Beyond Meat “Disappointed” With Q3 U.S. Retail Sales Declines
Despite instituting broad cost-saving measures, Beyond Meat’s struggle to right the ship has continued with the company still combatting “broader consumer headwinds” domestically and only “pockets of growth” internationally, Beyond Meat CEO and cofounder Ethan Brown said in Wednesday’s third quarter earnings report.
In line with its preliminary Q3 earnings released last week, Beyond Meat reported sales of $75.3 million, a decrease of 8.7% year-over-year. Gross margin loss improved to -9.6%, compared to -18% in the same period last year, showing that the company’s move to reduce inventory and cost reduction had helped some of the challenges it had faced in the last year.
“We are disappointed by our overall results,” Brown said in a prepared statement. “We expected a modest return to growth in the third quarter which has not materialized.”
Brown laid out the plan that the brand has been following to cut costs including tightening its labor force, re-aligning pricing strategy, inventory reduction and prioritizing its geographic footprint and channel strategy.
The plant-based meat maker announced last week it was reducing its non-production workforce by 19%, or approximately 65 positions. The labor restructuring is expected to result in about $9.5 million to $10.5 million in operating expense savings.
The company has reduced its full-year outlook once again, bringing its net revenues down to between $330 million and $340 million from its Q2 reassessment of $360 to $380. Gross profits are expected to now be flat for the year compared to the mid to high single-digit range announced in the second quarter.
The brand will also be considering discontinuing select “underperforming” product lines.
“Obviously, we’re very focused on beef, burger, sausage and chicken lines and things of that nature and really focused on the partnerships we have in Europe and some of the new retail items we’ve offered there,” Brown said.
U.S. retail sales declines are the main challenge for Beyond. Its sales in this channel decreased -33.9% to $30.5 million in Q3, compared to $46.2 million in the same period last year, primarily due to an 18.8% decrease in volume of products sold reflecting the softening of consumer demand.
At one point, Brown seemed to place part of Beyond Meat’s sales declines on an “attack platform” of lobbyists aimed at creating a false narrative about the plant-based meat category.
“There is a loud and steady drumbeat of advertisements, op-eds and social media posts and activities that seek to negatively influence the consumer regarding our products and the category generally,” Brown said.
As a counterpoint, Brown pointed to the institutional support the brand has seen in Europe. The company reported incremental growth internationally of retail sales which were up 38.8% to $14.2 million in the quarter, compared to $10.2 million in the year-ago period. The international foodservice channel continued to grow hitting $18.1 million, a 78.7% increase compared to Q3 2022.
Brown closed the question-and-answer section saying that “the U.S. has been slow, it’s dominated by vested interests, and the government is very much beholden to them. So this transition here is going to be about business and the consumer making the change.”
