By Uday Sampath Kumar and Hilary Russ
-Beyond Meat Inc forecast fourth-quarter revenue below estimates on Wednesday, as the once red-hot plant-based meat maker reported slowing demand in both grocery stores and restaurants, driving its shares down 19% in extended trading.
The company, which generates the bulk of its revenue from retailers, had cut its third-quarter revenue forecast last month as it took a hit from fewer people stockpiling plant-based burgers and sausages at home after they returned to dining out.
However, Beyond did not sell as many products at restaurants during the quarter either.
Sales of its faux meat fell at fast-food locations when the Delta COVID-19 variant hit and labor shortages caused restaurants to cut hours and trim menus, Chief Executive Officer Ethan Brown said in an earnings call.
Sales to U.S. retail stores fell 15.6% to $52.4 million in the third quarter, Beyond said, while those to U.S. restaurants fell 7.3% to $15.1 million.
In October, McDonald’s Corp said it will test a plant-based patty made by Beyond in its McPlant burger at eight U.S. locations. Beyond is also working on products for other global chains including Pizza Hut and KFC, both owned by YUM Brands Inc.
Widespread supply chain problems and labor shortages at Beyond’s own facilities and a transportation provider also hampered operations, as did water damage related to severe weather that destroyed “sizeable amounts” of packaging at a Pennsylvania storage center.
Brown said the company is focused on long-term growth, including through restaurant partnerships and continued international expansion.
“The only reason we gave more tepid guidance on fourth quarter is just because we didn’t want to go through this again,” Brown said.
“My view…is to get through the year with these unusual conditions and get back to a strong resumption of growth, which I feel very confident about for 2022,” he said.
The company said it expects fourth-quarter net revenue of $85 million to $110 million, compared with analysts’ estimates of $131.6 million, according to IBES data from Refinitiv.
“This is going to be one of those quarters Beyond will want to erase from its memory. Unfortunately, it seems like many of these issues will persist through at least 4Q,” wrote CFRA analyst Arun Sundaram.
Net revenue rose 12.7% to $106.4 million in the three months ended Oct. 2, but missed estimates of $109.2 million.
Excluding certain items, the company reported a loss of 87 cents per share, compared with analysts’ estimates of a loss of 39 cents per share.
(Reporting by Uday Sampath in Bengaluru and Hilary Russ in New York; Editing by Vinay Dwivedi, Richard Pullin and Sam Holmes)
