Hydroponics retailerGrowGeneration Corp. (Nasdaq: GRWG) posted a $46.5 million net loss for 2023, including a $27.3 million loss in the fourth quarter, as revenues for the business also took a downward turn, the company reported Wednesday.
Revenues drop
Net revenues slid 18.8% to $225.9 million year-over-year from 2022, and were down by 9% year-over-year for the fourth quarter to $49.5 million, despite GrowGeneration’s attempts to cut overhead and find new cost-saving efficiencies.
The slashed annual revenues were primarily due to “a 19.3% decrease in same-store sales and a 3.6% dip in same-store sales for the fourth quarter, GrowGeneration reported. During 2023, GrowGen made quite a few changes to its footprint. The company acquired or opened five new locations and expanded its physical retail presence into two new states. On the flip side, it closed and consolidated 14 retail locations in 2023. Those cuts continued into 2024 as the company closed and consolidated another three additional stores and may consider additional store consolidations in the future.
Despite the revenue decrease, CEO Darren Lampert noted in a press release that the company outperformed its expectations.
On a positive note, losses improved dramatically from 2022, when GrowGeneration posted a $163.7 million loss.
“Hard work and dedication” let GrowGeneration “surpass our full-year revenue guidance,” Lampert said, who added that the company’s gross profit margin is up “nearly 200 basis points as well.”
Lampert said he believes the business is well-positioned heading into 2024, and reiterated that GrowGeneration will be expanding beyond its traditional customer base of cannabis cultivators to reach home fruit and vegetable farmers.
Guiding down
Still, 2024 is not likely to improve GrowGeneration’s prospects, the company said in its guidance, which forecasts another annual net revenue decrease to between $205 million and $215 million. In the first quarter of the year, GrowGeneration expects to either break even or lose up to $2 million, it said.
In addition, GrowGeneration is still weighing how best to monetize the storage solutions business it acquired in 2021, MMI, and said it’s hired Lake Street Capital Markets to evaluate options.
At the close of 2023, GrowGeneration had $239 million in total assets, including $29.7 million in cash, against $65.6 million in total liabilities, with zero debt.
