GPO Plus, Inc. (OTCQB: GPOX) stock is in rally mode. And the momentum behind it shows no signs of weakening, especially after GPOX reported record-setting revenues resulting from a growth trajectory that continues to steepen. That good news for GPOX can be excellent for investors, especially those taking advantage of a valuation disconnect between assets, performance, near-term potential, and the GPOX share price. Volume and price indicate many investors are doing just that, with that interest helping to send the GPOX share price appreciably higher since the middle of last month. Still, that increase could be the precursor to more. In fact, off its 52-week high of $0.29 and positioned better than ever to accelerate store openings and accrue the revenues that come with it, that’s more than likely; it’s probable.
That bullish proposition is more than warranted. Unlike many growth stock stories, GPOX’s is evidence-based, supported by a string of better-than-expected, even record-setting, quarterly performance. Most recently, GPOX reported all-time-high revenues, scoring $970,735 in FY/Q1 that ended July 31, 2023. That beat expectations by roughly 12% and, more impressively, easily eclipsed the prior quarter’s revenues, posting a 126% increase on a consecutive basis. That performance also followed a triple-digit percentage growth precedent. Closing out a busy fiscal year in July, GPOX reported revenues of over $430,000, a 320% increase compared to the three months ending April 30, 2023.
Here’s the potentially best news- the trend of higher revenue trends is very much intact, leading GPOX to reiterate bullish guidance as it continues to maximize the benefits of its Direct to Store Delivery (DSD) model, which provides operations efficiency, expedited market penetration, and, most notably from a company and investors perspective, fuels an already escalating revenue curve.
Monetizing A Unique Business Model
Those revenues are generated through a strategy that maximizes intrinsic strengths, particularly those related to manufacturing and distributing consumer products, which facilitate GPOX serving a growing list of convenience store and specialty retailer clients. The latter includes gas stations, smoke shops, vape shops, and other high-volume, high pedestrian-trafficked locations. The method of meeting and filling product demand is unique.
The company got its start by acquiring the assets of Betterment Retail Solutions, which led to the establishment of its first Regional Distribution hub in Lubbock, Texas, to serve 470 retail locations. Then, in 2023, GPOX made its service model more efficient by creating and implementing what they call a Mini-hub business model, a hub and spoke design that can leverage low-cost efficiencies to generate high store revenues. It was made even better.
Through its Distro+ division, GPOX initiated its “White Glove Direct Store Delivery,” a service model that includes weekly visits to client store locations. Success was immediate, with GPOX noting the service led to increased product placements, resulting in an over 365% increase in monthly sales, soaring from an average of $580 per location to $2,120 in the first 100 stores receiving the new service and enhanced product offering. That includes products from its in-store concept called “the Feel Good Shop+,” which offers customers CBD-inspired health and wellness products.
Bringing it all together, GPOX announced live testing, implementation, and the rollout phase for MSRP+, its proprietary software, which powers order management, logistics optimization, lead generation, sales analytics, accounting, inventory management, and e-commerce for DISTRO+.
Momentum Builds Behind New Store Openings
Combined, the model has led to GPOX currently servicing approximately 570 locations in 12 states, with expansion supported by the Mini-Hubs, which are a vital component in providing enhanced service to retail partners. They are also easily managed. Each Mini-Hub caters to 50 to 100 stores, utilizing a small storage facility, 1-2 drivers, and a minivan for product delivery. These Mini-Hubs are serviced by the regional hub in Lubbock, Texas, which is designed to scale to serve over 2,000 retail locations, including potential placements resulting from pilot programs with two national chains. Success there could lead to an additional 300 new store locations added.
Those would add to the expected onboarding of roughly 258 new locations in Texas, Iowa, and Kansas by the end of this year and another 123 locations throughout New Mexico in early 2024. GPOX expects to offer its entire product line at each location, which, using a store-average sales estimate, could add substantially to near-term revenue streams. By simplifying retailer processes, that already fast growth pace can accelerate.
Keep in mind retailers are embracing the GPOX model. According to GPOX, most retailers get about 80% – 85% of their products from just a few distributors, with the remaining 15% -20 % of the products sometimes represented by dozens of separate vendors. As one might expect, 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. That’s where GPOX is focused.
Its model focuses on the 15% to 20% of products not provided by the retailer’s primary distributors, using its White Glove DSD service to mitigate specialty retailers’ challenges of identifying and qualifying new products, ensuring quality, and managing delivery. More than mitigate, GPOX believes its White Glove DSD service can help to eliminate 100% of the challenges faced, a stat that is doing more than attracting new business; it’s contributing enormously to the growth of serviced locations by simplifying and optimizing client operations. That results from GPOX consolidating multiple products into one distribution service, essentially becoming a one-stop shop for these specialty retailers to leverage.
Moreover, GPOX said it led to its retail partners asking what additional products will be provided through this uncomplicated and comprehensive GPOX service solution.
Accelerating Growth In FY/2024
That’s led to some bullish internal expectations. GPOX expects its White Glove Service will contribute to opening upwards of 500 new locations in its current fiscal year. And by leveraging technology and compiled data, revenues from those sites could fall faster toward the bottom line from efficiencies inherent to its hub and spoke business model. Those are expected to rise as well. GPOX forecasts that increased product offerings could increase average sales per convenience store location to over $3,000, about 40% higher than current.
Executing its plans to introduce proprietary products, such as Yuenglings Ice Cream flavored gummies and High-Cloud gummies, could fuel that intention. With gross margins for general products roughly 20% and between 35% and 40% for proprietary products, those higher revenues could lead to GPOX reaching bottom-line EPS sooner rather than later. That would be no coincidence.
From its start, the GPOX mission has been to become the best-in-class manufacturing and distribution company for its clients, filling a considerable need by becoming a one-stop source for an appreciable amount of shelf inventory. The benefits don’t end there. GPOX fills other retailer gaps, including price negotiation, meeting minimum order requirements from large manufacturers, and providing hands-on service from order placement to shelf stocking to end-sales management. That’s led to impressive growth across the board.
And with a 2024 agenda filled with initiatives to create near and long-term value for GPOX, its clients, and its investors, it’s fair to speculate that the best is yet to come. If so, despite the recent run in GPOX stock, the value proposition may still be too good to ignore.
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