Laird: Company Emphasizes Turnaround Efforts After $15.6M Q4 Net Loss

Facing a net loss of $15.6 million in Q4 2022 – up 126% year-over-year – plant-based food and powdered drink brand Laird Superfood said it is emphasizing turnaround efforts in the new year during an earnings call this week.

The Oregon-based company reported net sales of $9 million in Q4 2022, down from $9.4 million the year before. The decline was heavily affected by a 4.7% year-over-year drop in ecommerce sales, which made up 66% of total net sales in the quarter. In the report, Laird noted that it reduced marketing media spend by 52% in the period, and that double-digit sales growth on Amazon helped to offset the slide.

Meanwhile, wholesale revenue (down 3.3% year-over-year) reflected 34% of Q4 net sales and was hurt by lower Club channel sales. Gross margin was -4.6%, compared to 23.4% in Q3 and 23.6% in Q4 2021.

“Fiscal year 2022 was a year of transition, beginning with the onboarding of a new leadership team and culminating in the successful transition of our in-house manufacturing and fulfillment center to 3rd party co-manufacturing and logistics partners at the end of the year,” CEO Jason Vieth said in a statement. “We expect this move to expedite our margin improvement agenda by moving our business to a variable cost model and dramatically reducing our overhead costs.”

“Additionally, we recently unveiled a complete brand refresh across all products in our portfolio, which is already having a positive effect on retail performance,” Vieth continued. “We believe that these momentous steps will position the business for growth and continued improvement in our gross margin throughout 2023.”

Laird CFO Anya Hamill added that the company has now completed “cost cutting and cash optimization initiatives across the business. With its supply chain now operating through a variable cost model – following the closing of its Sisters, Oregon production facility in October 2022, inflicting a one-time charge of $9.1 million – Hamill said Laird is projecting a gross margin improvement to over 30% this year.

During the earnings call yesterday, Vieth noted the transition to third party manufacturing and logistics was completed by the end of January and these new partners are now producing and shipping 100% of Laird’s powder products.

The call follows the launch of Laird’s rebrand across product lines, which was unveiled last week at Natural Products Expo West 2023.

“We have already seen a nice bump in our recent retail sales velocities, which we attribute to the new branding and its ability to draw in consumers at that first moment of truth when they see our new package on the shelf or on the screen,” Vieth said.

Despite challenges in the ecommerce channel, Vieth said the business lowered its consumer acquisition costs from $90 in Q4 2021 to just $30 in 2022, while the average order value increased, setting the brand “on the right track to fundamentally reshape our DTC business as we drive it toward profitable growth.” On Amazon, Black Friday and holiday shopping led to a 13% increase in average order volume, compared to last year.

As Laird focuses on driving growth this year, Vieth also highlighted the appointment of former Chocolove VP of sales Doug Lee as its new SVP of sales in November. In the months since, Vieth said Laird has seen improvements in club channel sales and noted that Lee has worked closely with a rebuilt broker network to expand the brand in conventional and natural channel grocers and mass accounts.

However, the turnaround initiative has not come without new setbacks. Vieth said the company received rancid coconut milk powder from one of its suppliers last month, requiring a voluntary recall of several of its non-dairy creamers. Laird is still estimating the total costs, but expects to receive reimbursement from its suppliers.

Since joining the company as CEO in January 2022, Vieth added that the business has succeeded in slowing the burn rate and improved efficiency and market positioning.

“As a result of these changes and without having raised any additional capital during this time, we still have more than a year of cash remaining,” he said. “And while we expect to require a cash raise at some point before mid-2024, we will be able to present a much stronger business model that sets us up for continued growth and expansion as we become a leader in functional plant based foods.”