Canopy Growth (WEED.TO)(CGC) says its transformation strategy is working, even as the world’s most valuable cannabis company sees its sales shrink in the Canadian recreational and medical markets on a quarterly basis.
“We are implementing a renewed corporate strategy with the appointment of a new leadership team, which will focus on delivering quality products to our consumers, positioning our business for continued growth,” chief executive officer David Klein said in a statement on Monday.
Klein’s overhaul of the cannabis giant started when he took the top job in January. In addition to a greater focus on consumer preferences, and a more streamlined product portfolio, the company has shed more than 1,000 jobs, closed cultivation facilities, and pulled back its international reach to focus on the Canadian, U.S., and German markets in a bid to cut costs.
Canopy said on Monday that it has reduced its staff by 18 per cent since the beginning of the year. The company had 4,434 employees at the end of March, according to recent filings.
The Smiths Falls, Ont.-based company topped analyst expectations for its first-quarter 2021 sales, reporting net revenue of $110.4 million, up from $107.9 million in the prior period, and 22 per cent higher on a year-over-year basis.
It also reported a $92 million adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss. Canopy’s net loss came to $128 million, compared to $1.3 billion in the previous quarter. Analysts polled by Bloomberg predicted revenue of $98.1 million, and an adjusted EBITDA loss of $103.3 million for the period ended June 30.
Canopy’s Canadian recreational sales amounted to $44.2 million in Q1 2021, down from $49.8 million in the fourth quarter of 2020, as rising competition in dried flower eroded its once-dominant market share.
The company also said the decline was related to the impact of COVID-19 on an already challenging retail environment. A number of company-owned cannabis stores were forced to temporarily close as a result of the pandemic.
Medical sales slipped to $13.9 million from $14.9 million in the previous quarter, but increased 19 per cent from Q1 2020.
More to follow.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.