Veggie sausages from Beyond Meat Inc, the maker of vegan burgers, are displayed for sale at a market in Encinitas, California on June 5, 2019.
Mike Blake | Reuters
Beyond meat announced a weaker-than-expected loss for its fourth quarter on Thursday, despite its sales falling more than 20%.
Shares of the company soared 14% in after-hours trading.
Here’s what the company reported compared to what Wall Street expected, based on a Refinitiv analyst survey:
- Net loss per share: $1.05 vs. $1.18 expected
- Revenue: $79.9 million vs $75.7 million forecast
For the fourth quarter, Beyond reported a net loss of $66.9 million, or $1.05 per share, narrower than a net loss of $80.4 million, or $1.27 per share, one year earlier.
CEO Ethan Brown said the company’s margins improved by 14 percentage points, helped by the reduction of its co-manufacturing footprint and better management of production staff levels.
Net sales fell 20.6% to $79.9 million. Beyond said the total number of pounds of meat alternatives sold fell 16.9% in the quarter.
The company said demand for meat alternatives across “all channels” was still weak. In response, he offered his products at reduced prices to attract customers hampered by persistently high inflation. Beyond’s net income per pound fell 4.4% in the quarter.
Sales in the United States fell 20.9% as the company saw weaker demand in its grocery and restaurant segments. Similarly, outside the US, Beyond saw a 19.9% drop in revenue, fueled by a steeper drop in grocery sales.
And the company expects its sales to continue to decline this year.
Beyond projects its 2023 revenue to be between $375 million and $415 million, representing a 1-10% drop in sales. Wall Street expected a wider range of $322 million to $496 million.
Rather than increasing sales, Beyond’s main business objective is to generate positive cash flow in the second half of 2023. Its gross margins are expected to be in the double digits and increase sequentially throughout the year.
Beyond and the broader meat alternatives category has struggled for more than a year and a half after seeing demand soar at the start of the pandemic. Customers who tried the expensive meat substitutes did not stick with the products, especially as inflation pushed up grocery prices.
“We believe that continued high inflation, a slowing economy, increased competition and consumer marketing behavior among protein are all negatively impacting our category and brand growth, but we believe that this is transitional,” chief financial officer Lubi Kutua said. the company’s conference call on Thursday.
In response, Beyond pivoted from its initial “growth first” strategy, according to Brown, to focus on preserving cash, reducing inventory and pursuing profitability.
Last year it carried out two rounds of layoffs, cutting more than a fifth of its workforce. The company also plans to restructure the operating activities of Beyond Jerky, which is part of its joint venture with PepsiCo.
Others in the plant-based meat category had to make similar decisions as demand dried up. Impossible Foods is said to have cut staff by 20% after laying off 6% of workers last year. Somewhere else, Kellogg dropped plans to spin off and potentially sell its plant-based unit, which includes Morningstar Farms.
