GrowGeneration (NASDAQ:GRWG) executives emphasized a multi-year restructuring effort that they said repositioned the company for improved profitability, even as revenue declined due to store closures. On the company’s fourth-quarter and full-year 2025 earnings call, management pointed to higher proprietary brand penetration, gross margin expansion, and significant operating expense reductions as key drivers behind a sharp improvement in adjusted EBITDA and a materially narrower net loss.
2025 restructuring and profitability progress
Co-founder and CEO Darren Lampert described 2025 as a “defining year,” saying the company “transformed the business” by rightsizing its retail footprint, expanding private label penetration, and resetting its cost structure. GrowGeneration consolidated eight retail stores during 2025, ending the year with 23 locations as of December 31. Lampert said same-store sales at the remaining core locations were “relatively stable,” which he characterized as a sign of stabilization.
Despite lower revenue, management highlighted gains in profitability metrics. Lampert said gross margin improved 370 basis points year over year to 26.8% for 2025, supported by a higher mix of proprietary products. He also said the company reduced GAAP net loss by more than half and improved adjusted EBITDA by $8.5 million year over year.
Sanders reported a full-year net loss of $24.0 million, or $(0.40) per share, improving from a $49.5 million loss, or $(0.82) per share, in 2024. Adjusted EBITDA was a loss of $6.0 million for 2025, improving from a loss of $14.5 million in 2024.
Fourth-quarter results: revenue growth and margin rebound
In the fourth quarter, GrowGeneration reported net sales of $37.8 million, up from $37.4 million in the same period last year. Sanders said the quarter returned to year-over-year revenue growth despite the company operating with eight fewer retail locations.
Cultivation and gardening segment sales were $32.1 million, compared with $32.9 million a year earlier, while storage solutions segment sales increased to $5.7 million from $4.5 million. Sanders attributed the storage segment’s increase to “stable demand across product lines and diversification into new end markets.”
Profitability improved sharply in the quarter. Gross profit increased to $9.1 million from $6.1 million, and gross margin rose to 24.1% from 16.4%. Sanders cited higher proprietary brand penetration and the absence of restructuring-related costs incurred in the prior-year quarter as the primary drivers.
On costs, Sanders said store and other operating expenses declined 26.6% to $6.8 million. Selling, general and administrative expense increased to $7.3 million from $6.8 million, driven mainly by approximately $1.5 million of one-time severance and legal costs. Total operating expenses fell to $16.7 million from $30.1 million, and depreciation and amortization decreased to $2.4 million from $7.1 million, largely due to the absence of prior-year asset impairment and restructuring-related depreciation.
GAAP net loss for the quarter was $7.4 million, or $(0.12) per share, improving from a loss of $23.3 million, or $(0.39) per share. Adjusted EBITDA was a loss of $2.0 million, improving from a loss of $8.1 million.
Proprietary brands and channel expansion
Management positioned proprietary brands as the central driver of margin expansion. Lampert said private label penetration reached 32.8% of cultivation and gardening revenue for the full year, up from 24.2% in 2024, and 35.8% in the fourth quarter. Sanders added that proprietary brand sales increased in absolute dollars, rising to $44.0 million in 2025 from $39.5 million in 2024, an 11.3% increase.
Lampert said each percentage point of private label mix adds margin and pricing control. He listed Char Coir, Drip Hydro, The Harvest Company, Dialed In, and Power Si as brands seeing “strong adoption,” and said they remain in early stages of introduction. The company expects proprietary brands to reach 40% of cultivation and gardening revenue in 2026.
In analyst Q&A, Lampert said the majority of proprietary brand sales still move through GrowGen’s own channels, estimating “about 80%” currently, with a goal of reaching “50/50” between internal and third-party channels. He described increased activity through portals and commercial channels, and said the company is beginning to see products move into agricultural markets, along with Viagrow products selling in some big-box outlets.
Lampert also highlighted channel initiatives including selling into independent garden centers, relaunching theharvestco.com to serve greenhouse and specialty crop growers, and a distribution partnership with Arid Sales that he said expands wholesale and B2B reach into thousands of new retail stores across 32 states. Internationally, he cited partnerships with V1 Solutions in the European Union and distribution activity in Costa Rica as steps intended to scale brand presence with minimal capital investment.
Retail footprint and evolving operating model
On the call, Lampert said GrowGeneration is shifting away from a consumer retail model toward B2B distribution, noting stores are closed on weekends, hours have changed, and staffing mixes have shifted toward warehouse operations. He suggested the company may reconsider its use of “stores” terminology to avoid misunderstanding, describing some locations as B2B distribution centers.
While the company ended 2025 with 23 locations, Lampert told analysts the company had closed three stores in the first quarter and expected to close an additional store in the first quarter, implying 19 locations at quarter-end. He also said GrowGen may finish the year around 15 locations, potentially shedding about four more depending on lease negotiations, largely in smaller markets with less cultivation activity.
On expenses, Sanders said the company reduced its operating expense base by $27 million in 2025 versus 2024. Looking to 2026, he said incremental improvements could come from a full-year benefit of 2025 store closures and the absence of certain closure-related costs, with additional opportunities to continue lowering the expense base.
Balance sheet, buyback authorization, and 2026 guidance
Sanders said the company ended 2025 with $46.1 million of cash equivalents and marketable securities and no debt. Lampert also highlighted “over $46 million in cash and no debt” as a foundation for flexibility.
Management also announced a board-authorized share repurchase program for up to 10 million shares of common stock. In response to analyst questions about capital allocation, Lampert said the company has looked for acquisitions over the past year but “really haven’t found anything that really fit our profile,” adding that the company remains open to M&A if the right fit emerges. He said the company believes buying back shares at current levels is in shareholders’ best interest and described the buyback as likely to be executed in a controlled manner, “easing into it” depending on where the stock trades. Sanders said the board evaluated the program based on financial position, capital needs, and its view that the current share price does not reflect long-term value, and added the company expects to be in the market in the near term.
For 2026, Sanders guided to net revenue of $162 million to $168 million, with modest growth and an emphasis on “revenue quality and margin improvement more so than volume.” The company expects proprietary brand penetration to reach approximately 40% by year-end and projected gross margins of 27% to 29% for the full year. Management expects a “softer first quarter,” with profitability building through the year and Q2 and Q3 benefiting from outdoor cultivation season, continued margin expansion, and a lower operating cost base.
Both Lampert and Sanders reiterated a goal of approximately break-even adjusted EBITDA for full-year 2026, with Lampert characterizing the structural changes made in 2025 as “permanent” and foundational to reaching profitability.
About GrowGeneration (NASDAQ:GRWG)
GrowGeneration Corp. is the largest chain of specialty hydroponic and organic garden centers in the United States, serving commercial and home growers of all experience levels. The company offers a broad assortment of cultivation supplies, including high-efficiency LED lighting, climate control systems, irrigation and fertigation equipment, growing media and nutrients. Through its retail outlets and e-commerce platform, GrowGeneration caters to indoor and outdoor horticultural operations, with a particular focus on the rapidly expanding legal cannabis market.
In addition to its product offerings, GrowGeneration provides design, consulting and project management services for turnkey cultivation facilities.
