GrowGeneration Reports 23.5% Decline in Q2 2025 Net Sales, Acquires Hydro Generation Inc.

GrowGeneration Corp. reported a significant decline in financial performance for the second quarter of 2025, with net sales of $40.96 million, down 23.5% from $53.54 million in the same period last year. For the first half of 2025, the company generated $76.67 million in revenue, a decrease of 24.4% compared to $101.42 million in the first half of 2024. The decline in sales was primarily attributed to the closure of 19 retail locations in 2024 as part of a strategic restructuring plan aimed at improving profitability. The company's gross profit also fell to $11.59 million for the quarter, down 19.6% year-over-year, while the gross profit margin increased slightly to 28.3%.

Operating expenses decreased to $16.87 million in the second quarter, a reduction of 19.4% from $20.94 million in the prior year, reflecting the impact of the company's restructuring efforts. Despite the reduction in expenses, GrowGeneration reported a net loss of $4.81 million for the quarter, compared to a loss of $5.90 million in the same period last year. The loss per share was $0.08, consistent with the previous year. The company noted that the decrease in net loss was primarily due to lower operating expenses and improved gross profit margins driven by a higher sales mix of proprietary brands.

In terms of strategic developments, GrowGeneration completed the acquisition of Hydro Generation Inc. (Viagrow) on June 6, 2025, for a total consideration of $1.2 million. This acquisition is expected to diversify the company's product offerings in the gardening and hydroponic equipment sector and expand its customer base through relationships with major retailers and e-commerce platforms. The company currently operates 29 retail locations across 11 states and continues to evaluate its geographic footprint for potential redundancies.

Operationally, the company reported an increase in accounts receivable, which rose to $10.43 million as of June 30, 2025, compared to $7.36 million at the end of 2024. The increase in accounts receivable reflects the company's efforts to manage its credit losses effectively. Additionally, GrowGeneration's employee headcount has been adjusted as part of its restructuring plan, which included workforce reductions aimed at streamlining operations. The company anticipates that these changes will lead to annualized cost savings of approximately $12 million.

Looking ahead, GrowGeneration remains cautious about market conditions, particularly in light of recent changes in U.S. trade policy that could impact costs. The company is actively monitoring these developments and exploring strategies to mitigate potential risks. Management believes that the restructuring efforts, combined with the recent acquisition, position the company for improved performance in the future, although it acknowledges the uncertainty surrounding consumer confidence and market dynamics.