Aurora Cannabis announced early Tuesday that a new round of personnel cutbacks will be undertaken, including plans to close down five locations in the next six months as the ongoing global health crisis dries the cash-strapped cannabis market.
For many marijuana producers in Canada, which legalized the recreational use of the commodity in October 2018, sales have been parched as a result of fewer-than-estimated retail shops, falling rates on the black market, and weak growth outside of the country.
Aurora Cannabis shares were up nonetheless early Tuesday after news it was cutting around 700 employees, closing five production plants, and taking a $60 million charge for the current quarter ending June 30.
As for the work retrenchments, the company disclosed there will be around a quarter of the reduction in its sales, general and administrative headcount most with immediate effect, and about 30 percent cut in production workers in the next two quarters.
The move, according to Aurora Cannabis executive chairman and interim CEO Michael Singer, hasn't simply been a cost-reducing initiative. Singers said they have carried out a critical realignment of operations to safeguard the company's position as "a leader in key global cannabinoid markets, most notably in Canada" Tara Deschamps of The Canadian Press wrote, as posted in Global News Canada.
Aurora Cannabis announced the resignation of founder and CEO Terry Booth in February, including 500 job cuts and impairment charges as the company received wide criticisms for its aggressive global expansion in the midst of questionable demand.
Other big-name pot companies including Tilray Inc, Canopy Growth, Sundial Growers Inc, and Hexo Corp have also slashed their headcount, underscoring a push towards quicker sales as investors became restless.
Aurora also estimates to generate a charge of around $140 million in connection to inventory and near-term demand projections. The grower is seen to post its fourth-quarter results by early September, company executives disclosed.
Shares of Aurora have dropped 42 percent for 2020, compared with declines of 3 percent and 8 percent for the S&P 500 index and Dow Jones Industrial Average, respectively.
Aurora has been maintaining a tight rein on its expenditures and last month, it doubled down on measures to keep capital expenses under C$100 million in the second half this year while pointing out it was on course to be profitable in the next fiscal year.
Aurora's retrenchment comes as the pot market is ravaged by COVID-19, which caused several producers to pull the plug on operations to curb the spread of the disease. Cannabis firms were facing headwinds before the crisis, even as they began launching the country's first legal beverages, edibles, and vapes.
