Beyond Meat “Beyond Burger” patties made from plant-based substitutes for meat products sit on a shelf for sale in New York City.
Angela Weiss | AFP | Getty Images
Beyond Meat on Wednesday reported a widening loss in its third quarter as U.S. demand for its meat substitutes shrank and higher costs ate into its profits.
The company also disappointed investors with its fourth-quarter outlook, indicating that sales aren’t expected to snap back immediately. Shares of the company tumbled 18% in extended trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
Loss per share: 87 cents vs. 39 cents expectedRevenue: $106.4 million vs. $109.2 million expected
Beyond reported fiscal third-quarter net loss of $54.8 million, or 87 cents per share, wider than a net loss of $19.3 million, or 31 cents per share, a year earlier. Analysts surveyed by Refinitiv expected a loss of 39 cents per share.
The company said it faced higher transportation and warehousing costs and increased its inventory write-offs, which hurt its profits. About $9 million was written off due to water damage at one of its plants, which mostly affected packaging.
Net sales rose 12.7% to $106.4 million, missing expectations of $109.2 million. Compared with the second quarter, its revenue fell, bucking typical seasonal trends for the company’s products. Customers usually buy more Beyond Burgers during the summer to grill.
The company reported strong growth outside the United States, with international grocery and restaurant divisions each seeing sales more than double during the quarter.
However, U.S. revenue fell 13.9% compared with a year ago, mostly due to weaker grocery demand. CEO Ethan Brown told analysts that grocery sales didn’t help make up for shrinking food service orders, unlike in 2020.
The company also said softer demand and operational challenges, like severe weather, hurt its domestic sales. Brown said new competitors in the market are putting pressure on its market share, but data doesn’t reveal that the lower demand is due to other companies stealing its customers. New products, like its meatless chicken, slightly offset U.S. sales declines.
In October, the company warned investors that it would be reporting weaker sales than it had previously predicted, citing a wide range of factors, including the delta variant and distribution problems.
And the company’s forecast doesn’t indicate a sunnier fourth quarter. Beyond is predicting net sales of $85 million to $110 million for those three months. Wall Street was expecting revenue of $131.6 million during the quarter.
Beyond said it’s expecting some of the operational challenges from the third quarter to drag down its fourth-quarter results as well. It also cited restaurants’ labor challenges and hesitant ordering behavior due to uncertainty tied to the pandemic as other factors embedded in the outlook. The company noted that the period contains 5 fewer shipping days than a year prior.
“Near-term market and operating conditions notwithstanding, we remain committed to our long-term strategy,” Brown said in a statement.
He told analysts he is feeling optimistic about 2022. He hinted at new product launches coming next year, saying that some of those items could reach price parity with meat.