Beyond Meat’s revenue from U.S. retail sales declined.
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Beyond Meat issued a disappointing sales forecast as it reported weaker fourth-quarter results than expected. That’s sending the stock down on Friday as analysts and investors lower their expectations for the alternative protein producer.
Beyond Meat (ticker: BYND) said it lost $80.4 million, or an adjusted $1.27 a share, as revenue fell 1.2% year over year to $100.7 million. Analysts were looking for the company to lose 70 cents a share on revenue of $101 million.
The maker of plant-based faux meat said it expects revenue of $560 million to $620 million for the full year, compared with the $611.2 million consensus estimate.
Beyond Meat stock closed up 3.4% to $49 in regular trading on Thursday, but fell double digits after hours when the numbers came out. It was down 11.4% to $43.40 Friday morning.
In providing its forecast, Beyond Meat warned that its “operating environment continues to be affected by near-term uncertainty related to Covid-19 and its potential impact including on demand levels, labor availability and supply chain disruptions.”
As Barron’s noted ahead of the report, Beyond Meat’s stock tends to see big swings after its earnings disclosures. Investors are focused on sales and supply- chain issues, so uncertainty around those areas had the potential to hurt the shares.
While domestic restaurant sales did grow year over year for both the quarter and 2021 as a whole, its U.S. retail revenue declined in both periods. So while the company’s growing roster of high-profile restaurant partners is paying off, consumers still aren’t choosing Beyond Meat at the grocery store as often as hoped. And given that retail sales make up nearly three-quarters of sales, a miss in that category is more worrisome.
On the bright side, Beyond Meat’s international business, which accounts for about one-fifth of sales, saw both retail and restaurant revenue grow in the quarter and the year. In addition, the company’s sales forecast represents growth of 21% to 33% year over year, an acceleration from the 14% top-line growth it recorded in 2021.
Not surprisingly, a number of analysts have been changing their financial forecasts following the report. According to FactSet, six have predicted deeper per-share losses for the current quarter and 12 have for the year as a whole.
“We expect a meaningful reset of Street numbers and view a path to profitability even more challenging going forward,” writes Oppenheimer
‘s Rupesh Parikh, who has a Perform rating on the shares. “Increasing competitive pressures from Impossible Foods and food service challenges likely persist going forward.”
The number of plant-based options has exploded in recent years as more consumers look for meat alternatives for environmental, ethical, and health reasons, although Beyond Meat still holds a key top position in the industry.
The competition is likely why the company is pushing so hard to introduce new products and push down prices to attract new consumers. Investing in the business is a necessity at this point, but it’s also costly.
“We are a bit unnerved by the speed of the margin decline (which likely will worsen again in the first quarter),” wrote J.P. Morgan
‘s Ken Goldman. He lowered his price target to $32 from $54 while keeping an Underperform rating on the shares.
Beyond Meat’s size and scale means it is one of the best positioned to achieve price parity with meat—a key sticking point for the industry. Yet while consumers are more price-sensitive than ever, that achievement might not move the needle as much as the company hopes, warned Piper Sandler
‘s Michael Lavery, who kept a Neutral rating on the shares while lowering his target to $50 from $64. His research shows that the increased consumer sales Beyond Meat looks likely to capture from lower prices could be an “insufficient amount to offset price declines.”
Ultimately, it’s another disappointing quarter for Beyond Meat. Investors who stick with the stock will have to remain patient as the company increases spending on goals that remain elusive in the near term.
Write to Teresa Rivas at [email protected]
