CBD giant Charlotte’s Web struggles in first quarter, as losses pile up

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The fortunes of leading U.S. CBD company Charlotte’s Web continued a downward trend in the first quarter of 2024 as the company recorded $9.7 million in losses on reduced revenues of $12.1 million – more than tripling losses recorded in the same period last year.

“The first quarter of 2024 started slowly in terms of sales volume,” CEO Bill Morachnick said in a statement, noting the company is working on “turnaround initiatives.” Those efforts include halting paid media promotion, redesigning the company’s business-to-business division “to better serve retailers within the current regulatory environment,” and putting more attention on opportunities in medical CBD.

Cutting costs

“Given our current revenue challenges, we continue to act with agility to further optimize cost structures across the company, streamline operations, and eliminate inefficiencies,” CFO Jessica Saxton said in the company’s Q2 statement. She was replaced last Friday by Erika Lind, who moved up from her position as Vice President of Financial Planning and Analysis.

The company said it is also about to relaunch online assets because its “legacy e-commerce platform limits our ability to be agile in executing marketing strategies and promotions quickly.” Charlotte’s Web was accused in April of violating the California Invasion of Privacy Act by eavesdropping on visitors to its website.

Losses on top of losses

The Louisville, Colorado-based company lost $2.9 million on revenues of $17 million in the analog quarter of 2023, a year in which it eventually suffered losses totalling $23.7 million, after shedding $59.3 million the year previous. Revenue last year fell by 14.8% to $63.2 million from $74.1 million in 2022.

The company said its 2023 losses were due to softness in both consumer and B2B sales, and that it was hurt by increased expenses, particularly due to costs associated with a licensing and media rights deal it entered with Major League Baseball in 2022 that the company aggressively promoted.

Walmart deal touted

While the company is touting a recent deal in which its line of CBD topicals will be distributed through more than 800 Walmart stores in five states (California, Illinois, Florida, Texas, and Pennsylvania), such products represent only about 1% of CBD sales in the U.S. and Canada. Most of the CBD business is in products that are taken internally – products that large retailers have shied away from due to a lack of regulations and questions over quality, safety and efficacy.

Charlotte’s Web shares closed Friday, June 28 at $0.1840 (about 18 cents) against an all-time high of $21.90 reached April 1, 2019. The company went public in September 2018 on the Toronto Stock Exchange and the OTCQX Venture Market in the U.S. – risky “penny stock” markets that are highly volatile.

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