Editor’s Note: This post is out of stock and will be updated
Beyond Meat (BYND) reported fiscal second-quarter results that missed estimates as the company faces operational headwinds and low margins.
Beyond Meat shares fell after hours with shares down 6%.
Here are Beyond Meat’s second quarter results compared to Wall Street consensus estimates, as compiled by Bloomberg:
Similar to the first quarter, Beyond Meat posted a bigger-than-expected loss as the company’s plant-based jerky, created in partnership with PepsiCo (PEP), continued to weigh on margins.
Beyond Meat also announced that it would cut 4% of its global workforce. Ahead of earnings, the company cut about 40 positions as part of a broader cost-cutting plan, according to an internal memo, cited by Bloomberg.
Gross profit was a loss of $6.2 million, or a gross margin of -4.2% of net revenue, in the second quarter. That was way behind the prior year period when the company reported gross profit of $47.4 million, or a gross margin of 31.7% of net revenue.
The company reaffirmed its previous full-year 2022 guidance, saying net revenue is still expected to be between $560 million and $620 million, an increase of 21% to 33% from 2021.
Still, Beyond’s management team noted that its operating environment continues to be impacted by short-term uncertainty related to macroeconomic issues, including inflation and rising interest rates, in addition to COVID- 19 and supply chain disruptions.
The plant-based meat maker has struggled to maintain its initial pace of growth as its shares have fallen more than 70% in the past 12 months.
Analysts largely expect Beyond Meat’s sales and earnings to remain volatile until the company makes greater strides in containing operating expenses.
“The pursuit of growth opportunities such as jerky creates operational inefficiencies and higher costs, burning cash,” Bloomberg Intelligence analyst Jennifer Bartashus said in a recent note, adding that “the high supply chain costs and production challenges can weigh on margins.”
She warned that the company’s focus on long-term growth initiatives could offset short-term gains and that consistent profitability may not arrive for several years, with consensus estimates calling for annual losses of up to in 2023.
Overall, while high-profile partnerships (like its recent collaboration with Kim Kardashian) will help the company stand out, it “must balance investments in growth strategies with progress towards sustainable profitability and earnings. long term,” she said.
On the earnings call, investors will want clarity on the scalability and prospect of certain restaurant partnerships, like the McDonald’s McPlant rollout, because restaurant revenue lags far behind retail.
Recent reports from BTIG and JPMorgan indicated that the McPlant received lukewarm demand in its last US test. At this point, there have been no announcements about additional testing or a nationwide launch for the menu item.
Some of the bright spots that Beyond Meat could capitalize on in the coming quarters include increased international revenue growth, as well as an increase in innovative restaurant partnerships and broader distribution points in grocery stores.
The outlook for plant-based food alternatives remains bright, however, as the category relies on innovation, while increasing production, reducing costs and adjusting recipes to meet consumer preferences.
Competition in the herbal sector has exploded in recent years – from lab-grown meat to mushroom products. Increased competition has played a big role in some of Beyond Meat’s recent struggles.
Global retail sales for the plant-based category are estimated to reach $166 billion by 2031, or 10.6% of the projected $2.2 trillion protein market.
Alexandra is a senior entertainment and food reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at firstname.lastname@example.org
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