Beyond Meat loses second-quarter earnings, reducing 4% of global workforce

Beyond Meat loses second-quarter earnings, reducing 4% of global workforce

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

Beyond Meat (BYND) reported second-quarter financial results that didn’t miss estimates as the company battles operating headwinds and weak profit margins.

Beyond Meat stock is down in after-hours trading with shares down as much as 6%.

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

Similar to the first quarter, Beyond Meat reported a wider-than-expected loss as the vegan jerky company, which was built 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 jobs as part of a broader plan to cut costs, according to an internal memo, cited by Bloomberg.

Gross profit was a loss of $6.2 million, or gross margin of -4.2% of net revenue, in the second quarter. This is significantly behind the same period last year when the company reported gross profit of $47.4 million, or a gross margin of 31.7% of net revenue.

The company lowered its guidance for the full year of 2022, saying that net revenue is expected to be between $470 million and $520 million, an increase of 1% to 12% over 2021. This compares with previous forecasts of between $560 million and $620. million.

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

The vegan meat maker has struggled to maintain its initial pace of growth as shares have fallen more than 70% over the past 12 months.

Analysts largely expect Beyond Meat’s sales and earnings to remain volatile until the company takes bigger steps in containing operating expenses.

“The pursuit of growth opportunities like jerky creates operational inefficiencies and higher costs, draining money,” Jennifer Bartachus, an analyst at Bloomberg Intelligence, said in a recent note, adding that “rising supply chain costs and production challenges could weigh on margins.”

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

Overall, although high-profile partnerships (such as her 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 profits,” she said.

Beyond Meat and McDonald’s recently completed a US test of their McPlant burger

On the earnings call, investors will want more clarity about scalability and the potential for partnerships with certain restaurants, such as the McDonald’s McPlant offering, where foodservice revenue lags sharply from retail.

Recent reports from BTIG and JPMorgan indicated that McPlant received tepid demand in its latest US test. At this point, there have been no announcements of additional testing or a nationwide launch of the menu item.

Some of the bright spots that Beyond Meat could benefit from in the coming quarters include an increase in international revenue growth, as well as increased 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, with increased production, lower costs, and recipes modified to embrace consumer preferences.

Competition in the plant-based sector has exploded over the past several years – from lab-grown meats to products based on fungi. Increased competition has played an important role in some of the recent Beyond Meat struggles.

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

Alexandra is the Senior Entertainment and Food Correspondent at Yahoo Finance. Follow her on Twitter aliecanal8193 And email it to alexandra.canal@yahoofinance.com

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