Beyond Meat reports narrow-than-expected quarterly loss despite sinking sales

Beyond Meat on Thursday reported a narrower-than-expected loss for its fourth quarter, despite its sales sinking more than 20%.

Shares of the company climbed 14% in after-hours trading.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

• Loss per share: $1.05 vs. $1.18 expected
• Revenue: $79.9 million vs. $75.7 million expected

For the fourth quarter, Beyond reported a net loss of $66.9 million, or $1.05 per share, narrower than a net loss of $80.4 million, or $1.27 per share, a year earlier.

CEO Ethan Brown said the company’s margins improved by 14 percentage points, helped by slimming down its co-manufacturing footprint and better managing production staffing levels.

Net sales dropped 20.6% to $79.9 million. Beyond said the total pounds of meat substitutes it sold fell 16.9% in the quarter. The company said demand for meat alternatives across “all channels” is still soft. In response, it’s offered its products at discounts to entice inflation-weary customers. Beyond’s net revenue per pound fell 4.4% in the quarter.

U.S. sales fell 20.9% as the company saw weaker demand in both its grocery and food service segments. Likewise, outside the U.S., Beyond reported a 19.9% drop in revenue, fueled by a steeper decline in grocery sales.

And the company is forecasting its sales will shrink further in 2023.

Beyond is projecting its 2023 revenue will range from $375 million to $415 million, representing a drop of 1% to 10% in sales. Wall Street was expecting that annual revenue would range from $322 million to $496 million.

Rather than growing sales, Beyond’s primary business goal is to become cash-flow positive in the second half of 2023. Its gross margins are expected to be in the low double-digits and increase sequentially throughout the year.

Beyond — and the broader meat alternative category — have been struggling for more than a year and a half, despite seeing soaring demand in the early days of the pandemic. Customers who tried the expensive meat substitutes didn’t stick with the products, particularly as inflation pushed grocery prices higher.

“We believe persistently high inflation, the slowing economy, increased competition and trading-down behavior by consumers among proteins are all negatively impacting growth for our category and our brand, but we do believe this is transitory,” CFO Lubi Kutua said on the company’s conference call on Thursday.

In response, Beyond has pivoted from its initial strategy of “growth above all,” according to Brown, to focus on preserving cash, reducing inventory and aiming for profitability. Last year, it completed two rounds of layoffs, cutting more than a fifth of its workforce. The company also plans to restructure operating activities for Beyond Jerky, which is part of its joint venture with PepsiCo.

Others in the plant-based meat category have had to make similar decisions as demand has dried up. Impossible Foods is reportedly cutting 20% of its staff after laying off 6% of workers last year. Kellogg scrapped its plans to spin off and potentially sell its plant-based unit, which includes Morningstar Farms.