GrowGeneration Corp. (GRWG) reported third-quarter earnings on Wednesday with revenues of $4 million increasing 86% over the previous year’s revenue of $2.2 million. Same-store sales also jumped from $2.1 million to $2.7 million from $2.1 million reported last year for the same time period.
The quarter ended September 30 and included eight stores versus last year’s sales that came from five stores. In addition to that, new stores in Boulder, Colorado and Las Vegas will be reflected in the fourth quarter earnings. As a result of the new stores coming on board, the company’s operating expenses increased as well. Store operating costs were $800,861 for the 2017 third quarter versus $372,317 for the previous year, for an increase of $428,544 or 115%.
However, even with the increase in stores and sales, GrowGeneration reported a net loss of $460,887 versus last year’s net income of $10,844. The loss was attributed to an “an increase in non-cash share-based compensation of $242,984, the opening of our operations in Denver South, Boulder, Las Vegas, and San Bernardino, CA, and costs related to the Seattle Hydro purchase and pre-opening store costs, plus higher salaries and related expenses due to an increase in corporate support staff and sales staff dedicated to outside sales.” In other words, it takes money to make money.
“Our company continues to attract capital, raising $4.8 million through Q3 2017, strengthening our balance sheet to $8.2 million in assets and breaking the $10 million revenue mark,” said Darren Lampert, Co-Founder, and CEO. “GrowGen now is operating in 4 states, with 14 commercial and retail stores, with over 50,000 sq. ft. and servicing 100’s of licensed commercial growers. We are aggressively expanding our brand and store model, with a focus in California, Nevada, Michigan, Rhode Island, Massachusetts, Maine, Oregon and the state of Washington,” added Mr. Lampert. We continue to forecast revenue for 2017 to be approximately $15 million.”
The Company had $1.9 million in cash at the end of the quarter. Currently, GrowGen has 14 stores, which includes 9 locations in Colorado, 2 locations in California, 2 locations in Las Vegas and 1 location in Washington. GrowGen also carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers. The company’s goal is to own and operate GrowGeneration branded stores in all the major legalized cannabis states.
The stock was lately trading at $1.92, down from its 52-week high of $3.43.