Hexo Corp (TSX: HEXO) (NYSE: HEXO) announced this afternoon that it is making a number of cuts to its operations as a result of decreased revenue expectations for 2020, including the reduction of approximately 200 jobs across all departments. The employee reduction equates to roughly 19% of the total workforce at Hexo as per the latest filings.
The reduction in employee count comes amid decreasing revenue expectations for Hexo and other firms in the cannabis sector. Two weeks ago Hexo cancelled guidance of $400 million in top line revenues for 2020 following weaker than expected sales in Canada. Earlier this week, the firm also delayed its earnings, initially expected to be released in pre market hours today, in favour of reporting a financing of up to $70 million in unsecured convertible debentures.
The firm has repeatedly blamed slower than expected provincial retailer rollouts as a pressure point in the Canadian market, as well as pricing pressure faced nationally as more cultivation operations come online. Further compounding the problem is the perceived delay in derivative cannabis products, such as beverages and vapes.
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Included within the headcount reduction is two executives, including the Chief Manufacturing Officer Arno Groll, and Chief Marketing Officer Nick Davies. Their departure follows that of Chief Financial Officer Michael Monahan who left the company at the start of October.
Hexo Corp as of its latest filings employed 1072 people, including approximately 250 employees that joined the company with the acquisition of Newstrike Brands. The firm indicated that the headcount reduction is necessary if the company wishes to obtain profitability and long term stability.
Hexo Corp is currently trading at $2.59 on the New York Stock Exchange.
Information for this briefing was found via Sedar and Hexo Corp. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
