Shares of Sundial Growers Inc. (SNDL) took a hit this week amid yet another cannabis C-suite shakeup. Yesterday the company announced a handful of executive changes, which includes the departure of its CEO and COO, in addition to a cost-cutting program.
Torsten Kuenzlen resigned as CEO effective immediately, and will also step down as a director. Current board member Zach George will take over as CEO. Executive chairman Ted Hellard will also resign, but remain on the board and continue to head the M&A committee.
COO Brian Harriman will be leaving the company and his portfolio will be transitioned to Andrew Stordeur. Currently president of Canadian operations, Stordeur will become COO.
“Sundial’s talent, state-of-the-art facilities and disciplined consumer product focus will be the drivers of its future success. As the market evolves, these attributes, along with our flexible operating structure, position us for long-term growth and sustainable value creation for our shareholders,” said Zach George.
The cost-cutting program comes about as a response to slower-than-expected rollouts of new stores in Canada. Sundial is aiming to realign its product lines and improve efficiency.
The cost cuts are expected to generate savings between C$10 million ($7.5 million) and C$15 million in fiscal 2020. Part of the cost cutting includes the implementation of numerous streamlining and efficiency initiatives.
Initiatives include a heightened discipline in cost management, workforce optimization, the enhancement of facility workflows and processes, and the realignment of product lines and product formats into areas of greater demand.
The company’s brief history
Sundial Growers has a market value of $356 million. The company made waves following its 2019 IPO, but shortly after lost all of its gains as a result of Canadian supply issues.
Additionally, Sundial has positioned itself primarily as a wholesale cannabis supplier. This is a lower-margin strategy compared to selling products in the adult-use market. The company says that it intends to transition away from the wholesale business, but it’s anybody’s guess as to how long that will take.
Sundial has already launched in the BC market with its house brand: “Sundial.” The product line encompasses five experiences: Calm, Ease, Flow, Lift and Spark. Sundial also owns premium cannabis brands, Top Leaf and BC Weed Co.
The company strives for a reputation of methodically crafting small batches of cannabis that consistently yield high-quality. Currently, the company operates facilities in Canada and the United Kingdom and employs nearly 1,000 employees globally.
Sundial’s reputation has been built on growing ‘craft-at-scale’ cannabis, with a nod to its modular facilities and award-winning genetics. The company’s flagship production facility is in Olds, Alberta, with a second facility in Rocky View, Alberta. A new facility in Merritt, British Columbia is in the works.
Sundial grows hemp, ornamental flowers and edible herbs in the United Kingdom, throughout 1.5 million square feet of state-of-the-art indoor facilities. The company’s “Bridge Farm” brand has three facilities in Spalding and another under construction.
Adult-use consumers can purchase Sundial products through British Columbia’s Liquor Distribution Branch (LDB) online store or through brick-and-mortar retail stores. The BC Liquor Distribution Branch is the only wholesale distributor and public retailer for non-medical marijuana in BC.
SNDL shares have dropped 14% so far in 2020.
Sundial Growers Inc. (SNDL) was trading at $1.21 per share on Friday afternoon, down $0.30 (-19.87%). Year-to-date, SNDL has declined N/A%, versus a 21.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Eric Bowler
Eric Bowler is an accomplished journalist providing in-depth insights for more than two decades. Over the past several years his focus has been on the marijuana industry, with a special interest in cannabis growth stocks. His daily coverage of the industry keeps him on top of the key trends with the goal of helping investors make well-informed decisions.