Cannabis accessories firm Humble & Fume updates quarterly expenses

Humble & Fume reported its second-quarter fiscal 2023 financial and operating results for the six and three months ended December 31. "I want to acknowledge the effort made by our prior leadership team," said CEO Jakob Ripshtein. "The past twelve months was a challenging adjustment period for our business." In Q2, the company saw a quarter-over-quarter revenue increase of 177% in its California cannabis distribution business. Operating expenses decreased by $2M or 30% year over year in the North American accessories and Canada cannabis business and decreased by $3.5M or 27% for the six months year over year. However, increased costs of $4.4M and $8.5M relating to expanding the California cannabis distribution business for three and six months, respectively, offset these savings. "The progress we have made in addressing our inventory concerns is encouraging, but we are confident there is more we can do in this area," said Ripshtein. Gross margin improved to 17.1% compared to 11.9% in Q1 2022, thanks to driving efficiencies in the North American accessories business that reduced overall inventory by 14% or $1.5M. Ripshtein continued, "Our focus on margin-enhancing products and opportunities includes the introduction of a proactive, rigorous approach to address inventory levels further. We will concentrate on high-velocity, margin-enhancing SKUs, which are expected to provide working capital and gross profit benefits." The company’s new leadership team is focused on accelerating the growth of the cannabis business, driving change management to develop effective and efficient operations, margin enhancement within the North American accessories business, and prioritizing white-label offerings to deliver a differentiated service to customers that generate accretive margins.