Shares of Canadian cannabis product producer and distributor Canopy Growth (CGC) - Get Report plunged on Thursday after the company posted a wider fiscal second-quarter loss on a big drop in selling prices of legal cannabis and related products amid declining consumer demand.
The Smiths Falls, Ont.-based company posted a loss for the quarter ended Sept. 30 of C$374.6 million ($282.4 million), or C$1.08 a share, vs. a loss of C$330.6 million, or C$1.52 a share, in the year-earlier period. Revenue more than tripled to C$76.6 million from C$23.3 million, but still came in well below FactSet consensus estimates of C$90.6 million.
"The last two quarters have been challenging for the Canadian cannabis sector as provinces have reduced purchases to lower inventory levels, retail store openings have fallen short of expectations, and Cannabis 2.0 products are yet to come to market," CEO Mark Zekulin said in a statement.
"However, we believe these conditions are a short-term headwind in what is a brand-new industry, and Canopy continues to be best positioned with cash-on-hand, a world-class infrastructure, and a portfolio of intellectual property to deliver sustained, long-term market leadership."
The company took a C$32.7 million restructuring charge related to "returns, return provisions, and pricing allowances primarily related to its softgel & oil portfolio," and C$15.9 million inventory charge "to align the portfolio" to focus more on high-demand products like chocolates and other edibles, as well as medical products.
Recreational business-to-business dry cannabis sales was 7,497 kilograms and recreational business-to-consumer dry cannabis sales were 1,064 kilograms--there were no recreational sales a year ago--while medical dry cannabis sales fell to 998 kilograms from 1,698 kilograms.
Shares of Canopy Growth were down more than 15%, or $2.81 a share, at $15.69 in morning trading.