Sugarmade Discusses its Growing Cost Advantages in Hydroponics Supplies - Announces Strong Preliminary Results for Calendar 2019 Exceeding Internal Forecasts
NEW YORK, NY -- November 19, 2019 -- InvestorsHub NewsWire -- Sugarmade, Inc. (OTCQB: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.”
About Sugarmade, Inc.
Sugarmade, Inc. (OTCQB: SGMD) is a product and branding marketing company investing in operations and technologies with disruptive potential. The Company is becoming a leading supplier to the growing hemp industry and is benefitting from the growth of the hydroponic marketplace. The Company is in the process of acquiring several leading hydroponic and agricultural supply companies that are currently producing in excess of $70 million in annual revenues. Sugarmade is also an investor in fast growing Hempistry, Inc., a Kentucky-based, operates Zenhydro.com a leading online provider to Hydroponic industry and Carryoutsupplies.com a leading provider to the quick service restaurant industry.
FORWARD-LOOKING STATEMENTS: This release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements also may be included in other publicly available documents issued by the Company and in oral statements made by our officers and representatives from time to time. These forward-looking statements are intended to provide management's current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. They can be identified by the use of words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "would," "could," "will" and other words of similar meaning in connection with a discussion of future operating or financial performance. Examples of forward looking statements include, among others, statements relating to future sales, earnings, cash flows, results of operations, uses of cash and other measures of financial performance.
Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and other factors that may cause the Company's actual results and financial condition to differ materially from those expressed or implied in the forward-looking statements. Such risks, uncertainties and other factors include, among others. such as, but not limited to economic conditions, changes in the laws or regulations, demand for products and services of the company, the effects of competition and other factors that could cause actual results to differ materially from those projected or represented in the forward looking statements.
Any forward-looking information provided in this release should be considered with these factors in mind. We assume no obligation to update any forward-looking statements contained in this report.
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