EL SEGUNDO, CALIF. – Beyond Meat Inc. lessened the blow of its poor third-quarter results released Nov. 8 on Nov. 2 when it said the results would not meet expectations established by the company. Management also did not give much additional detail on Nov. 8 about the steps it will be taking to improve the business’ performance.
“We expected a modest return to growth in the third quarter of 2023, which did not materialize as category-specific and broader consumer headwinds continued and drove weaker-than-expected sales volumes, reduced promotional effectiveness and adverse changes in our product sales mix,” said Ethan Brown, president and chief executive officer, during a Nov. 8 conference call with securities analysts.
The plant-based meat manufacturer recorded a loss of $70.5 million for the quarter ended Sept. 30, which compared with a loss of $101.7 million during the same period of the previous year.
Quarterly sales were $75.3 million, down from $82.5 million the year prior.
Quarterly US retail sales of $30.5 million were down 34% when compared with the same period the year before, and US foodservice sales of $12.5 million were down 22%. Combined, US sales of $43.1 million were down 31% compared with 2022.
“We are contending with two main headwinds,” Mr. Brown said. “First, there are broader challenges facing the US consumer, namely higher prices and reduced buying power. We believe that the corresponding consumer action of trading down among proteins is foregoing more expensive cuts of animal meat for cheaper cuts of meat, (is) similarly impacting our category and brand.
“Second … we continue to face serious category perception challenge. As I’ve long maintained as a brand and category, we will cross the chasm to mainstream on the strength of progress across taste, health and price and to a lesser extent here in the US, awareness of the planetary benefits of our products.”
International sales were a bright spot for the company, rising 59% to $32.3 million from $20.3 million the year before.
“Net revenues from international retail sales in the third quarter of 2023 were $14.2 million, an increase of $4 million, or 38.8%, compared to the year-ago period due to a 42.8% increase in volume of products sold, primarily reflecting strong sales from new product introductions and the lapping of a weak year-ago comparison partially offset by a 2.8% decrease in net revenue per pound,” said Lubi Kutua, chief financial officer and treasurer.
International foodservice sales were $18.1 million, up from $10.1 million the year before. The increase was driven by a 91% increase in volume sold reflecting strong sales to a large quick-service restaurant customer in the European Union, according to the company.
Mr. Brown outlined five steps the company is taking to improve Beyond Meat’s cost structure and overall performance, including reducing its global workforce by approximately 8%, reviewing its pricing strategy, utilizing inventory management to reduce working capital, focusing on specific channels and geographies that are exhibiting revenue growth, and, in US retail, specifically, using marketing to “counter misinformation” about its products and the category in general.
Securities analysts on the call were keenly interested in what product line or geographic changes may be coming. A product specifically asked about was plant-based jerky.
“ … what’s on the table is our product lines that are underperforming in a way that we think is perhaps structural on a margin perspective or we’re just not exhibiting the growth we want to see,” Mr. Brown said. “So, some of what you mentioned probably falls into that pretty well.”