$SGMD revs expected to exceed initial projections: https://finance.yahoo.com/news/sugarmade-discusses-growing-cost-advantages-133000482.html
Sugarmade Discusses its Growing Cost Advantages in Hydroponics Supplies - Announces Strong Preliminary Results for Calendar 2019 Exceeding Internal Forecasts
GlobeNewswire GlobeNewswireNovember 19, 2019
NEW YORK, Nov. 19, 2019 (GLOBE NEWSWIRE) -- via NetworkWire – Sugarmade, Inc. (SGMD) (“Sugarmade”, “SGMD”, or the “Company”), a major supplier to the hydroponic cultivation and hemp sectors, today announces preliminary calendar year to date revenue performance of $26 million and strengthening gross margins. The Company is expecting its recently acquired hydroponics supply operation to produce approximately $32 million for the calendar year. Based on both growing revenues and an expanding sector cost advantage, the Company believes it is well-positioned moving into 2020.
“This business sector is all about robust product sourcing, efficiency in logistics and effective e-commerce programs, not to mention effective placement on Amazon, where we are realizing great success. Our revenue and gross margin production are testaments to the fine job our staff has done relative to these areas,” commented Chief Executive Officer, Jimmy Chan. “Our revenue for this calendar year, as well as our gross margins, have exceeded our internal forecasts. We are especially pleased with how gross margins have remained robust all year and have actually risen over the past few months, bucking the expected seasonal trend in this subsector of the agricultural supply industry. We believe we are especially well set up moving into 2020, with not only e-commerce, but also brand and logistical advantages over the competition.”
The Company’s online strategy, especially relating to placement on Amazon.com, has proven to be a significant success with the ipower and Simple Deluxe product lines now becoming “Best Seller” brands on the e-commerce site. Over the past year, the Company has continued to increase the number of its products available via the Amazon sales channel. As a result, the product lines now hold the Amazon “Best Rated in Greenhouse Ventilation Equipment.”
In addition, to growth via the Amazon channel, the operation has also been very successful via its own logistic, e-commerce, and fulfillment efforts. Management believes the Company now has a cost advantage by way of its 55,000-square-foot fulfillment center located in Irwindale, California. Located strategically along a logistics corridor, which directly connects to the Port of Long Beach, the Company is able to import and fulfill customer deliveries from a very low-cost position, especially relative to orders placed by the growing number of California-based customers. Internal Company analysis places this cost savings at an approximate 65% cost advantage compared to traditional warehousing and logistics structures.
The Company is extremely pleased with the seasonality trends relative to both revenues and gross margins. Despite a normal peak sales season in the agricultural sectors centering around late Spring as cultivators prepare for peak planting season, the Company has been able to maintain sequential monthly revenue growth over the past few months with revenue production for each of the months of October and November equaling or exceeding all other months, except for the expected peak planting month of May. Combined gross margins for the months of August, September and October at nearly 36% easily exceeded the average for the first seven months of the calendar year, reflecting both revenue strength and an increasingly favorable product mix of newly introduced products, which are increasingly being accepted by the Company’s customers.
The Company attributes much of the revenue growth and strong margin successes to its continually evolving online strategy and to its strong product sourcing capabilities. Mr. Chan continued, “Our online strategies have been on point all year, allowing us to keep customer acquisition costs in-line, while strongly growing revenues. We have also been highly successful in sourcing products. When products demanded by our customers could not be procured at reasonable prices, our staff innovated by initiating programs directly with manufacturers. These internally sourced products have been some of our best performers. We then utilize our considerable logistics operations to get these products into the hands of our customers. With a strong cost advantage, we have been able to keep our prices low, which has increased customer loyalty, allowing us to capture a growing market share at numerous important cultivators. We have now exceeded one of our long-term goals by surpassing the important $1,000,000 annual per-employee revenue market. We are looking forward to continued growth in 2020.”