GrowGeneration Corp. (Nasdaq: GRWG) had a rough 2022, with a 34% drop in revenues and a full-year loss of $163.7 million, according to the company’s fourth-quarter earnings report. That’s a stark drop from 2021, when company had turned a modest profit of $12.8 million.
The hydroponics supply chain’s CEO, Darren Lampert, said leadership recognized in early 2022 that the business would have to “shift our focus towards right-sizing our cost structure, reducing inventory, consolidating our store footprint, and generating cash to strengthen our balance sheet” due to “pressures on the broader cannabis and hydroponic industries.”
Lampert noted that thanks to various cost-saving moves, GrowGen was able to end 2022 with $71.9 million still in the bank, but only after liquidating $28.5 million worth of inventory, cutting payroll by 30%, and eliminating “redundancies in (GrowGen’s) store footprint.”
Last year, GrowGen shuttered eight stores and opened five new ones in four states where it had previously not had a retail presence, bringing its national footprint to 16 states. It also acquired more assets in November from a competitor in Missouri, the St. Louis Hydroponic Company.
Lampert also said he expects a turnaround quickly in 2023.
“For the first time in seven quarters, we believe GrowGen will see sequential revenue growth in the first quarter of 2023 versus the fourth quarter of 2022, with sequential growth quarter over quarter expected throughout the remainder of the year,” Lampert said. “We believe that margins will normalize in the first quarter and for the balance of the year.”
In the quarter ending Dec. 31, 2022, GrowGen’s revenues plummeted by 40% to $54.5 million from the same period a year prior, and was caused mostly by a nearly 52% decrease in same-store sales, the company reported. The net loss for Q4 alone was $15 million, compared to GrowGen’s $4.1 million loss in the final quarter of 2021.
For the full year, revenues were down to $278.2 million, a 34% drop from 2021 revenues of $422.5 million.
The projection for 2023, the company reported, is net revenues between $250 million-$270 million, with $55 million-$57 million in Q1.