Charlotte’s Web looks to management changeup, manufacturing changes to jumpstart turnaround

Charlotte's Web is touting the resume of its new CEO, who the company said will help reinvigorate a brand suffering from falling sales and mounting losses.

Hank Schultz, Senior Editor

November 9, 2023

3 Min Read

Charlotte’s Web is highlighting a management change that the company says will reinvigorate the brand as it reports falling sales and a steep loss. 

In its third-quarter earnings release, the company, which is focused on CBD products, put the spotlight on its new CEO and board director Bill Morachnick, who took the job in September. Morachnick, who previously served as president of Santa Fe Reynolds Tobacco International, was elected to the company’s board in June amid a challenge by several activist investors, which included the company’s co-founders Jesse and Joel Stanley and Major League Baseball, which has partnered with the brand since 2022. 

Firm looks to new CEO for turnaround 

The earnings release said Morachnick “is an accomplished executive with a track record of building premium, differentiated products and brands.” 

“Following less-than-satisfactory third-quarter revenue, we have quickly mobilized a decisive action plan aimed at streamlining the organization to restore growth. We have revamped both our commercial and IT departments and are in the process of upgrading our operational platforms,” Morachnick said. 

Charlotte’s Web recorded $14.3 million in revenue in the quarter, compared to $17 million for the same period in 2022. That represented a 16% drop, and which is part of an ongoing trend. In the third quarter of 2021, for example, the company recorded $19.5 million in revenue. 

Related:FDA objects to Charlotte’s Web safety notice for hemp extract

Most of the revenue slide came from eroding direct-to-consumer sales. Charlotte’s Web sold $9.7 million worth of products direct to consumers in the quarter, compared to $11.8 million in sales in this channel in 2022. 

Business-to-business sales fell too, but not by nearly as much: $4.9 million in 2023 compared to $5.2 million in 2022. 

Charlotte’s Web also recorded a steep net loss in the quarter of $15.2 million, compared to a loss of $7.6 million in the same period in 2022. 

Manufacturing brought in house 

Among the changes that the company said will yield positive results in the future is the effort to bring more of the company’s manufacturing in house, to better utilize the capabilities of the plant in Louisville, Colo. Chief among those products is the company’s line of gummies. 

“Gummies represents the largest sales volumes in our business and insourcing will improve capacity utilization and fixed cost leverage, while also optimizing production and supporting long-term operating margins,” said Jessica Saxton, chief financial officer of Charlotte's Web. “We calculate the payback period to be highly favorable, requiring only a modest increase in capital expenditure. In addition, internalizing production will also benefit our R&D, accelerating innovations and speed to market.” 

Traders have yet to punish stock price over earnings miss 

Stock analysts had projected Charlotte’s Web to lose 5 cents a share in the quarter, when in fact it lost 10 cents per share. And the company missed analysts’ projections too of quarterly revenue of about $17 million. Still, the stock market has yet to react in a big way to the earnings news. Charlotte’s Web stock price fell from about 26 cents a share at the beginning of trading on Thursday to about 25 cents at publication time. 

The company’s share price has declined massively over time, however. In August 2019, the company’s stock briefly sold for more than $20 a share. In late April 2022, the company’s share price dipped below $1 a share and has remained in penny stock territory since. 



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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