Sundial Growers Inc (NASDAQ: SNDL) quietly issued a response this morning to a report made by MarketWatch on Friday, indicating that the supplier had had roughly $2.5 million in inventory returned by Zenabis Global (TSX: ZENA) earlier this year. Sundial had not previously reported the event.
Within the article, it was identified that the product produced by Sundial Growers was returned due to quality concerns. According to MarketWatch sources, the product had visible mold, bits of rubber gloves, and other non-cannabis materials contained within its contents. As a result, Zenabis had to return the product to the supplier, which it then subsequently blamed as the reason for not hitting its cannabis sales targets for the quarter.
Sundial Growers recently issued its latest financials for the period ended June 30, 2019, wherein it failed to mention the return of 554 kilograms of product. MarketWatch estimates peg the value of the returned product at approximately $2.5 million, which would represent approximately 12.3% of last quarters sales. The sale is believed to have occurred during the second quarter, while the rejection of product is believed to not have taken place until July, placing the return of product in the third quarter of 2019.
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Sundial Growers, in its statement filed this morning with the SEC, stated that factual inaccuracies were present within the MarketWatch report, however it failed to identify what specifically was inaccurate. Instead, it stated that it can’t comment on the specific agreement between themselves and the licensed producer. While no impact was made to the second quarter financials, Sundial stated that the impact to the third quarter results will be ‘negligible’.
Sundial Growers is currently trading at $10.60 on the NASDAQ.
Information for this briefing was found via the SEC and Sundial Growers Inc. 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.
