By Mrinalika Roy
(Reuters) -Pot producer Canopy Growth Corp reported a smaller second-quarter core loss on Wednesday on the back of higher sales and cost-cutting measures, sending the company's shares up about 7%.
The company has been doubling down on its efforts to turn profitable, including cost cuts through layoffs, exits from some international markets, store closures and divestiture of its retail business across Canada.
Canopy's quarterly gross margins improved from a year earlier, helped by lower costs and a decrease in inventory charges.
Last month, the company said it will create a holding company to fast track its entry into the United States, which is projected to be a more than $50-billion market by 2026.
U.S. President Joe Biden has recently sought a review on marijuana classification. A potential change in legislation is expected to benefit cannabis producers further, and support for marijuana legalization has been steadily growing in the country.
"I hope the U.S. midterm results will further push the Senate to act swiftly on cannabis reform," Canopy Chief Executive David Klein said.
The company posted revenue of C$117.9 million, compared with estimates of C$113.13 million, according to Refinitiv IBES data.
Higher sales at Canopy's BioSteel business, which sells sports and health drinks, offset the impact of increased competition in the Canadian recreational-use cannabis market and the effect of divestitures, according to the company.
Canopy reported an adjusted core loss of C$78.1 million ($58.13 million) in the second quarter, compared with a loss of C$162.6 million a year earlier.
($1 = 1.3436 Canadian dollars)
(Reporting by Mrinalika Roy in Bengaluru; Editing by Shinjini Ganguli and Shounak Dasgupta)