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 operational headwinds and weak margins.

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

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

Similar to the first quarter, Beyond Meat reported a wider-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 it will be cutting 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 gross margin of -4.2% of net revenues, in the second quarter. This greatly lagged the year-ago period when the company reported gross profit of $47.4 million, or gross margin of 31.7% of net revenues.

The company reaffirmed its previous guidance for full year 2022, maintaining that net revenues are still expected to be in the range of $560 million to $620 million, an increase of 21% to 33% compared to 2021.

Still, 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 meat maker has struggled to maintain its initial pace of growth with shares plummeting more than 70% over the past 12 months.

Analysts largely expect Beyond Meat’s sales and profits to remain volatile until the company makes greater strides in containing operating expenses.

“The pursuit of growth opportunities such as jerky is creating operational inefficiencies and higher costs, burning through cash,” Bloomberg Intelligence analyst Jennifer Bartashus said in a recent note, adding that “elevated supply-chain costs and production challenges may weigh on margins.”

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

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

Beyond Meat and McDonald’s recently completed the US test of its McPlant burger

On the earnings call, investors will want greater clarity on scalability and the prospect of certain restaurant partnerships, like McDonald’s McPlant rollout, as food-service revenue severely lags retail.

Recent reports from BTIG and JPMorgan indicated that the McPlant received lukewarm demand in its most recent US test. At this point, there have not been any announcements on additional tests or a nationwide launch for the menu item.

A few bright spots that Beyond Meat could capitalize on in the quarters to come include an uptick in international revenue growth, as well as an increase in innovative restaurant partnerships and wider distribution points in grocery stores.

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

Competition in the plant-based sector has exploded over the past several years — from lab-grown meat to fungi-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 expected $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 alexandra.canal@yahoofinance.com

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