COVID-19 restrictions, US unrest hit Ecofibre hemp sales
4 June 2020, Written by Matt Ogg
Three weeks after securing a breakthrough deal with US pharmacy chain CVS, hemp nutraceuticals company Ecofibre (ASX: EOF) has withdrawn guidance due to the unpredictable impact of civil unrest on sales.
Ecofibre's Ananda Hemp range of topical creams and salves weren't going to be offered at CVS until December, but the group claims reordering from other distributors, purchasing groups and pharmacies has become inconsistent.
This is due to a challenging retail environment stemming from prolonged restrictions, and more recently the civil unrest that has erupted in the US since the death of George Floyd in police custody.
"In the US, the early stages of re-opening the economy began in the last two weeks," says Ecofibre CEO Eric Wang.
"However, this re-opening is being impacted by a series of very unfortunate and sad incidents that have led to civil unrest across most major US cities.
"As a result of these events, Ecofibre's major markets will be impacted for an unknown period of time."
Ecofibre emphasises its strong confidence in the US hemp-derived CBD (Cannabidiol) market, and looks forward to a return to a level of normality in due course.
"The Company continues to work towards achieving our expected accounting profit, but due to the high degree of uncertainty on business re-openings that impact US sales, it is appropriate to withdraw second half guidance at this time."
The group's pivot to personal protective equipment (PPE) is showing results for Ecofibre's Hemp Black line of hemp textiles, with sales of more than 67,000 washable masks whose yarn is infused with CBD and copper to provide anti-microbial and anti-odor properties.
Produced by Ecofibre's manufacturing partner TexInnovate, revenues reached $1.2 million in May with a 50 per cent gross margin.
The manufacturing schedule will produce the same amount for the month of June before increasing capacity in July. A second line of PPE, Hemp Black Fusion/Flex Gaiter (neck gaiter), is expected to be launched this month.
The group's Ananda Food segment continues to see steady via Woolworths and its Macro branded hemp seed and protein powder.
Updated at 9:45am AEST on 4 June 2020.
Author: Matt Ogg