Charlotte’s Web Earnings Stay Flat, Retail Footprint Grows

Charlotte’s Web Holdings Inc. (CSE:CWEB) released its 2019 first-quarter results this week and it saw a decline in net income over the previous quarter, while revenues remained flat. Although the U.S. company’s sales of US$21.7 million were up 66 per cent over last year, they inched ahead of last quarter’s US$21.5 million sales. Meanwhile, net income dropped to US$2.3 million from US3.2 million in the last quarter.

Big retail presence gives company early advantage in hemp market

While earnings growth cooled off, the company’s retail footprint expanded and helped generate more than half of its sales (51 per cent). Charlotte’s Web now has its hemp CBD products in more than 6,000 retail locations with four major national retailers now receiving shipments.

Charlotte’s Web also said “A major grocery retailer is carrying all categories of the Company’s product portfolio including oils, capsules and topicals, while the remaining national retailers have begun their Charlotte’s Web product introduction with topical products only.”

The U.S. firm is expecting to continue adding to the list of retailers it sells its products to throughout the year as the potential for the market is only going to get bigger.

“This momentum is continuing as consumer awareness and retailer interest surrounding hemp and CBD increases. We believe we’ll continue to see expansion in this area with additional retailers coming onboard and we expect continued roll-out to new states from existing retail customers throughout the year. Some retailers may wait for further clarity from the Food and Drug Administration (FDA) before including ingestible products, while others have been moving forward and expanding the number of stores that carry Charlotte’s Web products.”

Pet line launched

Charlotte’s Web expects to see more growth with new product lines, and recently came out with a CBD product for pets that aims to help calm, relieve hip and joint pain, and improve cognition as well. The company cites research firm Brightfield Group, who estimates the CBD pet market will grow to US$1.16 billion by 2022. The pet market is still new and the segment shows signs for growth in the industry as more customers come online.

As a result of growing demand from retail locations and pet products, Charlotte’s Web is going to significantly increase the number of hemp acres planted. In 2018, the company had 300 acres to plant hemp, and it expects to grow that to 700 by 2019.

Shares to Trade on the TSX

Charlotte’s Web also announced Tuesday it would be delisting from the Canadian Securities Exchange as of the close of  Thursday and move to the Toronto Stock Exchange. With more exposure expected on Canada’s largest exchange, it may attract more attention from investors and could lead to a much stronger share price.

U.S. cannabis companies have stayed on the CSE due to the TSX Group rules that do not allow cannabis companies that do not comply with U.S. federal laws. Charlotte’s Web offers hemp-derived products, which are now legal in the U.S. with the 2018 Farm Bill removing the from the list of controlled substances, and now has the ability to move to the TSX.