MedMen Pre-Announces Large Sales Decline and Massive Tax Bill

Through an SEC filing announcing its inability to file its 10-Q on a timely basis, MedMen (CSE: MMEN) (OTC: MMNFF) disclosed that its financials deteriorated in its fiscal Q2. It suggested that revenue was $33.8 million, which is a decline of 23% from a year ago and below the analyst consensus of $38.8 million. In its fiscal Q1, it reported revenue of $35.6 million. It blamed the weakness on COVID-19’s impact on retail traffic and tourism in California and Nevada. It noted substantial growthin Florida and Illinois compared to a year ago.

MedMen expects its operating loss in Q2 to improve to $42.9 million compared to $69.3 million a year ago, with gross margin improving to 39.9% from 29.1% and SG&A declining by 47.2% from the year-ago quarter. The operating loss is a sharp deterioration from Q1’s $8.1 million.

The company expects its net income to deteriorate sharply, with a net loss of $69.6 million compared to $56.7 million a year ago, citing a $38.2 million increase in its provision for income taxes driven by 280E.

The company will be hosting a call on February 16th.

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Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online communities 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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