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GrowGeneration Corp. GRWG has opened a 9,000-square-foot store in Richmond, its first hydroponic store in Virginia. GRWG has plans to expand its store presence in the state to capitalize on the emerging hydroponic market. It also signed two new leases for stores launches in Mount Holly, NJ, and Hazelwood, MO, which are expected to open in the fourth quarter of 2022. With these, GRWG expanded its reach to 17 states.
Virginia Expected to be a Key Driver
Legislation in Virginia allows unlimited medical cultivation licenses and the growing of marijuana at home. This makes it an ideal choice for GRWG’s one-stop shop that provides new and existing cultivators with seeds for better harvesting, including turnkey facility design, cultivation room design, on-site project consultation and access to its private-label products. Virginia is also considered a prime market to supply indoor-controlled environmental agriculture, vertical gardening.
Expanding in New & Emerging Markets
GRWG’s new store leases in Mount Holly and Hazelwood align with its endeavors to increase its presence in the new and emerging markets. These new stores will provide vertical farming demonstrations and educational support for new growers and help them set up and maintain state-of-the-art growing operations, thereby maximizing their investments in vertical farming. In addition, GRWG also continues to build its distribution capabilities regionally to deliver products to new and existing growers, efficiently and profitably.
Overall Weakness in Cannabis Industry
GrowGeneration’s results are bearing the brunt of the overall weakness in the cannabis industry. Demand for GRWG’s hydroponics products fell due to an oversupply of cannabis in the United States. GRWG’s revenues plunged 43.5% year over year to $71 million in the second quarter of 2022 as same-store sales slumped 57%. GRWG reported a loss per share of 14 cents in the quarter against the earnings of 11 cents in the second quarter of 2021.
GrowGeneration anticipates the ongoing headwinds to intensify in the back half of the year. Despite weak demand faced by the industry currently, GRWG believes that the long-term prospect of hydroponics is intact. GRWG is working toward preserving cash through working capital optimization and aggressively right-sizing its cost structure.
GrowGeneration expects revenues between $250 million and $275 million in 2022, while its adjusted EBITDA is expected from a negative $12 million to $15 million.
The weakness in the industry was highlighted in the recent quarterly earnings performances of other players as well. Chicago, IL-based Cresco Labs Inc. CRLBF, a vertically integrated, multi-state operator, reported second-quarter 2022 revenues of $218 million, up 4% year over year. CRLBF reported wholesale revenues of $95 million, which helped it maintain its position as the topmost seller of branded cannabis products in the United States.
CRLBF reported a net loss of $8.3 million in the second quarter of 2022 against a net income of $2.65 million in the year-ago period. It is driving efficiencies across the business to maintain margins and is also focusing on growing its market share. The acquisition of Columbia Care gives Cresco Labs the largest pro-forma revenues in cannabis today at above $1.4 billion and more than doubled its retail footprint.
Chicago, IL-based Green Thumb Industries Inc. GTBIF manufactures and distributes a portfolio of branded cannabis products, and also owns and operates national retail cannabis stores called RISE. Total revenues for the second quarter of 2022 were $254.3 million, up 14.6% from the prior-year period’s tally.
GTBIF’s revenue growth was primarily driven by increased retail sales in New Jersey, reflecting the legalization of adult-use cannabis, increased retail sales in Illinois, additional retail locations compared to last last year and higher traffic in Green Thumb’s 77 open and operating retail stores. GTBIF reported earnings per share of 10 cents, flat with the second-quarter 2021 level.
Marysville, OH-based Scotts Miracle-Gro Company SMG is the world’s leading marketer of branded consumer lawn and garden as well as indoor and hydroponic growing products. SMG reported a loss from continuing operations of $443.9 million or $8.01 per share in third-quarter fiscal 2022 (ended Jul 2, 2022) against a profit of $229.8 million or $4.00 in the year-ago fiscal quarter. Barring one-time items, the adjusted earnings were $1.98 per share, down from $3.98 a year ago.
SMG’s net sales fell around 26% year over year to $1,186.1 million as it witnessed lower sales across its major segments in the quarter. It is seeing sustained pressure on sales in the Hawthorne unit due to oversupply issues in the cannabis industry.
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