Recent banking failures and interest rate hikes have raised
fears of the U.S. economy tipping into recession, prompting many
customers to cut back on spending, especially on recreational
products including cannabis.
Pot producers are also struggling with lower pricing,
increased competition and higher input costs, amid a lack of
access to capital and the banking system.
"The company experienced increased competition and
promotional activity in certain markets, including Florida,
Pennsylvania and Massachusetts," Trulieve said in a statement.
The company's gross margins declined to 52% in the
January-March quarter from 57% a year earlier and Trulieve said
it expects to see pressure throughout the year.
"There's pricing compression in the market… quite frankly,
just wallet pressure and that they're (customers are) spending
less on a per-visit basis," Trulieve CEO Kim Rivers said on a
post-earnings call.
She also said operational improvements, inventory reduction,
and cash generation will be non-linear throughout 2023.
The Florida-based company's net loss doubled from a year
earlier to $64 million in the March quarter, with operating
expenses up 8% at $163 million.
Revenue fell 9% to $289 million, missing analysts' average
expectations of $293 million, according to Refinitiv data. The
company said the fall was due to a decline in both retail and
wholesale revenues.
Trulieve said its first-quarter customer retention was 54%
and 73% in medical-only market, adding that near-term growth
opportunities include new market expansions.
(Reporting by Ankit Kumar and Mrinalika Roy in Bengaluru;
Editing by Subhranshu Sahu)
(Adds details from conference call in paragraphs 6, 7, 8 and
11)
By Ankit Kumar and Mrinalika Roy
May 10 (Reuters) - Trulieve Cannabis Corp posted a bigger-than-expected fall in first-quarter revenue on
Wednesday, as demand for pot and related products weakened amid
rising recession fears and increased competition.
Shares of Trulieve fell nearly 4% to C$6.88 in morning
trade, having fallen almost 33% so far this year.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.