CELLULAR Goods has revealed its first ever sales figures after launching its inaugural product range in December last year.
The young British CBD company released its interim results for the six months to February 28 yesterday, shedding light on a period of major change in which it welcomed a new CEO, underwent a significant strategic review, and generated its first revenues.
However, the reporting period and months proceeding have also seen Cellular Goods face numerous ‘macro-economic and operational headwinds’ which it says will see it achieve lower than expected sales over the current period.
With cannabis stocks across the globe facing continued downward pressure, the company’s modest revenues, growing losses and lower sales expectations have so far failed to rescue the its share price from near all-time lows.
Inaugural Sales Figures
On February 21 Cellular Goods released a trading update stating that its first months of sales saw total revenues come ‘below internal forecasts’, revealing little in the way of details, leaving some investors to assume the worst.
For the six month reporting period, which includes three months of sales, Cellular Goods says its revenues came to £13,058.
This included sales of its CBG face serum, face-oil and after-shaving moisturiser, alongside its ingestibles range including CBD tinctures, sprays and capsules, which were removed from sale at the behest of Trading Standards only after the reporting period.
Cellular Goods CEO Anna Chokina, who joined the company just days after it launched its first products, said the figures represented a company ‘still in its infancy’, adding that ‘based on (her) industry experience, establishing a new consumer goods company will require time and investment while managing our cost base.’
Its update also points to the fact that these sales represent results from a ‘soft launch’, occurring before its multichannel marketing push, which it says has driven ‘encouraging results’ for sales of its skincare and ingestibles ranges in the second half.
However, as mentioned in its February update, Cellular Goods says product sales have been ‘significantly hampered’ by Facebook, Instagram and Google’s decision to prohibit the advertising of any ‘cannabis derived’ products on their platforms.
While this is nothing new for the CBD industry, the company cites this as an ‘unexpected’ hurdle, suggesting it had assumed that as its products are lab-made and not technically derived from cannabis it should have been able to circumvent these blanket bans.
Alongside the £13k sales, Cellular Goods reported a pre-tax loss of £2.389m, up 12% from a £2.12m loss a year earlier.
Its net cash as of May 30 2022 was £5.528m, down from £7.73m as reported on 18 February 2022, suggesting a burn rate currently of around £650k per month.
According to the company, these challenges mean ‘the management team faces the difficult task of striking a balance between managing company costs while continuing with investment in the business to deliver long term growth.’
The current period will represent Cellular Goods’ first full interim of sales since its inception, driven by a fully fledged marketing drive and a presence on Amazon.com.
Although it has launched a new face serum since the reporting period, it has also seen its entire ingestibles range pulled from sale by Trading Standards, after a controversial ruling by the FSA.
Cellular Goods confirmed to BusinessCann recently that it will continue to pursue the sale of ingestible products, an intention it has further solidified in its interim results.
“The confusion and uncertainty caused by FSA policies is disappointing and we will continue to press our case to be allowed to sell our ingestible products.”
In light of reduced product range, the company says ‘sales volumes and turnover in the second half are expected to ramp up at a slower rate than initially anticipated, though expected to increase from the first half’.
It added that it expects a ‘step-up increase in annual sales next year as the investment and actions being implemented generate strong momentum’, and it remained ‘cautiously optimistic about its long-term prospects’.
Ms Chokina echoed this, stating: “We are also facing significant headwinds to building growth momentum but the building blocks to improve our performance have now been laid. As a result, I expect the benefits of our strategy to become evident from next year when we expect trading conditions to normalise and our greater focus on brand-building and marketing to start paying off.”
In the second half of this year, Cellular Goods says it plans to launch four new products to ‘broaden its skincare range’, and additional new ‘travel sizes’ will launch this year.
However, its next major product release, the Function Better after-sport recovery range it hopes will ‘open up the company to new consumer segments’, is not due to launch until 2023.