Laird Reports Q1 Net Loss of $4.1M, Continues Turnaround Efforts
Laird Superfood announced a net loss of $4.1 million in Q1 2023 as the plant-based food company continues its turnaround efforts.
The Sisters, Oregon-based company reported net sales of $8.1 million in Q1 2023, down 12.9% from $9.3 million in the same period last year. The decline was primarily driven by an 18.4% year-over-year decrease in ecommerce sales, which reflected 55% of total net sales in the quarter. During the earnings call, the company attributed the drop in sales to a 70% reduction in marketing media spend in Q1.
Meanwhile, wholesale revenue accounted for 45% of Q1 net sales, a year-over-year decrease of 5.9% attributed to higher discounts related to one-time product quality costs. After receiving a batch of rancid coconut milk powder from one of its suppliers, the company issued a voluntary recall of several of its non-dairy creamers in Q4 2022.
“While we identified the issue relatively soon after production and were able to retrieve the majority of products before they reached consumers, the withdrawal did have an outsized impact on our Amazon business,” said CCO Andy Judd.
The product withdrawal led to a nearly 12-week blackout of powdered creamer products on Amazon. However, the products are now back in stock on the ecommerce platform and the company is “seeing [its] conversion rate to the levels [Laird] had planned for 2023.”
Gross margin for the quarter was 23.1% compared to -4.6% in Q4 2022 and 20.9% in the prior year period. Excluding the one-time product quality costs, Laird achieved an adjusted gross margin of 27%, an improvement of more than eight points from the sequential quarter in the prior year period.
“Within the conventional and natural grocery channel, we’re seeing strong growth in same-store sales, where our dollar sales velocity growth remains positive for both our liquid and powder creamers,” said president and CEO Jason Vieth during the call. “This growth is being fueled by our new branding and packaging that largely rolled out during the first quarter.”
Laird’s rebrand across product lines was unveiled at Natural Products Expo West in March.
CFO Anya Hamill told investors that the margin improvements resulted from the completion of Laird’s transition to a third-party co-manufacturing and fulfillment model at the beginning of the quarter. The transition comes after the company shuttered its Sisters, Oregon production facility in October 2022.
Laird expects further improvement in gross margin this summer when it transitions its current liquid creamer to an aseptic format that will enable better cost management. The company re-confirmed its guidance to achieve a gross margin in excess of 30% in fiscal 2023.
Looking ahead, the company projects it will have enough cash to operate into at least the second quarter of 2024 and that “it will be in a much improved financial position from which to raise capital when that time comes,” said Vieth.
He continued, “There’s no doubt that this team has made tremendous progress in turning around our company. Our journey is far from complete, but each quarter has demonstrated steady progress against our goal of break-even profitability.”
