SNDL Reports Second Quarter 2023 Financial and Operational Results The Company achieves record net revenue and gross margin results since its inception CALGARY, AB

SNDL Reports Second Quarter 2023 Financial and

The Company achieves record

net revenue and gross margin results since its inception

CALGARY, AB, Aug. 14, 2023 /CNW/ - SNDL Inc.

(NASDAQ: SNDL) ("SNDL" or the "Company") reported its financial and operational results for the second

quarter ended June 30, 2023. All financial information in this press release is reported in millions of Canadian dollars unless otherwise

SNDL has also posted a supplemental investor presentation

on its website, which can be found at https://sndl.com.

SECOND QUARTER 2023 FINANCIAL AND OPERATIONAL HIGHLIGHTS

"Our incredible two-year journey from less than

$10 million of net revenue and negative gross margin in Q2 2021 to our current trajectory of reaching an expected $1 billion in annual

revenue and continued gross margin growth in 2023 is a testament to our team's commitment to becoming a leader in Canadian regulated products,"

said Zach George, Chief Executive Officer of SNDL. "We have taken decisive steps to simplify operations throughout our business segments

with a sharp focus on the goal of reaching profitability in 2024. In Liquor Retail, we are capitalizing on margin accretive product opportunities

and modest expansion. In Cannabis Retail, our data licensing program is driving improved profitability and supplier relationships, and

we look to enhance consumer engagement through new loyalty capabilities. In our Cannabis Operations, we have taken aggressive cost-cutting

measures, streamlined manufacturing operations, and reduced reliance on high-cost cultivation. During this process, we have maintained

cannabis sales momentum and are actively exploring B2B and international opportunities. We have also simplified our investment portfolio

by divesting from securities, prioritizing the opportunity to return capital to our shareholders."

"Over the last two years, SNDL has grown both

organically and by acquisition while our leaders have implemented bold changes throughout the business," added George. "We believe

that we now have the requisite scale and platform optionality to create sustainable shareholder value. We expect our Canadian retail network

to continue to grow at a modest pace while our internal focus on optimization is in the early stages of producing tangible results. We

look forward to updating investors on the closing of the Nova transaction, and events related to our SunStream portfolio as we focus on

delivering improved performance in the second half of 2023."

SECOND QUARTER 2023 KEY FINANCIAL METRICS

SECOND QUARTER 2023 RESULTS

SNDL's business is operated and reported in four segments:

Liquor Retail, Cannabis Retail, Cannabis Operations and Investments.

SNDL is Canada's largest private sector liquor

retailer, operating 170 locations, predominantly in Alberta, under its three retail banners: "Wine and Beyond", "Liquor

Depot" and "Ace Liquor".

Net revenue for Liquor Retail sales for the three banners combined

was $151.7 million for the second quarter of 2023, an increase of 2.1% compared to the second quarter of 2022.

Same stores sales increased 1.7% across all liquor banners, with

Liquor Depot and Ace Liquor seeing 5.6% and 2.8% in same-store sale increases, respectively.

Gross margin in the Liquor Retail segment was $35.4 million, or

23.3% of sales in the second quarter of 2023, compared to $33.5 million, or 22.6% of sales, in the second quarter of 2022. The 5.5% gross

margin growth is mainly driven by procurement productivity and product mix management initiatives.

Preferred label sales, which are a substantial driver of gross

margin growth, increased 28% compared to the second quarter of 2022 and 22% compared to the first quarter of 2023.

SNDL's liquor banners' market share in Alberta was approximately

18% in the second quarter of 2023, with Wine and Beyond representing approximately 3% from only 11 stores in the province, showcasing

the continued success of the banner. Sales at the Wine and Beyond in Kelowna, British Columbia, continue to increase year-over-year, further

validating the banner's expansion strategy into Saskatchewan in 2024.

SNDL expects to launch an e-commerce platform for its Liquor Retail

banner, Wine and Beyond, which presents significant opportunities to drive accretive revenues. It is expected to provide the Company with

a scalable and adaptable platform to expand its market presence, increase customer engagement, and capitalize on the growing trend of

online shopping for liquor products. The launch date is scheduled for the third quarter of 2023.

As of August 11, 2023, the Ace Liquor store count is 138, the

Liquor Depot store count is 20, and the Wine and Beyond store count is 12.

With its ownership interest in Nova, SNDL is Canada's largest

private-sector cannabis retailer, operating 196 locations under its four retail banners: Value Buds, Spiritleaf, Superette, and Firesale

Cannabis. SNDL's Cannabis Retail strategy is based on several factors, including the quality of its store locations, the range of products

it offers, and the unique experiences it provides customers. Using data and insights from a large volume of monthly transactions enables

SNDL to leverage technology and analytics to inform and improve its retail strategy.

On July 25, 2023, SNDL and Nova announced that while

all other provincial approvals have been received, the continued review by one provincial regulator has necessitated the extension of

the outside date for the closing of the previously-announced strategic partnership (the "Transaction"). SNDL and Nova

anticipate that the Transaction will close on or before August 25, 2023, subject to the receipt of regulatory approval and the amendment

to certain terms of the Transaction that are mutually satisfactory to SNDL and Nova.

Net revenue from the Cannabis Retail segment for the second quarter

of 2023 was $71.9 million, compared to $63.5 million in the second quarter of 2022, a 13.2% increase year-over-year and a record for the

segment since SNDL diversified into Cannabis Retail.

Same stores sales for the second quarter of 2023 increased 3.3%

across all Cannabis Retail banners, compared to the same period in the year prior. Nova's same store sales increased 38% for the period.

Gross margin of $17.8 million, or 24.7% of sales, up by close

to 28% compared to the second quarter of 2022, showcasing the Company's efforts in continued margin expansion initiatives.

In the first half of 2023, SNDL took proactive steps to optimize

its proprietary data licensing program for the Cannabis Retail segment, aiming to create mutually beneficial results for its retail operations

and licensed producer partners. This margin accretive opportunity has resulted in revenue for the second quarter of 2023 of $2.7 million,

compared to $1.3 million in the second quarter of 2022, and represents growth of 80% compared to the first quarter of 2023. By leveraging

the volume of Nova's retail locations and the Company's access to high-quality analytics, it expects to deliver continued successful outcomes

for its partners and drive top-line revenue and margin growth.

The Company partnered with Nova for Value Buds' private label

products, and sales of Value Buds products represented approximately 6.6% of total 28-gram sales and 18.0% of 14-gram sales in Value Buds

locations nationwide.

As of August 11, 2023, the Spiritleaf store count is 98 (21 corporate

stores and 77 franchise stores), the Value Buds store count is 91 corporate stores, the Superette store count is five corporate stores,

and the Firesale store count is two corporate stores.

SNDL has a diverse brand portfolio from value to premium,

emphasizing premium inhalable formats and a full suite of 2.0 products. With enhanced procurement capabilities, premium cultivation and

manufacturing facilities, the Cannabis Operations segment is a key enabler of SNDL's vertical integration strategy.

Net revenue from the Cannabis Operations segment for the second

quarter of 2023 was $20.9 million, an 81% increase compared to the second quarter of 2022, and a 9% increase compared to the first quarter

Gross margin of negative $1.2 million in the second quarter of

2023, compared to negative $4.3 million in the second quarter of 2022, and negative $9.5 million in the first quarter of 2023. The improved

results showcase the Company's focus on bolstering margins through increased product distribution and streamlining the Cannabis Operations

In the first half of 2023, SNDL implemented aggressive cost-cutting

measures and improved manufacturing efficiency. A key initiative involved right-sizing cannabis cultivation in Olds, Alberta to focus

on producing premium products.

Subsequently, SNDL successfully centralized most manufacturing

activities and consolidated processing, labelling, and excising at its Kelowna facilities. This move optimizes resource allocation and

streamlines operations to significantly reduce costs.

Following the Valens acquisition, the Company underwent a meticulous

evaluation of its portfolio, focusing on higher-margin brands and products. SNDL's vertical integration capabilities facilitate informed

and data-driven product portfolio decisions. This strategic alignment enables SNDL to effectively enhance overall market positioning and

Market share in owned retail continues to scale through the Company's

vertical integration strategy. Driving increased owned retail share is a key focus for the Company and a meaningful contributor to overall