Canopy Growth Corp. says it no longer expects to be profitable this year, citing supply and market share challenges in its home country of Canada.
The new guidance was provided Friday with Canopy’s second fiscal quarter results, in which the company reported a ballooning loss on lower overall revenue.
Canopy’s adjusted EBITDA loss of 162.6 million Canadian dollars ($130 million) in the three months ended Sept. 30 was substantially worse than the previous quarter’s CA$63.6 million EBITDA loss.
Canopy reported a net loss of CA$16.3 million for its second fiscal quarter.
The company said it’s looking to further tighten expenses and is on track to achieve cost savings of CA$150 million to CA$200 million before the first half of fiscal 2023, which starts in April 2022.
Canopy wrote off another CA$87 million of inventory, citing excess Canadian inventory “resulting from lower sales relative to forecast.”
“Achieving profitability remains a top priority. We are focused on increasing market share in Canada, premiumizing our product mix and delivering on our cost savings commitment,” CFO Mike Lee said in a statement.
Overall net revenue fell 3% from the previous quarter to CA$131.4 million in the second quarter.
In delaying its outlook on profitability, Canopy said it is now focused on stabilizing its market share of the Canadian recreational cannabis market over the next six months.
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Canopy, along with other large producers in Canada, have experienced significant market share erosion this year.
No Canadian licensed producer currently possesses more than 14% of Canada’s overall recreational market.
In November 2020, CEO David Klein said the Smiths Falls, Ontario-based LP was “firmly” on track to achieve positive adjusted EBITDA, a measure of profitability, before the end of March 2022 – the end of the company’s 2022 fiscal year.
“In new industries where the potential is immense, progress is rarely a straight line. With a focused strategy, a foundation for growth, and our burgeoning U.S. ecosystem, Canopy is uniquely positioned to win as the industry matures,” CEO Klein said in a statement announcing the company’s latest quarterly results.
As a result, the company said it is taking steps to improve its Canadian recreational business, adding supply of in-demand, high-THC flower products and new product launches.
The company also said it had supply issues in the past three months.
In the top-selling segment in Canada, dry bud, Canopy’s adult-use sales tumbled 11% to CA$56.8 million in the quarter.
Adult-use oils and softgel sales amounted to only CA$5.5 million, 21% lower than the previous quarter.
Sales of recreational beverages, edibles, topicals and vapes grew by 15% but came in at only CA$9.2 million.
Canadian medical cannabis sales fell 6% to CA$13.1 million in the second quarter.
Canopy said it had cash of CA$2 billion as of Sept. 30.