Amid a pullback in company spending, layoffs, and other cost-cutting measures, leadership at Ayr Wellness (CSE: AYR.A) (OTCQX: AYRWF) discussed how they’re still pushing to rapidly expand the business’s retail footprint in several key U.S. markets while also hitting pause on external mergers and acquisitions.
Ayr has cut “over 400 positions over the course of the year,” CFO Brad Asher said during the company’s Q2 earnings call last week, while the company also hasn’t “been active on M&A.”
“We feel we’re built for growth with our (adult-use) catalyst in Florida, Ohio, Pennsylvania. So, it’s really not something that we’re looking at in terms of going out and acquiring new states or new companies,” Asher said, referring to widespread expectations that those three states will legalize recreational marijuana in the near future.
Additionally, CEO David Goubert said that several of Ayr’s 10 Florida dispensaries that opened in 2023 “haven’t ramped as fast as we want them to ramp,” leading the business to roll back its schedule for more store debuts in 2024.
“I’m not going to say we’re pausing, but we’re going not as fast as we had planned on those stores for the second half of the year” in that state, Goubert said .
“We’ve already opened 10 stores this year, we’re planning on having another two or three by the end of this year. That would get us, like say, to 64 stores by the end of this year,” Goubert said. “And then we’re still in the mindset that we’ll open in the range of 10 stores next year and get to 75 by the end of ’24.”
The other reason for slowing down a bit, Goubert said, is to ensure that new store rollouts in three other markets also get the resources they need to succeed.
“We also want to open pretty fast on the stores in Ohio, in Connecticut, and in Illinois. And that’s seven stores, coming up between the end of this year and I would say the very beginning of ’24 in these three states. And for us, it’s important to have that focus for the remaining of the year,” Goubert said.
“So, it’s a bit of a making sure we’re having the right recipe on ramp-up of new stores” in all four states at the same time. In other words, a financial and managerial balancing act.
In the current industry climate, with capital expensive and investors hard to come by, the bottom line is simple when it comes to both expansion and managing operations, Goubert said.
“Resources are limited, obviously, and we want to make sure that we put our resources on the right thing,” Goubert said.
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