Markets

Marijuana Company HEXO Slashes 200 Jobs

October has been a brutal month for HEXO (NYSE: HEXO). On Oct. 4, the cannabis producer's chief financial officer resigned. Apparently, HEXO didn't realize that hiring a U.S.-based CFO wasn't the best choice for a Quebec-based company.

Then on Oct. 10, HEXO announced preliminary fourth-quarter results. Investors punished its stock after the company said it expected net revenue of only $14.5 million to $16.5 million, which was well below its prior guidance. "While we are disappointed with these results, we are making significant changes to our sales and operations strategy to drive future results," CEO Sebastien St-Louis said at the time. A folded dollar bill next to a declining stock chart

Image source: Getty Images.

On that same day, HEXO also withdrew its financial forecast for fiscal 2020. The company said regulatory uncertainty surrounding cannabis derivatives made it impossible to accurately predict its results for the coming year. "Withdrawing our outlook for fiscal year 2020 has been a difficult decision," St-Louis said. "However, given the uncertainties in the marketplace, we have determined that it is the appropriate course of action."

He went on to suggest that HEXO was considering cost cuts: "We are also placing a greater focus on profitability. We are evaluating our plans and operations to see where we can be even more efficient."

We now know what those cost cuts will entail. HEXO announced today that it is "rightsizing its operations" and reducing its workforce. Approximately 200 people will lose their jobs, including chief manufacturing officer Arno Groll and chief marketing officer Nick Davies. 

"This has been my hardest day at HEXO Corp.," St-Louis said in a press release. "While it is extremely difficult to say goodbye to trusted colleagues, I am confident that we have made sound decisions to ensure the long-term viability of HEXO Corp."

St-Louis said that the job cuts would help to better align the company's cost structure with the amount of revenue it expects to generate in 2020. He noted that regulatory delays, slower-than-expected store openings, and pricing pressure on some cannabis products are all expected to weigh on results in the coming quarters.

HEXO is scheduled to release its complete fourth-quarter financial results on Oct. 28. Itsearnings conference callis Oct. 29 at 8:30 a.m. EDT, during which management may provide further commentary on cost reductions and operational plans for the year ahead.

Here's The Marijuana Stock You've Been Waiting For
A little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

And make no mistake – it is coming.

Cannabis legalization is sweeping over North America – 10 states plus Washington, D.C., have all legalized recreational marijuana over the last few years, and full legalization came to Canada in October 2018.

And one under-the-radar Canadian company is poised to explode from this coming marijuana revolution.

Because a game-changing deal just went down between the Ontario government and this powerhouse company...and you need to hear this story today if you have even considered investing in pot stocks.

Simply click here to get the full story now.

Learn more

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

HEXO

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More