Plant-based meat company Beyond Meat reported lower-than-expected first-quarter sales as it cut prices and slowed restaurant demand.
The El Segundo, Calif.-based company said its January-March revenue rose 1.2% to $109.5 million. Wall Street had forecast sales of $112 million, according to analysts polled by FactSet.
Beyond Meat shares _ Already down 60% since the beginning of this year _ fell 24% in after-hours trading.
Beyond Meat said total volume of products sold rose 12% in the first quarter, but net sales per pound fell 10%, mostly due to rebates and list price reductions.
Beyond Meat President and CEO Ethan Brown said lowering prices to achieve parity with meat products of animal origin remains the company’s long-term goal. But in the first quarter, he said, the company felt pressure to cut prices from a number of new competitors, including cheaper private labels.
“There’s an environment where there’s a lot of unsustainable price behavior happening,” Brown said on a conference call with investors on Wednesday. Brown said Beyond Meat remains the market leader but needs to better differentiate its products from the competition.
Beyond Meat said its U.S. retail revenue rose 6.9% in the quarter, but that was mostly due to the launch of Beyond Meat Jerky, a meatless jerky developed through a snack food partnership with PepsiCo. Beyond Meat said U.S. revenue from its other products, including burgers and sausages, was lower than a year earlier.
Foodservice sales fell 7.5% in the U.S., which Brown attributed in part to the Omicron variant and restaurant labor shortages. Brown said demand for foodservice started to pick up in March.
Beyond Meat said investments to support new products like jerky also hurt profits. Jerky was the company’s biggest product launch to date and is expected to be sold at 80,000 locations by the end of May. Going to market was “expensive and inefficient,” said Phil Hardin, Beyond Meat’s chief financial officer, as batches were moved back and forth between multiple facilities during production. Those costs should come down by the third quarter, when a third party will start manufacturing the product, Hardin said.
Beyond Meat reported a net loss of $100.5 million for the quarter, compared to a loss of $27.3 million for the same period last year. The loss of $1.58 per share was also far higher than the 97 cents loss analysts had been expecting.
Brown insisted the pain was temporary and that the company had great potential. McDonald’s expanded testing of its McPlant burger _ developed with Beyond Meat _ during the quarter, for example, and KFC is testing a Beyond Meat chicken.
“I don’t think this current state will continue,” Brown said. “For those who understand the long-term value we are trying to unlock, this is it.”
Beyond Meat also confirmed its full-year sales guidance. The company expects net sales of between $560 million and $620 million for the year and an increase of 21% to 33% compared to 2021.
Still, Beyond Meat’s results came amid signs of stagnant demand for plant-based meat. U.S. sales of meat alternatives were flat in the 52 weeks ended April 30, according to NielsenIQ, a market research firm. During the same period in 2021, they increased by 25%.
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