HempFusion Wellness Inc. (TSX:CBD.U) (OTCQB:CBDHF) (FWB:8OO) (“HempFusion” or the “Company”), a leading health and wellness company offering premium probiotic supplements and products containing CBD, today announces Project OPTIMIZE, a new initiative approved by the board of directors of the Company to optimize operations and lower costs by up to $4 million annually. Project OPTIMIZE will focus on the consolidation and elimination of common expenses among the Company’s family of brands including HempFusion, Sagely Naturals, Apothecanna and Probulin Probiotics. Starting in the first quarter of 2022, this initiative, in conjunction with the Company’s strong revenue growth, is expected to help drive the business towards profitability.
Project OPTIMIZE is driven by three major initiatives:
- Workforce Optimization: Beginning December 2021, certain duplicated positions across the brands will be eliminated as the Company proceeds with a consolidated enterprise approach. After acquiring Sagely Naturals and Apothecanna, and to a lesser extent Probulin Probiotics, the Company operated on a decentralized model, allowing each brand to continue to perform and grow without disruption. After months of careful planning, the business will now operate as an enterprise, with each brand maintaining a brand manager but reporting into a consolidated management team. The new organizational alignment will eliminate several redundant positions, while still providing each brand manager with incentives to grow their specific brand. This initiative is expected to drive over $2.5 million of annual cost savings.
- Supply-Chain Optimization: HempFusion is in the final stages of consolidating and optimizing its supply chain, taking advantage of its larger operating scale to drive cost savings across the business. This will include but is not limited to: consolidating warehouses and moving all of the shipping operations under one roof at the Company’s Topeka, Kansas facility; enterprise-wide purchasing of packaging materials; and enterprise-wide buying of raw materials. This initiative is expected to drive over $1.0 million of annual cost savings.
- Marketing Optimization: HempFusion plans to unify its marketing, branding and digital efforts across its family of brands to help drive further enterprise efficiencies, and drive an enterprise-focused approach to growing the business. Certain marketing functions that were previously outsourced to third-party agencies will be brought in-house, and brand agencies will be consolidated to drive further cost savings. As well, the Company will work with its marketing partners to drive group buying of advertisements, including direct buys. This initiative is expected to drive over $500,000 of annual cost savings.
“This past year included several significant milestones for HempFusion, including the acquisition of two very strong brands in Apothecanna and Sagely Naturals. As we progressed through the integration process, we identified several optimization opportunities to drive efficiencies and help achieve our goal of near-term profitability,” said Jason Mitchell, N.D., HempFusion’s Co-Founder and Chief Executive Officer. “Today’s announcement reflects our ongoing hard work to build shareholder value as we strive towards profitable growth. The opportunities ahead of us are immense and will also benefit from our new, leaner cost structure and enterprise-wide focus. We remain committed to ensuring that our current and future initiatives provide healthy returns-on-capital, and we look forward to updating our shareholders about our progress in 2022 and beyond,” continued Dr. Mitchell.
Retail Update
HempFusion is a leading health and wellness company that continues to grow it’s probiotic, CBD and non-CBD OTC topical pain businesses and expand it’s retail distribution initiatives. The company has already exceeded its 2021 target for new doors of 2,000, adding over 3,000 doors and counting. This includes the Company’s wholly-owned subsidiary, Sagely Enterprises, Inc. (“Sagely Naturals”), now having up to 7 SKUs being carried across 1,200 stores of one of the leading grocers in the United States, Kroger, as well as distribution in approximately 1200 Target stores with its highly anticipated exclusive launch of non CBD OTC Pain relief topicals. HempFusion proudly launched its CBD ingestibles (75 stores) and OTC Topicals into 400 Southeastern Grocers, Inc.’s Winn-Dixie stores across the Southeast United States and expanded its distribution footprint with Publix grocery stores. HempFusion also launched into Berkshire Grocery with its top selling OTC Pain Relief Cream while Probulin added distribution this past October at Weis Markets locations.
With the end of 2021 fast approaching, the Company is pleased to provide an updated view on expected new retail doors for 2022. During 2022, HempFusion anticipates acquiring between 3,000 and 4,000 new retail doors, with the focus remaining in the Food, Drug and Mass (FDM) channel. This would put total company estimated retail distribution to just over 18,000 retail doors across the United States. This continued push into retail is expected to position the Company well for potential future regulatory change and is above and beyond additional cross-sell opportunities that remain across the Company’s portfolio of leading health and wellness brands.
“We made incredible progress on our retail distribution initiatives in 2021 and continue to see significant, additional growth opportunities in 2022 and beyond,” said Jon Visser, HempFusion’s Chief Operating Officer. “Our new enterprise-focused approach should provide immediate benefits for our retail expansion initiatives, and we expect active discussions with several large FDM retailers across the US to contribute to our 2022 goals. Our leading position on the regulatory side has provided us credibility with large national US retailers. As the regulatory environment continues to evolve, we anticipate our significant distribution presence will set the Company up for continued significant future growth,” continued Mr. Visser.
