Better Choice Company Inc. Reports 9% Sales Decline but Improves Gross Profit and Reduces Operating Expenses

Better Choice Company Inc. reported a net sales decline of 9% for the fiscal year ending December 31, 2024, totaling $35.0 million compared to $38.6 million in 2023. The decrease is attributed to the strategic exit from unprofitable customers in the Brick & Mortar channel and the discontinuation of its Direct-to-Consumer (DTC) sales channel in June 2024. Despite the drop in sales, the company achieved a gross profit of $13.0 million, a 10% increase from the previous year, driven by improved pricing from manufacturers and a favorable shift in product sales mix.

Operating expenses saw a significant reduction of 43%, falling to $19.0 million from $33.0 million in 2023. This decrease was primarily due to the absence of an impairment charge that had impacted the previous year’s results, as well as lower selling, general, and administrative expenses. The company reported a loss from operations of $6.0 million, a substantial improvement from the $21.2 million loss recorded in 2023. Other income, including a $6.2 million gain from the extinguishment of debt, contributed to a net loss of $168,000, a significant recovery from the $22.8 million loss in the prior year.

In terms of strategic developments, Better Choice has made notable organizational changes, including the appointment of Kent Cunningham as CEO in May 2023 and the exit from Petco stores while maintaining an online presence on Petco.com. The company also completed the acquisition of Aimia Pet Healthco, Inc. in February 2024, aimed at developing products to combat pet obesity. Furthermore, Better Choice is in the process of acquiring SRx Health Solutions, which is expected to enhance its position in the health and wellness sector.

Operationally, Better Choice's international sales increased by 18% in 2024, primarily driven by growth in the Chinese market, which accounted for a significant portion of its international revenue. The company reported that approximately 47% of its net sales were generated through digital channels, reflecting a shift in consumer purchasing behavior towards e-commerce. The total employee headcount as of December 31, 2024, was 21, down from 24 in the previous year, indicating a focus on operational efficiency.

Looking ahead, Better Choice aims to leverage its brand positioning and innovation strategy to drive future growth. The company plans to enhance its marketing efforts on platforms like Amazon and Chewy while continuing to develop new products. However, the filing highlights ongoing risks, including the need for additional capital to sustain operations and the potential impact of economic conditions on consumer spending in the pet care market. The company remains committed to improving profitability and navigating the challenges of the competitive pet health and wellness industry.