HempFusion Launches Project OPTIMIZE to Drive $4 Million of Annual Savings

Rhea-AI Summary

HempFusion Wellness Inc. (CBDHF) announced Project OPTIMIZE, aiming to reduce costs by up to $4 million annually. This initiative includes workforce, supply-chain, and marketing optimizations, expected to save $2.5 million, $1.0 million, and $500,000, respectively. The company has expanded its retail presence significantly, surpassing 3,000 new distribution points in 2021 and anticipates adding another 3,000-4,000 in 2022. This growth positions HempFusion for potential profits and strengthens its market position as regulatory changes unfold.

Positive

• Cost savings of up to $4 million annually from Project OPTIMIZE.
• Strong retail expansion, exceeding 3,000 new doors in 2021.
• Projected acquisition of 3,000-4,000 new retail doors in 2022.

Negative

• None.

Provides Corporate Update on Retail Wins, Including the Launch of Sagely Naturals, HempFusion and Probulin in Key US Retailers.

DENVER--(BUSINESS WIRE)-- HempFusion Wellness Inc. (TSX:CBD.U) (OTCQB:CBDHF) (FWB:8OO) (“HempFusion” or the “Company”), a leading health and wellness company offering premium probiotic supplements and products containing CBD, today announces Project OPTIMIZE, a new initiative approved by the board of directors of the Company to optimize operations and lower costs by up to $4 million annually. Project OPTIMIZE will focus on the consolidation and elimination of common expenses among the Company’s family of brands including HempFusion, Sagely Naturals, Apothecanna and Probulin Probiotics. Starting in the first quarter of 2022, this initiative, in conjunction with the Company’s strong revenue growth, is expected to help drive the business towards profitability.

Project OPTIMIZE is driven by three major initiatives:

1. Workforce Optimization: Beginning December 2021, certain duplicated positions across the brands will be eliminated as the Company proceeds with a consolidated enterprise approach. After acquiring Sagely Naturals and Apothecanna, and to a lesser extent Probulin Probiotics, the Company operated on a decentralized model, allowing each brand to continue to perform and grow without disruption. After months of careful planning, the business will now operate as an enterprise, with each brand maintaining a brand manager but reporting into a consolidated management team. The new organizational alignment will eliminate several redundant positions, while still providing each brand manager with incentives to grow their specific brand. This initiative is expected to drive over $2.5 million of annual cost savings.
2. Supply-Chain Optimization: HempFusion is in the final stages of consolidating and optimizing its supply chain, taking advantage of its larger operating scale to drive cost savings across the business. This will include but is not limited to: consolidating warehouses and moving all of the shipping operations under one roof at the Company’s Topeka, Kansas facility; enterprise-wide purchasing of packaging materials; and enterprise-wide buying of raw materials. This initiative is expected to drive over $1.0 million of annual cost savings.
3. Marketing Optimization: HempFusion plans to unify its marketing, branding and digital efforts across its family of brands to help drive further enterprise efficiencies, and drive an enterprise-focused approach to growing the business. Certain marketing functions that were previously outsourced to third-party agencies will be brought in-house, and brand agencies will be consolidated to drive further cost savings. As well, the Company will work with its marketing partners to drive group buying of advertisements, including direct buys. This initiative is expected to drive over $500,000 of annual cost savings.

“This past year included several significant milestones for HempFusion, including the acquisition of two very strong brands in Apothecanna and Sagely Naturals. As we progressed through the integration process, we identified several optimization opportunities to drive efficiencies and help achieve our goal of near-term profitability,” said Jason Mitchell, N.D., HempFusion’s Co-Founder and Chief Executive Officer. “Today’s announcement reflects our ongoing hard work to build shareholder value as we strive towards profitable growth. The opportunities ahead of us are immense and will also benefit from our new, leaner cost structure and enterprise-wide focus. We remain committed to ensuring that our current and future initiatives provide healthy returns-on-capital, and we look forward to updating our shareholders about our progress in 2022 and beyond,” continued Dr. Mitchell.

Retail Update

HempFusion is a leading health and wellness company that continues to grow it’s probiotic, CBD and non-CBD OTC topical pain businesses and expand it’s retail distribution initiatives. The company has already exceeded its 2021 target for new doors of 2,000, adding over 3,000 doors and counting. This includes the Company’s wholly-owned subsidiary, Sagely Enterprises, Inc. (“Sagely Naturals”), now having up to 7 SKUs being carried across 1,200 stores of one of the leading grocers in the United States, Kroger, as well as distribution in approximately 1200 Target stores with its highly anticipated exclusive launch of non CBD OTC Pain relief topicals. HempFusion proudly launched its CBD ingestibles (75 stores) and OTC Topicals into 400 Southeastern Grocers, Inc.’s Winn-Dixie stores across the Southeast United States and expanded its distribution footprint with Publix grocery stores. HempFusion also launched into Berkshire Grocery with its top selling OTC Pain Relief Cream while Probulin added distribution this past October at Weis Markets locations.

With the end of 2021 fast approaching, the Company is pleased to provide an updated view on expected new retail doors for 2022. During 2022, HempFusion anticipates acquiring between 3,000 and 4,000 new retail doors, with the focus remaining in the Food, Drug and Mass (FDM) channel. This would put total company estimated retail distribution to just over 18,000 retail doors across the United States. This continued push into retail is expected to position the Company well for potential future regulatory change and is above and beyond additional cross-sell opportunities that remain across the Company’s portfolio of leading health and wellness brands.

“We made incredible progress on our retail distribution initiatives in 2021 and continue to see significant, additional growth opportunities in 2022 and beyond,” said Jon Visser, HempFusion’s Chief Operating Officer. “Our new enterprise-focused approach should provide immediate benefits for our retail expansion initiatives, and we expect active discussions with several large FDM retailers across the US to contribute to our 2022 goals. Our leading position on the regulatory side has provided us credibility with large national US retailers. As the regulatory environment continues to evolve, we anticipate our significant distribution presence will set the Company up for continued significant future growth,” continued Mr. Visser.

ABOUT HEMPFUSION

One of a select few CBD companies who are today fully prepared to meet or exceed expected FDA guidance, HempFusion Wellness Inc. is a leading health and wellness company whose family of premium consumer brands include HempFusion™, Sagely Naturals™, Apothecanna™, and Probulin Probiotics™, one of the fastest-growing probiotics companies in the United States according to SPINs reported data.

Utilizing the power of whole-food hemp nutrition, the HempFusion family of brands’ product portfolio comprises 112 SKUs including USDA Organic Certified Tinctures, proprietary FDA Drug Listed Over-The-Counter (OTC) Topicals, probiotic supplements and skin care products, a Doctor/Practitioner line, a White Label division and more. With a strong focus on research and development, HempFusion Wellness has 43 products under development.

Available from approximately 18,000 US retail locations across all 50 states, HempFusion Wellness products are also available in China, Mexico, Ireland, United Kingdom, United Arab Emirates, South Korea and Canada and may be purchased online from each brand’s website, The Probulin Store on Amazon.com, Alibaba’s Tmall.com, the world’s largest cross-border online marketplace, and a multitude of additional e-commerce sites.

For more information, visit www.hempfusion.com. Follow HempFusion on Twitter, Facebook and Instagram.

FORWARD-LOOKING STATEMENTS

This news release contains forward-looking statements and forward-looking information within the meaning of Canadian securities legislation (collectively, “forward-looking statements“) that relate to HempFusion’s current expectations and views of future events. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as “will likely result”, “are expected to”, “expects”, “will continue”, “is anticipated”, “anticipates”, “believes”, “estimated”, “intends”, “plans”, “forecast”, “projection”, “strategy”, “objective” and “outlook”) are not historical facts and may be forward-looking statements and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. These statements speak only as of the date of this news release. In particular and without limitation, this news release contains forward-looking statements relating to the continued growth of the Company’s planned workforce, supply chain and marketing optimization and cost cutting efforts, retail distribution and sales expansion plans and the Company’s other plans, focus and objectives.

Forward-looking statements are based on a number of assumptions and are subject to a number of risks and uncertainties, many of which are beyond HempFusion’s control, which could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the impact and progression of the COVID-19 pandemic and other factors set forth under “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in the annual information form of the Company dated March 31, 2021 and available under the Company’s profile on SEDAR at www.sedar.com. HempFusion undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. New factors emerge from time to time, and it is not possible for HempFusion to predict all of them or assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements contained in this news release are expressly qualified in their entirety by this cautionary statement.

Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211214005228/en/

Investor Relations:

Eric Balshin

+1 437-826-9911

eric@sophiccapital.com

Company Contact:

Jason Mitchell, N.D.

Chief Executive Officer and Director

ir@hempfusion.com

Source: HempFusion Wellness Inc.

FAQ

What is Project OPTIMIZE announced by HempFusion?

Project OPTIMIZE is an initiative aimed at reducing costs by up to $4 million annually through workforce, supply chain, and marketing optimizations.

How much does HempFusion expect to save from workforce optimization?

HempFusion expects to save over $2.5 million annually from workforce optimization as it consolidates operations.

What are the retail expansion plans for HempFusion in 2022?

HempFusion plans to acquire between 3,000 and 4,000 new retail doors in 2022, increasing its total distribution to over 18,000 locations.

What is the significance of HempFusion's retail distribution growth?

The growth in retail distribution positions HempFusion well for future profitability and leverages potential regulatory changes.

What brands are included in HempFusion's portfolio?

HempFusion's portfolio includes HempFusion, Sagely Naturals, Apothecanna, and Probulin Probiotics.