Canopy Growth Narrows Focus In Bid To Reverse Losses
June 2, 2020After posting an adjusted EBITDA loss of C$443 million ($326m) in its fiscal year ended in March, Canopy Growth says its current fiscal year will see a transition in focus, with the company heightening its efforts to connect with consumers and bolster its position in key markets as it chases “tangible, near-term profit opportunity.”
While Canopy’s fiscal year net sales soared 76% to C$399 million ($294m), it recorded impairment and restructuring charges of C$743 million ($547m) as part of an organizational and strategic review. Former Constellation Brands CFO David Klein was installed as CEO in January, and last month, Constellation exercised warrants to formally raise its stake in Canopy to 38.6%. Constellation still holds a significant amount of unexercised warrants, which have the potential to put its ownership stake over 55% if used in full.
Klein outlined a number of priorities for the upcoming year, including beefing up Canopy’s consumer insights and analytics as the foundation of its innovation activity; sharpening its focus on its three core markets of Canada, the U.S., and Germany; and enhancing efficiency and productivity through its supply chain.
In its fiscal fourth quarter, Canopy saw its Canadian recreational revenue slip 28% to C$50 million ($37m) compared with the prior quarter, as growth in softgels, oils, and edibles was offset by declines in flower and pre-rolled joints as the Covid-19 crisis took hold. Looking ahead, the company has high hopes that newly released drinkable cannabis products like Tweed Houndstooth & Soda and Tweed Bakerstreet & Ginger will sustain strong initial demand. Two more beverage products, Houseplant Grapefruit and Deep Space, will now join those aforementioned offerings. “We have said all along that infused beverages were going to be game-changer for our industry,” Klein noted.
In addition to beverages, Canopy’s new offerings include four THC-infused chocolate SKUs—two each from the Tokyo Smoke and Tweed brands—as well as a variety of vape pen components and new one-ounce SKUs for its value cannabis flower label Twd. The company believes “the introduction of competitively priced bulk offerings into the legal Canadian recreational market will continue to help shift sales from the illicit market.”—Daniel Marsteller
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