CBD pioneer Charlotte's Web saw its 2023 sales shrink by more than 14% over the previous year. But the company cut more than $30 million from its annual losses.

Hank Schultz, Senior Editor

March 22, 2024

3 Min Read

At a Glance

  • Charlotte's Web brought in $63.2 million in 2023, compared to $74 million in 2022.
  • But cut its annual loss to $23.8 million, down from $59.3 million
  • A plan refocusing on improving basic business operations has been put in place under the new CEO.

Charlotte’s Web reported a reduced loss in its 2023 year-end earnings report, which was achieved through ongoing cost cutting even as overall revenue continued to shrink. 

The pioneering CBD products company has suffered from market instability along with many of its peers. While the 2018 U.S. Farm Bill legalized trade in industrial hemp derivatives, the refusal of the Food and Drug Administration to regulate the sector has put a severe damper on what was once a skyrocketing market. 

Entire sector has been hollowed out 

According to Bethany Gomez, co-founder and managing director of Brightfield Group, a market intelligence firm, CBD in 2019 was the fastest-growing natural product of all, notching 562% year- over-year growth and hitting a market size of more than $4 billion. 

Since then, the FDA freeze-out along with other headwinds have stopped the category in its tracks.  The CBD market experienced intense price competition as thousands of brands struggled to survive in a shrinking market (many didn’t). 

And, with no recognition from FDA, almost all mass market retailers refused to stock ingestible products. Wegman’s, a privately held 109-store supermarket chain based on the East Coast, was the lone exception. But the chain had reportedly stopped selling CBD in late 2023, because of high amounts of theft, slow sales and the complication of dealing with individual state laws that were enacted in the absence of federal regulation. 

In addition, the complete lack of FDA oversight has led to many products of questionable quality entering the market, Gomez said, which has eroded consumer confidence. 

Plan to cut costs, improve business performance 

How has Charlotte’s Web coped? According to CEO Bill Morachnick, the company has enacted a turnaround plan that he said will turn the momentum in the right direction. 

Dubbed “True North,” the plan focuses on the block and tackling aspects of running a CPG business. Morachnick said the company is improving its ecommerce shopping experience and strengthening relationships with its retail partners. In addition, the company is investing in more advertising on various platforms and will continue to look for cost-cutting opportunities. 

"True North's objective is to enhance the overall consumer journey and drive sustainable growth. It combines an operational and data-driven emphasis with the integration of marketing, sales, innovation, technology, and education, all centered around our consumer and valued retail partners," Morachnick said in a press release

The plan was put into place shortly after Morachnick took the reins in September. Much of his prior business experience was in the tobacco sector. 

Earnings details 

For the full fiscal year 2023, Charlotte’s Web recorded $63.2 million in revenue, compared to $74 million in 2022, or a decline of 14.8%. But the company shaved its loss to $23.8 million from $59.3 million in 2022. Charlotte’s Web noted that 2022 featured a one-time charge of a $21.5 million inventory write-off, which makes the improvement in the loss figure less dramatic. 

The company’s stock price has suffered along with the fortunes of the category. During the brief CBD heyday in early to mid 2019, after the provisions of the 2018 Farm Bill took effect, shares of Charlotte’s Wed traded for more than $21. The company’s shares now trade for 17 cents a share.  

 

 

 

About the Author(s)

Hank Schultz

Senior Editor, Informa

Hank Schultz has been the senior editor of Natural Products Insider since early 2023. He can be reached at [email protected]

Prior to joining the Informa team, he was an editor at NutraIngredients-USA, a William Reed Business Media publication.

His approach to industry journalism was formed via a long career in the daily newspaper field. After graduating from the University of Wisconsin with degrees in journalism and German, Hank was an editor at the Tempe Daily News in Arizona. He followed that with a long stint working at the Rocky Mountain News, a now defunct daily newspaper in Denver, where he rose to be one of the city editors. The newspaper won two Pulitzer Prizes during his time there.

The changing landscape of the newspaper industry led him to explore other career paths. He began his career in the natural products industry more than a decade ago at New Hope Natural Media, which was then part of Penton and now is an Informa brand. Hank formed friendships and partnerships within the industry that still inform his work to this day, which helps him to bring an insider’s perspective, tempered with an objective journalist’s sensibility, to his in-depth reporting.

Harkening back to his newspaper days, Hank considers the readers to be the primary stakeholders whose needs must be met. Report the news quickly, comprehensively and above all, fairly, and readership and sponsorships will follow.

In 2015, Hank was recognized by the American Herbal Products Association with a Special Award for Journalistic Excellence.

When he’s not reporting on the supplement industry, Hank enjoys many outside pursuits. Those include long distance bicycle touring, mountain climbing, sailing, kayaking and fishing. Less strenuous pastimes include travel, reading (novels and nonfiction), studying German, noodling on a harmonica, sketching and a daily dose of word puzzles in The New York Times.

Last but far from least, Hank is a lifelong fan and part owner of the Green Bay Packers.

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