Laird Superfood (LSF) Q3 2025: Wholesale Channel Grows 39%, Reshaping Revenue Mix
LSF’s third quarter marked a decisive shift as wholesale sales surged and now comprise the majority of revenue, offsetting e-commerce softness and compressing margins. Strategic pivots in product innovation and channel focus, along with cost discipline and inventory drawdown, position the company for improved cash flow and margin stability into 2026. Management’s cautious tone on order timing and macro headwinds signals both resilience and ongoing execution risk as the business scales its wholesale-led model.
Summary
- Wholesale Expansion Overtakes E-Commerce: LSF’s channel mix pivot is accelerating, with wholesale now over half of sales.
- Margin Compression Signals Channel and Cost Pressure: Gross margin contraction reflects both mix shift and commodity inflation, with cost actions underway.
- Innovation Pipeline Targets Larger Markets: New dairy-based launches and cleaner formulations aim to unlock broader category growth.
Performance Analysis
LSF’s Q3 results showcased a business in transition, with net sales up 10% year over year to $12.9 million, but a notable shift in channel dynamics. Wholesale channel sales jumped 39% and now represent 53% of total revenue, up from 49% year-to-date, as the company leans into distribution gains at grocery and club stores. This expansion comes at the expense of gross margin, which contracted to 36.5% from 43% a year ago, reflecting both the higher-volume, lower-margin profile of wholesale and ongoing commodity cost inflation.
E-commerce, which now comprises 47% of sales, declined 11% in direct-to-consumer (DTC) but was partially offset by continued Amazon growth. Adjusted EBITDA turned positive at $0.2 million, and operating cash flow improved by $1.1 million as LSF began drawing down elevated inventories built earlier in the year to mitigate tariff and supply risk. The company ended the quarter with $5.3 million in cash and no debt, providing flexibility as it navigates channel transitions and invests in product innovation.
- Channel Mix Shift Drives Growth and Margin Tradeoff: Wholesale now leads sales growth but dilutes margin compared to DTC.
- Inventory Drawdown Bolsters Cash Flow: Strategic inventory build unwinds, supporting liquidity and future margin expansion.
- Impairment Charge Highlights Brand Focus: $661,000 Picky Bars write-off underscores the pivot to core Laird Superfood brand.
While topline growth remains robust, margin pressure and timing of large customer orders introduce volatility, with management updating full-year guidance to 15% sales growth and upper-30s gross margin. The balance of 2025 and early 2026 will test LSF’s ability to sustain growth, optimize channel profitability, and execute on new product launches.
Executive Commentary
"Our wholesale channel continues to be a standout with net sales up 39% in the quarter and 40% year to date. This growth reflects our focused efforts on expanding distribution, particularly in grocery and club stores, where we've seen robust velocity gains and increased shelf space."
Jason Veit, President and Chief Executive Officer
"Gross margin in the third quarter delivered robust 36.5 points compared to 43.0 points in the corresponding prior year period... We're confident in our ability to hold gross margins in upper 30s for full year 2025 and beyond, which is at the level of best-in-class CPGs, despite inflationary pressures and even without using pricing as a lever."
Anya Hamel, Chief Financial Officer
Strategic Positioning
1. Wholesale-Led Revenue Model
LSF is intentionally transitioning to a wholesale-first business model, with wholesale now over half of total sales and expected to rise toward two-thirds in coming years. This shift is driven by expanded distribution in grocery and club channels, where the company is seeing strong velocity and shelf gains. The move away from DTC as a primary growth driver reflects both consumer preference shifts and the scalability of retail partnerships.
2. Product Innovation and Category Expansion
Innovation is a core lever, with launches like protein coffee (first dairy-based offering) and reformulated liquid creamers designed to capture larger, adjacent markets. The protein coffee launch targets the much broader dairy segment (10x the size of plant-based), while the new creamer formulations (organic, higher adaptogen content, cleaner sweeteners) are positioned for both health-conscious and mainstream consumers. LSF is leveraging influencer marketing, in-store activations, and omnichannel rollouts to maximize impact.
3. Focused Brand Investment and Portfolio Rationalization
Management is concentrating resources on the core Laird Superfood brand, discontinuing the Picky Bars line in 2026 and recording a $661,000 impairment charge this quarter. This streamlining is expected to free up capital and operational focus for higher-potential products and channels, supporting scale and profitability.
4. Supply Chain and Cost Management
Cost discipline remains front and center, as LSF navigates commodity inflation, tariffs, and channel mix headwinds. The company has taken proactive steps to secure raw materials, partner directly with suppliers, and optimize co-packing relationships, while beginning to unwind elevated inventory levels to support cash flow and mitigate future cost volatility.
Key Considerations
This quarter’s results reflect a company in the midst of a strategic channel and product evolution, balancing growth with profitability in a volatile macro environment. Investors should weigh the following:
- Channel Profitability Tradeoff: Wholesale growth drives scale but compresses gross margin, requiring operational efficiency and pricing discipline to protect profitability.
- Inventory and Cash Flow Dynamics: Inventory reduction is improving liquidity, but ongoing management will be critical as new products and channels ramp up.
- Innovation Execution Risk: Success of protein coffee and reformulated creamers will determine the ability to capture new segments and offset DTC weakness.
- Tariff and Commodity Volatility: Recent tariff relief on coconut milk reduces near-term cost pressure, but commodity inflation remains a risk to margins and pricing strategies.
- Order Timing and Sell-Through Variability: Large wholesale order timing introduces quarterly volatility, requiring close coordination with distributors and retailers.
Risks
LSF faces several execution and macro risks: The shift to wholesale increases exposure to retailer inventory cycles and order timing, potentially amplifying quarterly volatility. Gross margin remains sensitive to input cost inflation and further tariff action, despite recent relief on coconut milk. The success of new product launches is unproven and critical for future growth, while e-commerce stagnation could limit upside if Amazon and DTC strategies do not deliver. Management’s cautious tone on order timing and macro headwinds underscores the need for disciplined execution and rapid response to market shifts.
Forward Outlook
For Q4, LSF guided to:
- Continued wholesale-led growth, with cautious expectations due to order timing variability
- Gross margin stability in the upper 30s percent range
For full-year 2025, management updated guidance:
- Net sales growth of approximately 15%
- Break-even adjusted EBITDA for the full year
Management highlighted several factors that will shape performance:
- Large customer order timing could impact short-term results but does not alter long-term channel momentum
- New product launches (protein coffee, reformulated creamers) expected to drive incremental growth and margin improvement
Takeaways
LSF’s Q3 signals a clear inflection in channel strategy and product portfolio focus.
- Wholesale Channel Now Dominant: The pivot to wholesale is reshaping the revenue base and will require ongoing investment in retail execution and margin management.
- Margin and Cash Flow Levers in Play: Cost actions, inventory drawdown, and supply chain discipline are helping to offset margin headwinds and support liquidity.
- Product Innovation Is Pivotal: Upcoming launches in dairy and reformulated creamers are critical for future growth and competitive positioning; early execution will be a key watchpoint.
Conclusion
LSF’s Q3 2025 results reflect a business at a strategic crossroads, with wholesale now driving growth and a focused innovation pipeline poised to unlock larger market opportunities. Margin pressure and execution risk remain, but disciplined cost management, inventory actions, and a clear brand focus provide a path toward improved profitability and cash flow as the business scales its wholesale-led model.
Industry Read-Through
LSF’s wholesale-led pivot and margin dynamics mirror broader CPG trends, as brands recalibrate toward retail distribution for scale but face tighter margins and supply chain volatility. The move to cleaner, functional ingredients and category expansion into dairy aligns with wellness and protein macro trends, suggesting similar opportunities and risks for other plant-based and functional food brands. Channel mix volatility and order timing risk are likely to remain industry-wide headwinds, with innovation and disciplined execution as the primary differentiators for growth and profitability.