Sow Good Inc. reported third‑quarter 2025 revenue of $1.55 million, a sharp 57% decline from the $3.6 million earned in the same period last year, and a loss per share of $0.90, compared with consensus estimates of $8.55 million in revenue and a $0.06 loss per share. The revenue miss is largely attributable to the company’s decision to close out a number of discontinued SKUs, which lowered average selling prices and reduced overall sales volume. In addition, a $5.38 million inventory obsolescence reserve was recorded against the discontinued lines, further compressing top‑line growth.
The company posted a gross loss of $8.9 million for Q3 2025, a dramatic reversal from the $0.6 million gross profit reported in Q3 2024. The loss stems from a $5.3 million non‑cash charge for reserves on finished goods and materials, and a $3.2 million write‑down of overhead allocated to inventory. These non‑cash items, combined with a shift toward lower‑margin SKUs, turned the gross margin from a healthy 16% in the prior year to a negative 576% in the current quarter.
Operating expenses fell slightly to $3.7 million from $3.8 million in Q3 2024, reflecting modest payroll reductions and professional‑fee savings. However, the expense level remains high relative to the reduced revenue base, limiting the company’s ability to improve operating income. The CFO noted that the decline in average selling price and the inventory reserve charge were the primary drivers of the operating loss.
CEO Claudia Goldfarb emphasized that the quarter was a “period of steady progress and operational strengthening.” She highlighted the company’s plan to vacate the Mockingbird and Rock Quarry facilities, which is expected to save more than $5 million annually. Goldfarb also announced that insiders have committed an additional $1 million in capital, underscoring management’s confidence in the restructuring plan. CFO Donna Guy confirmed that revenue fell to $1.6 million from $3.6 million in Q3 2024, attributing the decline to lower average selling prices from the SKU closeout and the inventory reserve charge.
The earnings miss, combined with a “substantial doubt” going‑concern warning and cash reserves of only $387 k, has raised concerns about the company’s liquidity and long‑term viability. Management has indicated that the restructuring, including facility exits and new private‑label partnerships, is aimed at returning to profitability by mid‑2026. Investors will be watching for any subsequent guidance on revenue growth, margin recovery, and cash‑flow generation as the company navigates this challenging period.
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