MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) announced Friday it was cutting 190 employees and unloading non-essential assets to improve company numbers before the end of next year.
It’s part of a dramatic new 90-day austerity plan for the cash-strapped vertically integrated company to raise the company’s bottom line and hit a positive earnings before interest, taxes, depreciation, and amortization, which includes giving 20 per cent of its corporate workforce the axe.
“This layoff includes many hard working, mission-based people whose presence will be sorely missed,” MedMen CEO Adam Bierman said in a statement. “While it is never easy to let employees go from the MedMen family, we believe this decision is in the best interest of our company as we position ourselves for growth in the years ahead … We will now set our sights on achieving positive EBITDA by the end of calendar year 2020.”
The company is scaling back investments and selling stakes in unprofitable — or not profitable enough — ventures. MedMen’s US$14 million stake in Treehouse Real Estate Investment Trust is up for grabs, half has already been snapped up. The company is also abandoning store openings in 2020 unless the location is guaranteed to bring in US$10 million in its first year of operations, and is dumping US$8 million worth of stocks in “high-growth brands” have been liquidated after not growing high enough.
Employees and the company’s marketing budget have been slashed to save an annual US$10 million and US$20 million respectively. Employee benefits have also been “re-negotiated” in a way to save the company an extra US$2 million annually.
The 90-day plan is expected to reduce selling, general and administrative expenses by $85 million per year.
While the company recently expanded its retail footprint into Florida, MedMen terminated its all-stock acquisition deal last month of PharmaCann LLC valued at US$682 million.