By Tara Deschamps, The Canadian Press on November 5, 2021.
Canopy Growth Corp. pushed back its profitability target by reporting a loss of $ 16.3 million and announcing the closure of one of its greenhouses.
Smiths Falls, Ont. The cannabis company previously predicted it would be profitable in the second half of its 2022 fiscal year, but said on Friday that reaching that target will take longer than expected due to market share issues and a larger US launch. slower than expected of its BioSteel products.
“Overall, we are not happy with the current situation,” CEO David Klein told analysts on a conference call to discuss his latest financial results.
While Klein promised the goal would still be achievable, he called the operation delay in an industry that is still finding its way.
“Make no mistake about it, as in any new industry where the potential is immense, progress is rarely seen in a straight line,” he said.
Although Canopy remains one of the largest cannabis producers in Canada, many Canadians have yet to leave the illicit market, and pot makers have struggled to match supply with demand since cannabis was legalized in Canada. 2018.
Since then, Canopy has laid off hundreds of workers and closed some facilities as it tried to restructure the company.
On Friday, he announced he would close a 92,903 square foot lot in Niagara-on-the-Lake, Ontario. tightens its Tweed brand and immediately fires 30 workers.
This move could help reduce his recent losses and income problems.
The company’s loss of three cents per share in its most recent quarter was an improvement over the loss of $ 96.5 million or nine cents per share of Canopy recorded in the same quarter last year. Analysts on average expected a loss of 21 cents per share, according to financial market data firm Refinitiv.
The company’s revenues for the period ended September 30 totaled $ 131.3 million, compared to $ 135.2 million for the same period last year. Total net cannabis revenue reached $ 95 million in the quarter, an increase of 1% from the previous year.
Excluding the impact of the acquired businesses, Canopy said net revenues fell 13% and cannabis revenues fell 14%.
Canopy executives believe revenues will increase in the second half of its fiscal year, but have warned that the extent and pace of its revenue improvement is expected to be “smaller than expected.”
A competitive recreational cannabis market and changing consumer preferences are barriers to higher incomes.
“Consumers are increasingly looking for higher THC offerings in the flower category and we did not change our growth strategy fast enough to take advantage of this during the quarter,” Klein said.
To correct this problem, he said Canopy will increase its offering of high THC floral products and launch new joints, vapes, edibles and pre-rolled drinks.
The company will also try to woo shoppers during the December holidays by selling peppermint ribbons and fruit candy wrappers under the brand of celebrity chef Martha Stewart. The products will be infused with cannabidiol, a compound found in cannabis that doesn’t produce a high effect but is believed to relax users, and has flavors like blood orange, kumquat and Persian lime.
As Canopy revamps its offerings, it will also try to address some of the issues that have made it harder for consumers to get their hands on the products.
For example, Klein said the ramp-up of distribution in its US business is taking longer than expected. The company will also seek to find more efficiency through its recent acquisitions.
During the COVID-19 pandemic, Canopy acquired Supreme Cannabis Co. Inc. and AV Cannabis Inc.
His most recent purchase was in October, when he made a deal to buy Boulder, Colorado-based Wana Brands. The deal is conditional on the United States making tetrahydrocannabinol (THC), the main psychoactive component in cannabis, federally licensed.
This report by The Canadian Press was first published on November 5, 2021.
Companies in this story: (TSX: WEED)