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Monday, May 20, 2024
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.

Cannabis

SNDL cuts 85 jobs from Olds production facility to save $9M

SNDL expects to complete most of this transition within the first quarter of 2023

SNDL cuts off 85 jobs in sight of new cost-savings program
Inside one of the grow rooms at the Olds production facility. Photo via Sundial Growers.

SNDL Inc. (NASDAQ: SNDL) has cut off approximately 85 jobs from its Olds facility as part of a cost-saving strategy that will save the company around $9 million from labour and operational costs.

On Monday, the company said the transaction with The Valens Company Inc. (TSX: VLNS) (Nasdaq: VLNS) accelerated the need to optimize SNDL’s manufacturing and operational footprint to address market saturation and oversupply.

SNDL Olds operation is among the largest employers in the town where approximately 9,000 people live. The Olds facility was inaugurated in 2018.

“We have made the difficult decision to materially reduce staffing and activity levels in Olds, Alberta, in order to improve the efficiency of our operations as one of Canada’s largest adult-use cannabis manufacturers,” SNDL CEO Zach George said in a statement. 

“With the Olds facility already in operation when I joined SNDL, I am proud of the cultivation capabilities and high-quality flower that our teams have developed and produced.”

“We estimate that more than one billion grams of flower are sitting in Canadian vaults today,” said George.

Due to too much supply and unused products, high-quality flowers are being sold at prices lower than the cost of production, he explained. The company plans to use existing biomass to improve its costs and profits in the pricing environment.

George said the company’s approach to cultivation and manufacturing is adaptive to market changes and focused on providing excellent products at various price points.

Read more: Canopy Growth lays off 800 workers to reduce costs by $160M

Read more: SNDL completes acquisition of The Valens Company

The company said the initiatives will help focus the facility on premium products and brands and is expected to help the company reach its savings target as a result of the acquisition of Valens.

SNDL will release its financial results from the year-end and fourth quarter by the end of March and it expects to report record net revenue and net cash for the fourth quarter of last year.

The company is the largest private alcohol and cannabis retailer in Canada operating under the banners Ace Liquor, Wine and Beyond, Liquor Depot, Value Buds, Spiritleaf, and Superette.

Its cannabis brands include Top Leaf, Contraband, Citizen Stash, Sundial Cannabis, Palmetto, among others.

SNDL stock almost stayed flat decreasing 0.49 per cent on Monday to $2.03 on the Nasdaq Exchange.

Read more: Valens Company receives court approval for SNDL deal

Read more: Sundial completes acquisition of Zenabis Business

The layoffs news comes days after Canopy Growth Corporation (TSX: WEED) (NASDAQ: CGC)  announced cutting off around 800 positions from the closure of its Hershey Drive facility in Smiths Falls, Ontario. The company aims to save $140$160 million over the next 12 months.

Last year, Aurora Cannabis Inc. (NASDAQ: ACB) (TSX: ACB) announced the shutdown of its Aurora Sky Edmonton airport facility to save money and laid off approximately 12 per cent of its staff as part of a cost-saving reorganization strategy.

 

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