Grow Gen Warns Of Slowing Same Store Sales

Hydroponic chain GrowGeneration Corp. (NASDAQ: GRWG) announced revised full-year 2021 revenue expectations of $420 million to $422 million, versus $193 million for 2020, an increase of 118%.  The important news though was that same stores sales are expected to decline in the fourth quarter by 12.3%. This follows other hydroponic companies like Hydrofarm and Scotts Miracle-Gro that also warned of slowing sales.

Having said that, the fourth quarter revenue expectation is between $88 million to $90 million and same-store-sales for 2021 is expected to grow 24.4% for the full year.

“We delivered strong shareholder value in 2021 with triple digit revenue growth despite unprecedented persistent challenges and an uncertain operating environment. Although we continue to grow our business significantly, we experienced stronger-than-expected pressures in Q4 from the general slowdown in the hydroponics market. The sales results for Q4 combined with one-time expenses will result in a loss for the quarter of between $2 million and $4 million in EBITDA on an adjusted basis. We did improve our inventory position throughout the quarter to align inventory levels with sales activities,” said GrowGen CEO Darren Lampert.

2021 Financial Highlights:

• Full year 2021 projected revenue between $420 million to $422 million, versus $193 million for full-year 2020
• Full year 2021 projected EBITDA adjusted for stock-based compensation between $31.5 million to $33.5 million, versus $19.2 million for full-year 2020
• Same-store-sales increase of 24.4% for full-year 2021 compared to 2020
• Same-store sales decrease of 12.3% for fourth quarter 2021 compared to the same year-ago period
• A total of 24 new and acquired store locations in 2021, now with 62 locations nationwide
• On January 1, 2022, we acquired Mobile Media, Inc, a leading indoor vertical mobile racking and benching system manufacturer

Lampert added, “As we remain focused on our long-term strategy, we continue to use the Company’s strong balance sheet and cash flow generation to drive growth by focusing energies and investments on new greenfield stores, business technology, distribution capabilities, private and proprietary brands, and integration of the Company’s e-commerce distribution channels. These initiatives, supported by a team-oriented approach, give us confidence in our ability to deliver revenue and EBITDA growth in 2022. We believe the management team in place now is better suited than any other team in the industry to drive profitable growth over the next decade.”