Cost cuts such as layoffs, vendor renegotiations and consolidation of offices could generate $2.4 million in savings by August.

North Carolina-based cbdMD Inc. (NYSE: YCBD) reported a wider loss for its fiscal second quarter ending March 31, as sales slumped and the company recorded certain one-time charges.

The hemp company posted a net loss of $4 million, or $1.35 per share, versus a loss of $2.3 million, or $1.74 a share, a year earlier. The latest results included a $1.4 million non-cash charge related to the potential convertibility of notes issued during the quarter.

Revenue fell 30% to $4.4 million from $6.2 million a year ago. Direct-to-consumer sales declined 26% while wholesale revenue tumbled 44%.

A $439,926 credit was issued by cbdMD to a wholesale customer related to a $1 million order from March 2022. Gross margin contracted to 59% from 64% a year ago, primarily due to that credit.

Despite the disappointing results, management signaled optimism that recently enacted cost cuts will generate $2.4 million in annualized savings by August. The reductions include layoffs, vendor renegotiations and consolidation of offices.

The hemp company launched its ATRx functional mushroom brand into about 1,500 GNC stores nationwide during the quarter. Kennedy said third-quarter revenue is currently pacing ahead of the March period.

“Transformation is not always linear, and while our second fiscal quarter 2024 results fell short of our ambitions, we believe the operational changes we’ve enacted are set to propel us forward,”  CEO and CFO Ronan Kennedy said in a statement. “We’re particularly excited about our ATRx Platinum line national rollout at GNC, which not only broadens our market presence but also validates our expansion into functional mushrooms.”

The primary revenue driver for cbdMD is its direct-to-consumer online sales channels for its CBD products like tinctures, gummies, topicals and other consumer CBD goods across its cbdMD, Paw CBD and new ATRx functional mushroom brands. Wholesale sales to retailers make up a smaller portion of the company’s overall sales.

The CBD company had $2.1 million in cash remaining at the end of March, down slightly from $1.8 million in September 2023.

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