Charlotte’s Web continues to suffer revenue declines

Charlotte’s Web continues to suffer revenue declines


Charlotte’s Web Holdings Inc. (OTC: CWBHF) reported its revenue fell again in the fourth quarter and for 2023. Fourth-quarter revenue fell to $15.9 million from last year’s fourth-quarter revenue of $18.9 million.

The company said that CBD product sales remain below expectations due to ongoing headwinds in the overall CBD category, including regulatory ambiguities at the federal and state levels, associated consumer confusion, and competitive crowding and pricing pressures. Charlotte’s Web said that overall shelf space for CBD products had declined.

The company managed to trim its net losses from last year’s fourth-quarter loss of $35.2 million to this year’s net loss of $8.5 million.

Full-year results

Revenue for 2023 fell by 14.8% to $63.2 million from $74.1 million in 2022, due to lower DTC and B2B sales. Charlotte’s Web said that DTC revenue decreased 15.9% year-over-year to $42.6 million, and B2B revenue was 12.4% lower, at $20.5 million. DTC and B2B sales contributed 67% and 33% of net revenue in 2023, unchanged from 2022. The net loss per share for the year fell to ($0.16) from last year’s ($0.40).

The company’s cash and cash equivalents fell to $47 million from 2022’s $66 million.

“Since I joined the company last September, we have been executing a company-wide turnaround initiative we call True North,” said CEO Bill Morachnick. “True North’s objective is to enhance the overall consumer journey and drive sustainable growth. It combines an operational and data-driven emphasis with the integration of marketing, sales, innovation, technology, and education, all centered around our consumer and valued retail partners.”

True North is the company’s turnaround initiative fueled by four strategic pillars with a clear destination for long-term growth. These include:

Revamping the e-commerce to increase consumer traffic, engagement, acquisition, loyalty, and subscriptions.
Addressing the needs of the largest retailers with specific products.
Increasing television ad campaigns.
Prudent financial oversight.

“We continue to take multiple actions to maintain gross profit margins, reduce cash burn, and safeguard our financial position,” said CFO Jessica Saxton. “On the costs side, we have introduced zero-based budgeting in 2024 as part of a comprehensive 3-year financial plan to manage resources and optimize cost structures relative to our revenue position. Additional cash flow improvements are expected to result from efficiency gains, including production insourcing, IT upgrades, marketing optimization, and operational integrations within eCommerce and logistics.”

2024 changes

During the first quarter of 2024, Charlotte’s Web said it unveiled a significant competitive price reduction of its leading CBD oils, without sacrificing its proprietary formulation or quality. The company said it believes the more affordable pricing will improve consumer accessibility and that added volume will offset the reduction mragins.

Charlotte’s Web also reported that since the beginning of 2024, progress has been made in transitioning to in-house manufacturing of topical and gummy products. The company said in a statement that initial equipment had been installed, and commercial runs are anticipated to begin in the fourth quarter while maintaining co-manufacturing relationships for dual-source capability to mitigate supply chain risks. “On-site manufacturing can accelerate the innovation process, leading to quicker introduction of new products to the market, while enhancing profit margins,” read the statement.

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