The
On a year-over-year basis, the company's global cannabis net revenue fell 35 per cent to
Revenue from other consumer products revenues including Storz & Bickel (vapes), This Works (skin care), BioSteel (sports drinks and protein powders) and other items fell three per cent to
"We deliberately chose to not chase low-margin value flower sales and for a cannabis company transitioning your product mix can be challenging," she told analysts on a call.
"Had we continued to focus resources on actively pursuing low-margin value flower sales, our Canadian recreational cannabis business would have delivered significantly stronger revenue in fiscal '22, but at the expense of doing what was right, which was putting our Canadian cannabis business on a path to sustainable growth and profitability."
The shift comes after cannabis companies spent the years since recreational marijuana was legalized in
In recent months, many like Canopy have been pivoting away from that strategy and focusing more intensely on premium cannabis because it sells for higher prices and often has a more loyal consumer following.
To help Canopy navigate the shift, Hong said the company improved its forecasting processes to ensure it is more agile in adjusting production to reduce inventory writeoffs. Canopy reported inventory writedowns of nearly
Some of the savings from better forecasting will be offset by wage inflation and rising supply chain costs, but Hong said Canopy is still confident it can deliver savings between
Many of those savings will come from a cost reduction strategy Canopy implemented recently to make cannabis cultivation more affordable as well as supply chain efficiencies.
The plan includes retooling facilities, reviewing procurement strategies, implementing flexible manufacturing processes and reducing third-party professional and office fees.
It was unveiled just as Canopy laid off 243 workers in
Pressure to improve the company's economics has been mounting since Canopy announced it would not reach profitability in the second half of its fiscal 2022, as it once predicted. It has not released a new timeline, but chief executive
Standing in Canopy's way are a series of net losses. The company had a net loss of
Ahead of the results being released,
"Given the company's challenging profits and losses and past difficulties at achieving guidance, it would not surprise us if investors view the new reset plan with initial skepticism," she said, in a note to investors.
Canopy's results pushed its share price down by 14 per cent or
In a response to a written shareholder question about the "volatile" market, Hong said, "the share price declines (are) really not unique to Canopy."
"When you look at the share price performance of the
"Now from Canopy's standpoint, we are focused on really controlling what we can control, which is really laying the foundation for long-term sustainable growth and really building a premium branded cannabis company as the market goes through these types of cycles."
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