There's a saying in the retail sector- "location, location, location." For GPO Plus, Inc. (OTCQB: GPOX), maximizing theirs is leading to extraordinary revenue growth as they expand their retail sales footprint across the country. And that good news doesn't benefit GPOX and its retail partners exclusively. Investors can accrue benefits as well. In fact, the steepening revenue and store opening trajectory combine to expose an investment opportunity that appears to be more than ripe for the taking; the disconnect between GPOX's assets, sales growth, near-term potential, and its share price may be too good to ignore.
That bullish presumption is justified based just on current operations. The value proposition is even more compelling considering its plans to nearly double its retail store footprint from 570 locations to 1000 by the end of its 2024 fiscal year. While that initiative creates accretive value, there's more expected to contribute. Equally important to supporting the investment thesis is that revenues per location are also surging, with GPOX reporting that the average revenue contributions per location increased by roughly 265% from the first 100 stores receiving its new Distro+ divisions' "White Glove Direct Store Delivery," from approximately $580 per location to $2,120. That trend is more than impressive; it's accelerating from a string of new retail partnership agreements.
Most recently, GPOX announced a deal with hemp smokables company Hempacco Co, Inc. (NASDAQ: HPCO), which positions them well to capitalize on revenue-generating opportunities from an estimated $1 trillion industry. While an enormous opportunity now, it's expected to get significantly larger as consumer preference trends show increasing interest in and demand for hemp-based products as an 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.
Expanding Retail Presence In Fast-Growing
That's a big deal. Both companies present GPOX with significant expansion potential. Yesway, in fact, is one of the fastest-growing convenience store operators in the United States. And keep in mind that these newest agreements are enhancements, not starting points, which strengthens GPOX's previously announced retail partnership intentions to introduce The Feel Good Shop+ into eligible locations.
The Feel Good Shop+ is GPOX's innovative "store within a store" concept, offering an extensive range of CBD and other hemp-derived products. Specific to this deal, GPOX revenues could get a quick boost from 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. But more than excellent products are contributing to the high expectations.
GPOX's mentioned "White Glove DSD" should as well. It's a hands-on, full-service business model that GPOX said has been instrumental in driving average sales per unit to record levels. That makes sense. The unique approach to servicing retail clients does more than provide enhanced product offerings to its outlets; it serves a soaring number of customers turning to CBD-inspired health and wellness products. Indeed, as a tangible value driver, the expected contributions from its "White Glove DSD" have another value to consider. This one benefits investors.
GPOX believes that the program could lead to them realizing a potential windfall of revenue-generating opportunities by being on-site to provide clients with a service and benefit that others don't- particularly by filling a manufacturing and delivery gap for the 15% - 20% of items not typically provided by those locations' primary vendors. So far, GPOX notes that the reception to the service is excellent, with many of its retail partners showing interest in the additional products and services GPOX can provide through this uncomplicated but comprehensive program.
Fueling An Aggressive Growth Agenda
That's allowed GPOX to model for another growth spurt in 2024, saying its "White Glove DSD" should contribute to opening at least 500 new locations during its fiscal year. The excellent news from an investor's perspective, especially those appraising the value proposition, is that GPOX utilizes proprietary technology, real-time data, and efficiencies from its hub and spoke business services model, which should facilitate revenues from new and existing sites to 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 potential, GPOX highlighted executing its plans to introduce proprietary new products, such as Yuenglings Ice Cream flavored gummies and High-Cloud gummies, which are expected to generate roughly 40% gross margins. By the way, the gross margins for general products are also impressive, typically between 20% - 35%. That strength could accelerate GPOX's potential to reach cash flow and/or bottom-line EPS by the end of this new fiscal year. They should get additional help.
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 entire product lines from some of its partnerships 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. This initiative can be a revenue game changer in 2024.
Filling A Service Niche
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. For most corporate retailers, that's a significant managerial pain point, especially gas stations and convenience stores that sell potentially thousands of different products. Alleviating that problem is where GPOX sees an opportunity, again leveraging the value of 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 not just many of the challenges faced but potentially 100% of them.
If so, the program will do more than continue attracting new business; it can strengthen an already steepening growth curve of serviced locations by simplifying and optimizing client operations. Backend support with innovative 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, which combines to maximize intrinsic strengths related to manufacturing and distributing consumer products. Moreover, the mix of products, services, and technology could shift GPOX's already fast growth pace into a higher gear.
That's more than likely, it's probable. Remember, GPOX offers to do what others won't, including doing the heavy lifting for clients regarding 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 an underserved niche opportunity that's more than a target; it's in GPOX crosshairs.
A Value Proposition Exposed
And it contributes to an increasing sum of GPOX's parts supporting the case that the company's current share price isn't a fair representation of intrinsic value and inherent potential. However, that's not entirely bad news since the disconnect does expose an investment opportunity at what can be accurately described as ground-floor levels. Still, knowing that fundamentals ultimately drive share prices, the more investors learn about GPOX, especially its across-the-board growth, the gap between undervalued and fair could close quickly.
It should. Remember, as it stands, GPOX is delivering consecutive record-setting operating performance, is enjoying a surging retail presence, and has implemented operations efficiencies to facilitate its revenues to fall faster toward its bottom line. That alone supports GPOX re-claiming its 52-week high of $0.29. And with much more expected this year and by being better positioned today than when it scored that level, it's fair to suggest it may earn that mark sooner rather than later.
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