Charlotte’s Web leans on D2C sales to maintain revenue in tough quarter

BOULDER — Sales were relatively flat for Charlotte’s Web Holdings Inc. (OTCQX: CWBHF) in the third quarter of fiscal year 2020 despite the COVID-19 pandemic reducing the opportunity for in-store sales of the company’s CBD products. 

The firm credits strong increases in direct-to-consumer sales for its ability to hold the line on its bottom line. Still, the firm lost money in the quarter.

Charlotte’s Web posted a net loss of $6.7 million on sales of $25.2 million during the quarter, compared with a net loss of $1.3 million on $25.1 million in sales during the same period last year.

“Lower than expected revenue due to the pandemic has resulted in an increase in operating expenses as a percent of revenue,” according to the firm’s earnings report filed this week with the U.S. Securities and Exchange Commission. “In response, management has taken actions to better align operating expenses and initiated an expense optimization program targeting reductions of more than 10% of the consolidated expense run rate by the end of 2020.”

The most recent quarter saw direct-to-consumer sales increase 27.5% year-over-year and contribute 66.3% of Charlotte’s Web’s revenue.

“The strength of our leading ecommerce sales continued to offset slower B2B retail sales during the pandemic,” CEO Deanie Elsner said in a prepared statement. 

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