Editor’s note: This post is breaking and will be updated
Beyond Meat ( BYND ) reported second-quarter financial results that missed estimates as the company battles operational headwinds and weak margins.
Beyond Meat’s shares fell in after-hours trading with shares down as much as 6%.
Here’s Beyond Meat’s second-quarter results compared to Wall Street’s consensus estimates, compiled by Bloomberg:
Like the first quarter, Beyond Meat reported 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 unveiled that it will cut 4% of its global workforce. Ahead of earnings, the company eliminated 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. This was strongly behind the year-ago period when the company reported a gross profit of $47.4 million, or a gross margin of 31[ads1].7% of net revenues.
The company cut its full-year 2022 guidance, 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 compared with previous expectations of $560 million to $620 million.
Beyond’s management team noted that the operating environment continues to be impacted 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 meat producer has struggled to maintain its initial growth rate with shares plunging more than 70% in the past 12 months.
Analysts largely expect Beyond Meat’s sales and profits to remain volatile until the company makes greater progress in curbing operating expenses.
“The pursuit of growth opportunities like jerks is creating operational inefficiencies and higher costs, burning through cash,” Bloomberg Intelligence analyst Jennifer Bartashus said in a recent note, adding that “high supply chain costs and production challenges could 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 through 2023.
Overall, while high-profile partnerships (like the 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,” she said.
On the earnings call, investors will want greater clarity on scalability and the outlook for certain restaurant partnerships, such as McDonald’s McPlant rollout, as foodservice revenue lags badly in retail.
Recent reports from BTIG and JPMorgan indicated that McPlant received tepid demand in its latest US test. At this time, there have been no announcements of further testing or a nationwide launch for the menu item.
Some bright spots for Beyond Meat to capitalize on in the coming quarters include an increase in international revenue growth, as well as an increase in innovative restaurant partnerships and broader grocery distribution locations.
The outlook for plant-based food options remains bright, as the category leans on innovation while increasing production, reducing costs and tweaking recipes to embrace consumer preferences.
Competition in the plant-based sector has exploded in recent years – from lab-grown meat to mushroom-based products. The increased competition has played a significant role in some of Beyond Meat’s recent struggles.
The plant-based category’s global retail sales 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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