CWBHF - Charlotte's Web Sales Continue To Fall
Charlotte’s Web Holdings, Inc. (TSX: CWEB) (OTCQX: CWBHF) reported financial results for the first quarter ending March 31, 2022 as net revenue fell 17% to $19.4 million versus $23.4 million for the same time period in 2021. Sales also fell sequentially from the fourth quarter’s revenues of $24.8 million and greatly missed the estimates from Yahoo Finance for sales of $27 million. Charlotte’s Web said the decrease was partly due to a temporary closure of its production and shipping terminal in January after a local wildfire in Boulder County .
The net losses were trimmed to $8 million from last year’s net loss of $12 million. The company has also been trying to right-size itself as revenues continue to fall. Total selling, general and administrative of $20.4 million was reduced by 14.4% year-over-year. “The $3.4 reduction versus Q1-2021 was primarily the result of actions taken in late 2021 and early 2022 to bring expenses in line with current revenue levels to support a return to positive cash flow.”
“While our e-commerce traffic was lower compared to prior periods, subscriptions more than doubled since Q1-2021. With e-commerce revenue down $3.0 million year-over-year, rebuilding traffic and conversions remain key priorities for us in e-commerce, which is our largest revenue channel,” said Jacques Tortoroli , Chief Executive Officer. “In our retail business, shipping was disrupted in January due to a two-week closure after a local wildfire in Boulder County . Despite the slow start, the overall business improved through the quarter with March being the largest revenue month of the quarter. The quarter did not benefit from our new retail sales organization which was put in place in April.”
Revenue Breakdown
Charlotte’s Web said the direct-to-consumer (“DTC”) eCommerce revenue was $13.1 million , a decrease of $3.0 million or 18.5% year-over-year. The decrease was attributed to lower traffic to the online store, wildfire shipping delays, and an industry-wide consumer shift to lower-priced CBD products; primarily gummies and topical products, where Charlotte’s Web is the market share leader. New DTC subscriptions increased 107% year-over-year and eCommerce conversion rates were strong at 14.2%. Charlotte’s Web maintains the largest e-commerce business in the CBD industry. DTC sales contributed 67.9% of the Company’s total net revenue in Q1-2022.
Business-to-business (“B2B”) revenue was $6.2 million , $1.1 million or 14.6% lower year-over-year with reduced shipments to some of the Company’s largest retail customers after the warehouse closure and some supply chain challenges on top-selling CBD Clinic SKUs. This was partially offset by new retail distribution in grocery, natural, and pet retail, following the passing of Assembly Bill 45 in California .