduced volume.
Adjusted EBITDA was CAD 1.0 million, compared with CAD 1.6 million in the prior-year quarter, with the year-over-year decrease attributed to lower net sales and reduced scale, partially offset by gross margin improvement and disciplined SG&A spending. Net loss was CAD 2.6 million versus CAD 1.7 million a year ago.
On cash flow, Aouameur said cash flows from operating activities were positive at CAD 1.4 million. Capital expenditures were about CAD 160,000, and adjusted free cash flow was CAD 1.2 million for the quarter. He said Goodfood has generated positive adjusted free cash flow in seven of the past nine quarters, but added that net leverage has increased, reinforcing management’s emphasis on protecting liquidity and the balance sheet.
At quarter-end, cash and cash equivalents were CAD 11.8 million and marketable securities were CAD 2.7 million, totaling about CAD 14.5 million. Bassoul later referred to approximately CAD 15 million of cash and marketable securities, while reiterating that leverage is “elevated” and that liquidity protection is a priority.
Strategy: operate for current demand levels and evolve the portfolio
Bassoul said the meal kit category remains under pressure and that the company is not building plans around a near-term rebound. Instead, he described a focus on operating efficiently at current demand levels, protecting gross margin, staying disciplined on incentives, and maintaining a more flexible cost structure. He added that Goodfood will prioritize initiatives that improve repeat behavior and customer experience “without adding fixed cost back into the model.”
He also outlined organizational and execution-focused initiatives, including reassessing talent needs and organizational structure to improve decision-making and execution. Bassoul said this process will be completed within the next 100 days and that an operational review is already advancing, aimed at tightening decision-making and accountability, simplifying processes, and aligning the business around cash flow and margin performance. He described practical priorities such as focusing the product lineup on what customers value most, improving service reliability, and ensuring the footprint and cost base fit today’s volumes.
On portfolio evolution, Bassoul said Goodfood is working to move beyond a single product meal kit business, pointing to Heat & Eat and Genuinty as contributors to higher basket values and top-line diversification. He characterized these initiatives as tools to improve revenue quality and cash generation rather than a “return to growth story.”
Q&A: stabilization timeline, inflation, and M&A discipline
During the analyst Q&A, management discussed what it sees as key levers for stabilization, including capital allocation standards for marketing and SG&A, product focus, service areas, and ensuring the company’s footprint is aligned to demand. Bassoul also referenced traction with Heat & Eat and discussed expanding its value proposition beyond Quebec.
Another executive, identified as Sidney during the call, framed the effort as a “pure turnaround” and said it should happen within the next 18 months, adding that management is “not chasing calendar” but results.
On ingredient inflation, management said inflation is still present but not as severe as it was 18 to 24 months ago. Bassoul said the company has not implemented price increases in “over 18 months and maybe even 24 months,” noting that pricing must be weighed against customer value in the current environment. He also said the quarter included additional costs related to the CFIA matter and shipping from Western Canada into Eastern Canada and Ontario, and indicated this would impact Q2 more specifically.
Regarding acquisitions, Bassoul said the company’s filter is “strict” and that Goodfood would pursue only opportunities that are immediately accretive to cash flow and margin and fit within balance sheet constraints (or open broader avenues). In response to questions about areas of interest, management said it would not fully dismiss meal kits due to potential synergies but is looking more broadly at adjacencies that can leverage Goodfood’s digital platform, infrastructure, and operational know-how. From a geographic standpoint, management said North America makes sense due to proximity and capabilities.
About Goodfood Market (TSE:FOOD)
Goodfood is a leading online grocery company in Canada, delivering fresh meal solutions and groceries that make it easy for members to enjoy delicious meals at home every day. Goodfood’s mission is to make the impossible come true, from farm to kitchen, by enabling members to complete their weekly meal planning and grocery shopping in minutes. Goodfood members have access to a unique selection of products and exclusive pricing made possible by its world class direct-to-consumer fulfilment ecosystem that eliminates waste and retail overhead.
