While maintaining a presence in 18 states with 50 stores, Denver-based GrowGeneration Corp. GRWG reported a 13% decrease in net sales, totaling $55.7 million. Comparable store sales dropped by 14.4% compared to the previous year.
The U.S. chain of specialty hydroponic and organic garden centers released its Q3 2023 financial results late Wednesday.
GrowGen’s Financial Performance Highlights
The company saw improvements in gross profit margin, reaching 29.1%, a 320-basis point increase from the prior year.
Despite a net loss of $7.3 million (slightly higher than the previous year's $7.2 million), adjusted EBITDA displayed progress, with a loss of $0.9 million, an improvement of $1.8 million compared to 2022.
Darren Lampert, GrowGeneration's CEO, noted in a press release: "Q3 results met our expectations. Our focus on proprietary brands and distribution boosted gross profit margin to 29.1%, up 230 basis points from last quarter. We cut store operating expenses by 12% and SG&A by nearly 14%."
"We're consolidating 6 retail locations in Q3 and plan to consolidate 6 more in Q4 for cost savings. We closed Q3 with $66.6 million in cash and generated $3 million in operating cash flow YTD," Lampert stated.
While consolidating 6 retail locations in Q3, GrowGeneration plans to consolidate 6 more in Q4 to enhance profitability.
The company's cash, cash equivalents, and marketable securities stood at $66.6 million at the end of Q3.
Financial Challenges Amid Industry Headwinds
GrowGeneration Corp. faced a revenue decline and a net loss in Q3 2023, highlighting the challenges in the cannabis industry.
Despite this, the company made significant progress in improving its gross profit margin and adjusted EBITDA, which suggests that its cost-cutting measures are starting to bear fruit.
Investors should closely monitor the company's ability to control expenses and enhance profitability as it consolidates more locations in Q4.
Photo by Ben Warren on Unsplash.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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