Beyond Meat has lowered its sales expectations for the year, posted a wider than expected loss for the second quarter and revealed plans to cut 4% of its global workforce as the boss of the US plant-based group admitted progress was taking longer than expected.
Net revenues in the three months to the end of June fell 1.6% to $147m as consumers shunned its pricey range of plant-based meats in favour of cheaper private-label alternatives or switched back to other proteins such as beef and chicken.
The group said a fall in retail prices in Europe, along with increased trade discounts in the US and the impact of getting rid of excess stock on the cheap, was another driver of the decrease in revenues.
However, despite the lower prices, Beyond Meat said it was still working to achieve price parity for its products with traditional animal proteins.
Sales for international retail channels fell 17% in the quarter to $23.7m.
Net losses at Beyond Meat in the period widened to $97.1m, compared with $19.7m a year ago.
The group listed a myriad of factors for the increased loss, including higher manufacturing costs, a growth in non-production headcount expenses, higher general and administrative expenses driven by ongoing consulting agreements, greater investment in marketing activities, higher expenses associated with production trial activities and increased investments in innovation.
In a bid to save money, Beyond Meat said it would slash its global workforce of about 1,400 workers by 4%, which is expected to result in annual savings of $8m, excluding a one-off hot of about $1m in the third quarter for “separation costs”.
Beyond Meat followed fellow plant-based giant Oatly in downgrading its revenue expectations for 2022. It now forecast sales to be in the range of $470m to $520m, rather than $560m to $620m previously. Its new total would represent an increase of 1% to 12% on 2021 revenues, down from the previous forecast for a 21% to 33% rise.
The embattled firm blamed inflation, rising interest rates, increased concerns over a recession, Covid and its potential impact on consumer behavior and demand levels, challenges related to labour availability and supply chain disruptions caused by the war in Ukraine.
CEO Ethan Brown said: “We recognise progress is taking longer than we expected, notwithstanding the increasing urgency and importance of our opportunity.
“Our transition to mass market consumption will occur as we actualise our vision: providing consumers with plant-based meats that are indistinguishable from, understood as healthier than, and at price parity with their animal protein equivalents. With the recent, dramatic, decline in consumer buying power, the importance of delivering on our price parity targets is magnified.
“We take note of this powerful reminder, and continue to advance as well as broaden cost reduction activities in service to realizing price parity.”
Shares in the Californian company closed down 7.8% to $31.39.
It is a dramatic fall from the $235 a share heights in July 2019, three months on from its May IPO.
Brown added: “Across the balance of the year, we are tightly focused on intensifying OpEx and manufacturing cost reductions, executing against a series of planned market activities for our global strategic partners, and strengthening our retail business through core support and the introduction of one of our best innovations to date. Through these and other measures, we are confident we will emerge from the current economic climate leaner and stronger, and well positioned for our next chapter of growth.”
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