GrowGeneration withdraws EBITDA guidance as closures accelerate

By Tom Whitfield

GrowGeneration withdrew its 2026 adjusted EBITDA guidance of $2 million to $3 million as it accelerated store closures and restructuring. The cultivation supplies company narrowed its 2026 revenue outlook to $163 million to $165 million from $162 million to $168 million.

What changed in the 2026 outlook?

Chief Financial Officer Greg Sanders said: “Most restructuring actions are expected to be completed in the fourth quarter,” although some may extend into the first quarter of 2027. Sanders said GrowGeneration will provide an update in an 8-K filing once it finalizes its restructuring accounting.

The company withdrew the $2 million-to-$3 million adjusted EBITDA range, citing uncertainty over the fourth-quarter impact of closures and other cost-cutting actions. The forecast now leaves the cost of the reset and the timing of savings unresolved.

Did operations improve in the quarter?

Third-quarter net sales fell to $44.8 million from $47.3 million. Sanders attributed part of the decline to a few large, one-time transactions in the prior-year period.

Gross profit rose to $14.5 million from $12.9 million, while gross margin expanded to 32.4% from 27.2%. A $2.6 million benefit from IEEPA tariff refunds reduced cost of sales. Sanders said a higher mix of proprietary brand sales also supported margins.

Those gains were partly offset by pricing pressure, higher transportation costs and higher estimated inventory obsolescence costs. Lower sales tied to a smaller store footprint also weighed on gross profit.

Net income reached $0.2 million versus a $2.4 million loss a year earlier. Adjusted EBITDA rose to $2.3 million from $1.3 million, marking the second consecutive positive quarter. For the first nine months of 2026, adjusted EBITDA totaled approximately $1 million versus a $4 million loss in the comparable period.

Profit improved, but refunds and cost cuts make the underlying trend harder to read.

Can proprietary brands offset the sales decline?

Third-quarter cultivation and gardening sales declined to $35.6 million from $38.4 million. Proprietary brand sales rose 19.3% to $14.4 million and reached 40.6% of segment revenue, up from 31.6% a year earlier.

Through September, proprietary brand sales increased 23.4% to $40.1 million. Sanders said that growth offset lower third-party product sales and kept total cultivation and gardening revenue slightly ahead of the prior-year period.

Storage Solutions revenue rose to $9.2 million from $8.9 million. Sanders said retail and industrial demand contributed to the result, which exceeded expectations. Nine-month segment sales increased 10.2% to $24 million.

The portfolio mix improved, but neither brand growth nor storage demand fully offset the latest quarterly sales decline.

Why is GrowGeneration closing stores?

Co-Founder and Chief Executive Officer Darren Lampert told analysts: “Store traffic has been weak.” He said GrowGeneration is shifting from a retail-focused model toward commercial customers, while commercial, wholesale and proprietary brand sales help replace business lost when locations close.

The company completed two store closures after the third quarter ended and expects to close another two or three before year-end. Management expects to finish 2026 with about 14 stores, down from 65 in 2022. Some remaining stores serve as distribution points, while profitable locations with walk-in customers will remain open for now.

The restructuring includes targeted workforce reductions and other operating changes. Sanders said management is considering additional rationalizations, including potential inventory charges in the fourth quarter, but did not quantify expected savings.

No individual customer currently accounts for more than 5% of sales. GrowGeneration aims to retain commercial customers through nearby locations or its commercial sales team.

The store reset can preserve customer access, but the unquantified savings and inventory risk leave the near-term payoff uncertain.

Can the balance sheet support the reset?

GrowGeneration ended the quarter with $41.8 million in cash, cash equivalents and marketable securities and no debt. It repurchased 700,000 shares during the quarter for approximately $1 million, leaving about $8 million available under its repurchase authorization at quarter-end.

In October, GrowGeneration acquired technology from Order Junky to let sales representatives combine customer pricing, inventory availability and freight costs into one quote that can convert into an order. Lampert said the company is also evaluating the platform’s artificial intelligence capabilities for administrative work.

Cash and no debt provide room for the reset, but the absence of quantified savings prevents a reliable estimate of post-closure earnings.

What does GrowGeneration sell?

GrowGeneration Corp. (NASDAQ:GRWG) is a specialty retailer serving hydroponic and organic gardening markets through retail stores and an e-commerce platform, with commercial and home growers as customers. Its range covers hydroponic systems, growing media, plant nutrients, lighting, irrigation and environmental-control systems, propagation supplies and other equipment and resources for indoor and greenhouse crops.

The company is trying to replace weak retail traffic with commercial demand, while undisclosed savings leave the earnings effect of a smaller store base unresolved.