Laird: Net Loss at $5.7M in Q3 As Co. Eyes 2023 ‘Turnaround’

After announcing a $5.7 million net loss in Q3, Laird Superfoods’ executive team laid out the company’s plans to rebound from a challenging year during its quarterly earnings call on Thursday.

Laird president and CEO Jason Vieth said he expects the company to complete a “complete turnaround” by the middle of 2023, which will be hastened by restructuring marketing dollars and downsizing employees, including the closing of its production facility.

“The company’s going to look radically different,” Vieth said. “We remain confident in our direction and ability to drive significant improvements in sales growth and profitability in the future, supported by our loyal customer base and strong balance sheet with $21 million of cash and no debt.”

Co-founded in 2015 by big wave surfer Laird Hamilton, Laird Superfoods has tapped into functional food and beverage trends across a range of products, highlighted by powdered and liquid versions of its mushroom-infused coffee creamers. However the publicly traded company has struggled to stem mounting losses in recent months, including an over $14 million hit during Q1.

Citing a decline in sales in the club channel as a significant challenge, Laird reported $8.8 million in sales in Q3, a 18.6% decline from the same period last year . Gross margin slumped to 23.4% in Q3 versus 29.4% in the prior year period.

In October, the company announced it was moving to a co-manufacturing model by shutting down its Sisters, Oregon facility by the end of this year. Vieth maintained that the decision will help the business reach its long-term target goal of 35% gross margin.

The company insists that pivoting to a co-packing model will improve production flexibility and allow it to move into different packaging types like a single-serving size.

“The reality is, for a food business of our size, it’s really challenging to try to operate your own manufacturing facility, especially when you consider how many different types of packages and products we produce,” Vieth said during the question-and-answer portion of the call.

Vieth reiterated throughout the call that when he joined the company at the beginning of 2022 he had not expected to make such drastic changes to bring profitability back to the company.

“It started as more of a transformation…but we really didn’t see the depths that we’d have to go through, on how heavy the lift would be,” he said.

Laird’s new executive team has worked this year to build out the infrastructure so the brand could track consumer insights, data analytics on its segmentation and target new customer groups. Along with reducing the team from 140 people when Vieth started to around 40, the company is readjusting its marketing spend into different channels.

The company has been focused on growing its business on Amazon by diverting resources from its direct-to-consumer model to increasing marketing on the ecommerce platform. The decision helped drive growth on Amazon up 27% during the quarter, reported chief commercial officer Andrew Judd, yet Laird’s overall online business was down 8.3% year-over-year.

Judd highlighted that Laird’s liquid creamer business has seen increased retail dollar velocities and the dollar sales growth is outpacing the plant-based creamer segment. The brand released its new functional protein bars into retail channels and expects new innovation across its creamers, instant lattes and daily prebiotic greens.

Some of the changes at Laird were a full brand redesign that company executives reported was completed and a reformulation of many of the brand’s products to emphasize functional benefits and improve taste.

The company also announced it had removed its free shipping on orders over $40 and increased the price on shipping to carry the additional costs of carriers through the holidays.

Laird Superfoods stock price was trading for $1.55 per share at the time of publication.