Layoffs at Organigram (OGI.TO)(OGI) led to “meaningful missed revenue opportunities” as the pot producer struggled to fill orders and delayed new product launches, according to the company.
In July, New Brunswick-based Organigram cut its workforce by about 25 per cent, roughly 220 employees, and reduced its cultivation in response to a weaker-than-expected market. The move followed the temporary layoff of nearly half of its staff, about 400 workers, in April in response to COVID-19. According to regulatory filings on Monday, the company has 517 active employees, mostly based in Moncton.
“With a leaner workforce, the company experienced some reductions in production, cultivation, processing and packaging capacity. At certain times, this contributed to delays in the product launches for its portfolio revamp and hindered consistent order fulfillment,” the company said in a release on Monday. “This resulted in some meaningful missed revenue opportunities.”
Citing Statistics Canada data showing rising non-medical sales in September, as well as accelerating private retail store openings in Ontario, Organigram is now looking to increase its staff and production to meet demand. Chief executive officer Greg Engel said the company is planning to add a “modest” number of workers.
“We’ve had some stock-outs and certainly some lost sale opportunities in the near term,” Engel told analysts on the post-earnings conference call. “We are in the midst right now of looking at plans to scale back up. That would involve potentially bringing in some additional staff back in for both cultivation and downstream processing.”
Chief financial officer Derrick West added that Organigram continues to expect “some production inefficiencies to persist, which will impact gross margins.”
Organigram reported quarterly and year-end results on Monday, including a $136 million loss for fiscal 2020. The company lost $9.5 the previous year.
For the quarter ended Aug. 30, Organigram booked a $38.6 million net loss, compared to a loss of $22.5 million in the same period last year. Net revenue climbed to $20.4 million, 13 per cent higher than the previous quarter. Analysts polled by Bloomberg expected $20.7 million in revenue.
In Q4, the company wrote off $11.1 million in “excess and unsaleable inventory,” which nearly doubled the cost of sales on a year-over-year basis.
Toronto-listed shares fell 4.71 per cent to $1.62 at 10:39 a.m. ET on Monday.
https://ca.style.yahoo.com/organigram-blames-layoffs-for-meaningful-missed-revenue-160026085.html