Beyond Meat sinks into second-quarter profit loss, shedding 4% from global workforce

Editor’s Note: This post is breaking and will be updated

Beyond Meat (BYND) reported fiscal second quarter results that missed estimates as the company battles operating headwinds and weak margins.

Shares of Beyond Meat fell in after-hours trading with shares down 6%.

Here are Beyond Meat’s second quarter results compared to Wall Street consensus estimates, compiled by Bloomberg:

As in the first quarter, Beyond Meat reported a larger-than-expected loss as the company’s plant-based beef jerky, created in partnership with PepsiCo (PEP), continued to weigh on margins.

Beyond Meat also revealed that it will cut 4% of its global workforce. Before the 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 income, in the second quarter. This was well down from the prior year period when the company reported a gross profit of $47.4 million, or a gross margin of 31.7% of net income.

The company cut its guidance for the full year 2022, maintaining that net income is expected to be in the range of $470 million to $520 million, an increase of 1% to 12% compared to 2021. This compares with previous expectations. between $560 million to $620 million.

Beyond’s leadership team noted that its operating environment continues to be affected by near-term uncertainty related to macroeconomic issues, including inflation and rising interest rates, in addition to COVID-19 and supply chain disruptions. .

The plant-based meatmaker has struggled to maintain its early pace of growth, with shares plummeting more than 70% in the past 12 months.

Analysts largely expect Beyond Meat’s sales and earnings to remain volatile until the company makes more progress in containing operating expenses.

“The pursuit of growth opportunities like jerky is creating operational inefficiencies and higher costs, burning through cash,” Jennifer Bartashus, an analyst at Bloomberg Intelligence, said in a recent note, adding that “elevated supply chain costs and production challenges can affect margins.”

He warned that the company’s focus on long-term growth initiatives may offset short-term gains and that consistent profitability may not come for several years with consensus estimates calling for annual losses through 2023.

Overall, while high-profile partnerships (such as its recent collaboration with Kim Kardashian) will help the company stand out, “it needs to balance investment in growth strategies with progress toward sustainable profitability and long-term earnings,” he said.

Beyond Meat and McDonald's recently completed US testing of their McPlant Burger

Beyond Meat and McDonald’s recently completed US testing of their McPlant Burger

On the earnings call, investors will want more clarity on the scalability and outlook for certain restaurant partnerships, such as the launch of McDonald’s McPlant, as foodservice revenue lags far behind retail.

Recent reports from BTIG and JPMorgan indicated that McPlant received lukewarm demand in its most recent US trial. At this point, there has been no announcement about additional testing or a nationwide rollout for the menu item.

Some bright spots that Beyond Meat could capitalize on in the coming quarters include a pickup in international revenue growth, as well as an increase in innovative restaurant partnerships and broader distribution points in grocery stores.

However, the outlook for plant-based food alternatives remains bright as the category leans on innovation while increasing production, lowering costs and adjusting recipes to suit consumer preferences. consumers.

Competition in the plant-based sector has skyrocketed in recent years, from lab-grown meat to mushroom-based products. The increased competition has played a big part in some of Beyond Meat’s recent matches.

Global retail sales of the plant-based category are estimated to reach $166 billion by 2031, or 10.6% of the expected $2.2 trillion protein market.

Alexandra is a senior food and entertainment reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and send an email to alexandra.canal@yahoofinance.com

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