Maison Solutions Inc. (MSS)·Q1 2025 Earnings Summary

Executive Summary

• Q1 FY2025 was the first full quarter including Lee Lee, lifting revenue 115.6% YoY to $29.65M and expanding gross margin to 27.9% (+530 bps YoY), driving a swing to $0.70M net income and $0.04 EPS .
• Management reiterated FY2025 guidance of $120–$125M revenue and positive net income; tone emphasized supply-chain synergies and a path toward ~30% gross margin long-term .
• Underlying California stores saw sales pressure from new competition and the unwind of certain COVID-era benefits; interest expense rose and liquidity remains a focus with a $10.13M note due by Feb 8, 2025 and a working capital deficit, flagged in “going concern” disclosures .
• Additional context: MSS received a Nasdaq minimum bid price deficiency notice (no immediate listing impact) which, alongside progress on paying down the Lee Lee note and sustaining margin gains, are near-term stock catalysts/risks .

What Went Well and What Went Wrong

• What Went Well

  • Accretive acquisition impact: revenue +115.6% YoY to $29.65M; gross margin to 27.9% vs 22.6% LY as Lee Lee contributed $18.2M and higher-margin mix; management targeting the “coveted 30%” industry margin level .
  • Profitability/cash: swung to $0.70M net income vs a $0.10M loss LY; cash from operations improved to $3.59M vs $0.60M LY, providing near-term liquidity support .
  • Strategy execution: central-warehouse supply chain integration for Lee Lee, “optimiz[ing] its supply chain and tapping into synergies” to minimize costs and lift margins, underpinning maintained FY25 guidance .

• What Went Wrong

  • Core CA store pressure: California supermarkets’ revenue decreased ~$2.3M YoY, citing new local competitors near San Gabriel, benefit program changes, and a temporary El Monte renovation slow-down .
  • Balance sheet/interest: interest expense rose to $183k (from $47k LY), and MSS faces a $10.13M 5% seller note due by Feb 8, 2025, elevating near-term refinancing/execution risk .
  • Structural risks: negative working capital (~$15.78M), going concern language, and a Nasdaq minimum bid price deficiency notice increase execution and market risks despite no immediate listing impact .

Financial Results

Q1 YoY comparison (oldest → newest)

Sequential trend across available quarters (oldest → newest)

Segment breakdown (Q1 YoY)

Additional balance sheet and liquidity context (Q1 FY25):

• Notes payable current: $10.13M (seller note; 5% interest; due by Feb 8, 2025) .
• Working capital deficit and bank overdraft: negative working capital ~$15.78M and overdraft $1.80M as of 7/31/24 .

Guidance Changes

Earnings Call Themes & Trends

Note: No Q1 FY2025 earnings call transcript is available; themes below synthesize management commentary from press releases/10-Q MD&A across periods.

Management Commentary

• “We are pleased with our financial results for Q1 2025… gross margins… improved from 22.6%… to 27.9%, getting us closer to the coveted 30% goal… streamlining Lee Lee’s supply chain into the HK Good Fortune fold by leveraging our central warehouse in California… to minimize costs… and improve our margins.” — John Xu, CEO .
• “One of our key milestones this past quarter was the successful completion of our El Monte store renovation… laying the groundwork for broader renovation plans in 2025 and beyond… We are targeting established, profitable grocery stores… where synergies… are clear.” — John Xu (Q2’25 press release, strategic context) .
• “We continue to make considerable operational progress through store renovations, new store openings, and acquisitions… leveraging our recently purchased software suite to drive revenues…” — John Xu (Q3’24 press release) .

Q&A Highlights

• No Q1 FY2025 earnings call transcript was available in the document set; no Q&A to summarize [ListDocuments: earnings-call-transcript = 0].

Estimates Context

• We attempted to pull S&P Global consensus (EPS/Revenue) for Q1 FY2025 but were unable to retrieve due to data limits; therefore, we cannot provide beat/miss analysis versus consensus at this time [GetEstimates error].
• Implication: With H1 FY2025 revenue of $60.7M reported by Q2, the midpoint of guidance ($122.5M) implies H2 revenue broadly consistent with H1, supporting maintained guidance if momentum sustains .

Key Takeaways for Investors

• Acquisition-led growth + margin trajectory: Lee Lee integration drove 116% YoY revenue growth and 530 bps gross margin expansion in Q1; management is executing on supply-chain centralization toward ~30% GM .
• Profit/CFO inflection: Q1 net income of $0.70M and operating cash flow of $3.59M bolster near-term liquidity and validate synergy capture despite CA store pressures .
• Near-term liability wall: $10.13M seller note (5%) due by Feb 8, 2025 is the critical execution item; refinancing, repayments, or asset-level cash generation are key watch items .
• Core CA headwinds: competition/benefit roll-offs depressed legacy-store sales; sustained renovation and tech-enabled merchandising are necessary to stabilize comps .
• Governance/market structure risks: going concern language, material weaknesses in internal control, and a Nasdaq minimum bid price deficiency notice elevate risk; any remedial updates (controls, bid price compliance) will affect sentiment .
• Guidance credibility check: H1 revenue of $60.7M puts MSS near the $120–$125M range annualized; maintaining margin gains while integrating Lee Lee and ramping renovated stores underpins FY25 outlook .
• Trading setup: Catalysts include progress on paying/refinancing the Feb note, continued gross margin >26% and stable-to-improving comps in CA, and clarity on listing compliance; adverse outcomes on any could pressure the shares .