MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) reported its second quarter of fiscal 2019 with revenue of $29.9 million. This represents a 39.1% quarter-over-quarter increase over the first quarter of fiscal 2019 ending September 30, 2018.
California is the main driver of sales. MedMen’s eight retail locations primarily in Southern California reported a combined $23.7 million in revenue. The company said that if the revenue included pending acquisitions it would have been $49.5 million for the quarter.
Unfortunately, the company is continuing to post losses. MedMen delivered a total net loss of $64.6 million compared to a net loss of $66.5 million for the first quarter. So, the losses have been trimmed somewhat. The net loss per share in the second quarter was $0.25 versus a net loss of $0.27 for the first quarter.
Gross profits before biological asset adjustment, were $13.3 million, as compared to $0.5 million in the second fiscal quarter of last year. The gross profit margin after biological asset adjustment was 53%, compared to 45% in the previous quarter.
“Our strong second quarter results support MedMen’s commitment to drive strong retail and sales performance, while efficiently scaling the Company and executing on our growth strategy,” said Adam Bierman, MedMen chief executive officer, and co-founder. “As we emphasized last quarter, we are in a new phase of growth, one focused on continuing to operationalize our industry-leading retail footprint and increasing our profitability. We are confident in the team we’ve built to drive our success.”
The company said that “In an effort to increase transparency, provide a better understanding of MedMen’s business, and ensure sales comparability between years, it is basing accounting on the 4-5-4 calendar structure. Additionally, the Company is now breaking out performance in the MD&A by retail, cultivation and manufacturing, corporate SG&A and pre-opening expenses.”
The company has been criticized for its high expenses. MedMen noted that “Of the total $40.9 million corporate SG&A expenses, $14.4 million was corporate payroll, which included the buildout of several teams within the company including finance and accounting, digital, business intelligence and marketing. SG&A expenses also included $8.6 million in marketing and branding as compared to $4.8 million in the first quarter of 2019.”