GrowGeneration announces revenue growth, store closures

GrowGeneration Corp. (NASDAQ: GRWG) gave investors a good news/bad news preliminary report for the second quarter. The good news was that revenue grew 10% sequentially; the bad news is that the company is closing 19 stores.

This week GrowGen told investors that net revenue is expected to top $53 million, a sequential increase of at least 10.6% compared to $47.9 million in the prior quarter.

“During the second quarter, we continued to see sales growth driven by our commercial customers. We believe GrowGen can better serve these customers and extend our market reach by emphasizing our proprietary brands and launching an enhanced B2B e-commerce platform,” said Darren Lampert, co-founder and chief executive officer. “We intend to rapidly align our operating model, sales, and cost structures accordingly to achieve these goals, drive higher margins, and boost profitability.”

While GrowGeneration tried to focus investors on the sequential growth in revenue, the company also said it would close 19 redundant or underperforming stores. Seven of these stores were closed in the first half of 2024. GrowGen said the rest will be closed within 90 days, leaving the chain with 31 operational stores.

The company also told investors in a statement that it was beginning a “comprehensive restructuring plan” focused on long-term profitability and advancing growth initiatives in key areas, such as proprietary brands, B2B, and e-commerce. The plan will include improvements in inventory management, sales and marketing activities, and other aspects of operations, and is expected to generate margin gains and approximately $12 million in cost savings realized over the next 12 months.

In addition to the restructuring, GrowGen said it plans to have 35% of it sales come from proprietary brands by the end 2025, with 50 new products expected to be added to the proprietary brands lineup over the next 12 months.

The company also plans to launch a B2B e-commerce portal, migrating transactional activity from brick-and-mortar to this digital platform. GrowGen said it expects to launch the platform in the fourth quarter this year.