GrowGeneration Q3 Earnings: Revenue Drops Slightly To $70.9M, Gross Profit Margins Up

GrowGeneration Corp. (NASDAQ: GRWG) the largest chain of specialty hydroponic and organic garden centers with 58 locations across 15 states, reported its financial results late Monday for the third quarter ended September 30, 2022.

Third Quarter 2022 Highlights

• Net sales declined 39% to $70.9 million driven by softer industry demand
• Comparable store sales for the quarter decreased 58.1%
• Net loss of $7.2 million compared to net income of $4.0 million last year
• Loss per share of $0.12 in the quarter
• Adjusted EBITDA loss of $2.6 million
• Revenue guidance for 2022 updated to be between $270 million to $280 million, an improvement from the previous range of $250 million to $275 million
• Adjusted EBITDA guidance updated to be between a loss of $10 million to $13 million, an improvement from the previous range of a loss of $12 million to $15 million
• Cash and cash equivalents were $71.1 million on September 30, 2022

“I am proud of how resilient our team has been throughout this year as GrowGen – and the entire hydroponics category – has faced significant industry and economic headwinds. In the third quarter of 2022, net sales of $70.9 million outpaced our internal expectations, bolstered primarily by stronger-than-expected demand within our distribution and private label business,” Darren Lampert, GrowGeneration’s co-founder and CEO said. 

Q3 2022 Consolidated Results

Revenues declined $45.2 million, or 38.9%, to $70.9 million, for the quarter ended September 30, 2022, compared to $116.0 million for the quarter ended September 30, 2021. The decrease in net revenue was attributed to a decline in same-store sales of 58.1% at 57 retail locations and the Company’s e-commerce operations open in the third quarter of 2022 compared to the same period last year, offset partially by the addition of one new store and the contribution from acquisitions. Overall retail sales was $47.9 million in the third quarter, compared to $100.8 million for the same period last year.

E-commerce revenue was $3.1 million in the third quarter, compared to $10.5 million for the same period last year.

Revenue from non-retail operations, including distributed brands and MMI, was $19.8 million in the third quarter of 2022, compared to $4.7 million in the same quarter last year.

Gross profit was $18.3 million for the third quarter of 2022, compared to $34.1 million for the third quarter of 2021. Gross profit margin was 25.9% compared to 29.4% in the same quarter last year.

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