Beyond Meat on Monday said it swung to a loss in the third quarter after the coronavirus pandemic weakened demand for its meat alternatives at restaurants.
CEO Ethan Brown said that some of blame for its lackluster results lies with consumer stockpiling. Panic-buying at the start of the crisis lifted Beyond's grocery sales in the previous quarter, but as the pandemic stretched on into the autumn, the trend stabilized.
Shares of the company plunged 27% in after-hours trading, capping off an already eventful day for the stock. Shares were halted twice on Monday following the announcement that McDonald's was adding plant-based items to its menu.
Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Loss per share: 28 cents, adjusted, vs. earnings of 5 cents per share expected
- Revenue: $94.4 million vs. $132.8 million expected
For the third quarter ended Sept. 26, Beyond reported a net loss of $19.3 million, or 31 cents per share, compared with net income of $4.1 million, or 7 cents per share, a year earlier. The company spent $700,000 on repackaging items for grocery stores and $1.1 million in write-offs of foodservice inventory that was deemed unsalable.
Excluding the $1.8 million in costs related to the pandemic and other items, the company lost 28 cents per share, missing the earnings of 5 cents per share expected by analysts surveyed by Refinitiv.
Net sales rose 2.7% to $94.4 million, missing expectations of $132.8 million. Sales of its U.S. foodservice segment, which includes restaurants, corporate catering services and universities, fell 11% in the quarter.
Brown said that there are "strong signs that certain large [quick-service restaurants] are planning menu additions," but declined to provide any more details because of the uncertainty caused by the pandemic. Fast-food restaurants, which have been bouncing back from the crisis much faster, account for about one-third of Beyond's foodservice sales.
When asked about the collaboration with McDonald's, Brown said that he respected the chain's decision to refer to its McPlant line in "generic" terms. He also paraphrased writer Mark Twain's famous quote about the rumors of his death being greatly exaggerated.
"Our relationship with McDonald's is really good, it's really strong," said Brown.
But he said that he would resist efforts from McDonald's to leave Beyond Meat's branding off of any products created by the maker of meat alternatives. Brown told analysts that it would be in everyone's best interest.
U.S. grocery sales surged 40.5%, but it only barely offset the lower restaurant demand. Brown told analysts on the conference call that food makers in other categories have seen similar patterns following the initial stockpiling affect their third quarters.
Brown also announced on the call that Beyond products will be sold at CVS locations.
The company is also quickly expanding outside of the U.S. In September, it agreed to build two factories near Shanghai as it looks to build a larger presence in China. International revenues plunged 45% in the quarter, hurt by the 65% decline in foodservice sales.
Read the full earnings report here.
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