The consolidation in GPO Plus, Inc. (OTCQB: GPOX) stock is healthy. And it could be coiling the spring to send shares higher in 2024. That's not an overly ambition presumption, either. In fact, it's more than warranted; it's justified after GPOX announced brand and product placement expansion into eligible Yesway and Allsup stores. The even better news regarding those agreements is that the additional revenues will add to already record-setting performance.
In October, GPOX reported FYQ1/2024 revenues of $970,735, which were more than record-setting; they exceeded the company's bullish guidance by about 12% and crushed the prior quarter's revenues by 126%. And that was no one-off performance. That increase followed the over 320% sequential revenue growth reported for its FY/Q4 revenues, with that revenue easily eclipsing the totals posted for the three months ending April 30, 2023. The impressive growth is not exclusive to revenues.
Store count is also surging. GPOX expects to open its 1000th store by the end of its current fiscal year, nearly doubling the 570 locations already active in several states. There's more good news. Revenues per location are also on the rise, and appreciably so. GPOX reported that the average revenue contributions per location grew by roughly 265% from the first 100 stores receiving its new Distro+ divisions' "White Glove Direct Store Delivery," increasing from an average of $580 per location to $2,120.
Accretive Deal With Hempacco Co, Inc.
That trend should continue from the impact of new revenues from its recently announced agreement with hemp smokables company Hempacco Co, Inc. (NASDAQ: HPCO), which expedites GPOX's capitalization on an estimated $1 trillion industry. While it's a massive market opportunity now, it's expected to get significantly larger as consumer preference trends show increasing interest in and demand for hemp-based products that offer a satisfying alternative to nicotine tobacco. The deal, facilitated through its distribution division Distro+, will promote, market, and sell Hempacco's entire portfolio of hemp products in eligible Yesway and Allsup stores across the United States. Investors should appreciate the deal.
Yesway is one of the fastest-growing convenience store operators in the United States. Moreover, the deal strengthens GPOX's previously announced retail partnership, where it already highlighted plans to introduce The Feel Good Shop+ into eligible locations. The Feel Good Shop+ is an innovative "store within a store" concept offering an extensive range of CBD and other hemp-derived products. GPOX revenues could get a quick boost, especially with GPOX placing popular Hempacco products, including The Real Stuff Hemp Smokables, Rick Ross's Hemp Hop Smokables and Wraps, Cheech & Chong Smokables and Wraps, and Snoops Dogg's Dogg lbs brands.
Leveraging Value From Its "White Glove DSD" Program
Those products, along with others in the GPOX portfolio, should get a retail sales boost at the start through its mentioned "White Glove DSD," a hands-on, full-service business model that GPOX said has been an integral part of driving average sales per unit to record levels. That makes sense. The hands-on service approach facilitates enhanced product offering and allows GPOX to maximize the intrinsic value of its in-store concept, "the Feel Good Shop+," which offers customers CBD-inspired health and wellness products. Additional value drivers contribute to the growth thesis.
GPOX noted that its team presence could lead to a potential windfall of revenue-generating opportunities, particularly by being on-site to provide clients with a service and benefit that others don't- primarily filling a product manufacturing and delivery gap for the 15% - 20% of items not typically provided by primary vendors. So far, GPOX has said that the reception to the service is excellent, with many of its retail partners starting to ask what additional products can be provided through this uncomplicated and comprehensive GPOX service solution.
That's helped GPOX model for significant near-term growth, saying its combined service differences should contribute to opening at least 500 new locations in its fiscal year. Even better from an investor's perspective is that by utilizing proprietary technology, real-time data, and efficiencies from its hub and spoke business services model, GPOX revenues from new and existing sites could fall faster toward the bottom line. And there could be plenty more of it to drop.
GPOX believes increased product offerings could increase average sales per convenience store location to over $3,000, about 40% higher than current. Contributing to that, GPOX highlighted executing its plans to introduce proprietary new products, such as Yuenglings Ice Cream flavored gummies and High-Cloud gummies, expected to generate roughly 40% gross margins. The gross margins for general products are also impressive, typically between 20% - 35%. Strength in both should accelerate GPOX reaching cash-flow and/or bottom-line EPS, potentially by the end of this new fiscal year. They should get additional help.
New Store Openings In The Queue
GPOX said it expects to onboard roughly 258 locations in Texas, Iowa, and Kansas by the end of this year and another 123 locations throughout New Mexico in early 2024. The new revenue contributions could be substantial, considering plans to serve the entire product line at each site and using a rising store-average sales estimate. Remember, too, those could get an additional bump higher from its mission to fill a service gap. According to GPOX, most retailers get about 80% - 85% of their products from just a few distributors, with the remaining products sometimes represented by dozens of separate vendors.
That's a significant pain point for most corporate retailers, especially gas stations and convenience stores that sell potentially thousands of different products. For management, it's a tall order to handle. But their challenge exposes GPOX's opportunity. It's another the company intends to seize by using its White Glove DSD service to mitigate specialty retailers' challenges of identifying and qualifying new products, ensuring quality, and managing delivery. In the best case, GPOX believes its White Glove DSD service can help eliminate 100% of the challenges faced. If so, the initiative can do more than attract new business; it will add to the steepening growth curve of serviced locations, mainly by simplifying and optimizing client operations. Technology is fueling that intent.
GPOX announced live testing, implementation, and the rollout phase for MSRP+, its proprietary software empowering order management, logistics optimization, lead generation, sales analytics, accounting, inventory management, and an e-commerce platform. Those enable a unique strategy powered by maximizing intrinsic strengths related to manufacturing and distributing consumer products.
A Strategic Mix That Is Accruing Value
From a company and investor's perspective, the strategy to mix products with even more excellent service could shift the pace of GPOX growth into higher gear. That's probable, especially with GPOX offering to do the heavy lifting for clients, including price negotiation, meeting minimum order requirements from large manufacturers, and providing uncompromising, hands-on service, from order placement to shelf stocking to end-sales management. It's a unique package that could outperform expectations.
If it does, don't expect the GPOX share price to lag behind. Fundamentals ultimately drive share prices in the right direction. And with GPOX's strengthening, the most probable path of least resistance is higher. Keep in mind that that direction is already in play, supported by consecutive record-setting operating performance, a surging retail presence, and operations efficiencies that allow revenues to fall faster toward its bottom line.
Summing up those parts with the new ones expected, the disconnect between the GPOX share price and performance may not last much longer. Considering GPOX is better positioned today than when it reached its 52-week high of $0.29, it shouldn't. In fact, once this under-the-radar company makes its way to more investor screens, more likely than not, fundamentals support that, more likely than not, it won't.
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