U.S.-listed shares of Canopy Growth plunged as much as 17% on Thursday after the Canadian cannabis producer reported a higher-than-expected loss in its fiscal second-quarter financial results, hit by restructuring charges.
Canopy, the world’s largest publicly traded cannabis company by market value, reported a loss of $1.08 per share for its latest quarter. However, revenue came in at $118.3 million, higher than analysts had been expecting.
CEO Mark Zekulin, who became Canopy’s sole chief executive after the ouster of co-founder Bruce Linton in July, told CNBC on Thursday that the quarter has been challenging for the Canadian cannabis sector broadly due to slower-than-expected expansion on marijuana retail stores.
“There simply aren’t enough stores,” Zekulin told CNBC’s “Squawk Alley.” “If there’s nowhere to sell consumer products, then it’s very difficult to have the type of revenues everybody expected.”
Zekulin added retail expansion is an “easy problem to fix,” saying the Canadian government has acknowledged it needs more stores.
“We now have enough supply to allow them to do that,” he said. “We need to see a lot more stores so people have access.”
The company also said it took a restructuring charge of $24.71 million during the quarter for returns, return provisions, and price cuts related to its softgel and oil portfolio.
Zekulin said the company “took the necessary steps to address inventory levels on our oils and softgels,” and looking ahead, expects fundamentals to be strong.
The introduction of Cannabis 2.0, marijuana derivatives including edibles and beverages, is also likely to create excitement and generate sales, he added.
Zekulin has taken the reins as sole CEO of Canopy as he leads a search to find a new chief. He said Thursday that the company is down to a few “extraordinary” candidates.
“We still remain hopeful to be announcing something in a couple of weeks,” he said.
The stock was trading around $15 per share Thursday, down 72% from its all-time high of over $56 per share it hit in Sept. 2018. Shares are down 42% year to date.