Adam Jackson
Specialty retail hydroponics company GrowGeneration Corp. (Nasdaq: GRWG) recorded a 10% slump in year-over-year sales, totaling $63.9 million, according to the company’s financial report ending June 30.
The Denver-based company, with 62 garden centers across 18 states, reported its key metric of same-store sales marked a 15.1% decline from the previous year. GrowGeneration’s second-quarter report also showed a dip in its gross profit margin by 1.7% compared to last year; it now stands at 26.8%.
GrowGeneration’s CEO and co-founder, Darren Lampert, signaled satisfaction with the company’s recent performance, attributing positive outcomes to strategic shifts and a focus on sustainable growth.
“The improvements … are a testament to our team’s work over the previous few quarters in right-sizing the business and focusing on profitable growth,” Lampert said in a statement.
Still, the company posted a net loss of $5.6 million, or $0.09 per diluted share, for the second quarter. That compares to a loss of $136.7 million, or $2.24 per diluted share, for the same period in 2022.
The company announced it will rollout a new ERP system in the third quarter as part of the effort to streamline GrowGeneration’s cost structure and customer experience.
The CEO reiterated that the cannabis industry has been grappling with investment issues and botched legislative efforts. “Given the softer than anticipated industry outlook for the back-half of the year, we are changing our guidance to better align with that reality,” he added.
Despite a slump in net revenue from $71.1 million in the second period of 2022 to $63.9 million this quarter, there are some bright spots. E-commerce sales remained steady at $3.7 million, and non-retail operations, which include distributed brands, saw a rise from $12 million last year to $13.3 million this quarter.
The company’s financials also showed a year-to-date cash flow of $7.4 million from operations. As of June 30, GrowGeneration reported cash and equivalent assets worth $70.6 million.
Looking forward, the company has adjusted its 2023 revenue guidance to fall between $220 million and $225 million and predicts an adjusted EBITDA loss ranging from $4 million to $6 million.
