U.S. Pot Chain MedMen Reports Deeper Loss As Expenses Climb Amid Expansion
U.S. marijuana retailer and cultivator MedMen reported deeper fourth-quarter and full-year losses that reflected its aggressive expansion, while marijuana stocks attempted to rebound Thursday from an extended sell-off.
Net loss widened to $ 78.7 million in Q4 from $ 7.35 million a year ago. Systemwide revenue shot up to $ 20.6 million from $ 1.5 million a year ago and from $ 14.3 million in Q3, primarily due to the majority of MedMen’s stores coming on line during Q4.
The average sales per square foot was $ 6,257, and the customer conversion rate was 84% for all California stores.
For the year, net loss widened to $ 112.3 million from $ 15.4 million, as revenue surged to $ 39.8 million from $ 2.7 million. Expenses ballooned to $ 110.5 million from $ 15.7 million.
The results follow recreational marijuana legalization in Canada and the U.S. industry’s efforts to buy its way into growth, even as many marijuana companies sacrifice profits for expansion.
MedMen this month said planned to acquire PharmaCann in a $ 682 million all-stock deal. The acquisition would expand MedMen’s operations to 12 U.S. states.
A week later, rival iAnthus Capital said it would buy MPX Bioceutical, a $ 638 million all-stock transaction that would put the post-merger company in 10 states.
Canopy Growth (CGC) rose 4% in premarket trading on the stock market today, after marijuana stocks took a beating in recent weeks. Aurora Cannabis (ACB), which listed on the New York Stock Exchange this week, climbed 6%. Aurora also received its first medical cannabis import permit from Poland. Cronos Group (CRON) added 5%. Tilray (TLRY) rallied 3%.
On Monday, the credit-rating agency DBRS said that Canada’s biggest marijuana producers “exhibit characteristics consistent with the low, non-investment-grade range of the credit ratings spectrum.”
MedMen operated at a loss last year and in the second half of 2016. But as other U.S. cannabis companies quietly build out operations in legal states, MedMen over the past year has taken a much bolder tack.
The company’s advertising storm has tried to dispel “stoner” stereotypes while bringing elements of high fashion to cannabis consumption. The company on April 20 opened a dispensary on Manhattan’s Fifth Avenue with an all-white interior, palatial arches and lights shaped like halos.
MedMen this month launched its in-house product line, called Statemade, in packaging similar to that of high-end makeup. Buds come in short, wide, copper-lidded jars similar to those that might contain cosmetic cream. Joints, vaporizers and drop come in tubes that resemble eyeliner or lipstick.
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