Summary: Trulieve Cannabis reported a more significant loss in the second quarter, attributing the decline to unusually high temperatures and decreased consumer spending. The cannabis sector faces challenges such as reduced prices, increased operational costs, and heightened competition.
Trulieve Faces Decline in Q2 Revenue Amidst Rising Operational Costs
Trulieve Cannabis (TRUL.CD) announced a broader loss for the second quarter. The company highlighted that the unusually high temperatures and a decrease in consumer spending were negatively impacting the performance for the current quarter. The cannabis industry is currently grappling with challenges such as declining prices, rising input costs, a tight labor market, and growing competition.
The company’s executives, during a post-earnings call, mentioned that the extreme heat primarily affected cannabis sales due to reduced store traffic, as consumers preferred to stay indoors. Eric Des Lauriers, a Senior Research Analyst at Craig-Hallum Capital Group, supported this observation, stating that extreme heat typically leads to decreased store visits.
For the reported quarter, Trulieve’s revenue saw a 10% decline, amounting to $282 million compared to the previous year. In contrast, the operating expenses surged by 205%, reaching $433 million. However, the company noted a sequential increase in its retail revenue (excluding deferred revenue) by $3 million, which was driven by increased store traffic and volume.
Like many of its industry peers, Trulieve has implemented various cost-saving measures. The company announced its plans to reduce inventory and conserve cash by cutting wages and eliminating redundancies throughout 2023.
For the quarter ending June 30, Trulieve reported a loss of $404 million or $1.8 per share. This is a significant increase from the previous year’s loss of $22 million or 9 cents per share.
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