Dive Brief:
- Beyond Meat met earnings expectations for fiscal year 2022, with net revenues of $418.9 million — right in its predicted range of $400 million to $425 million. After more than a year of missing expectations, management said this is a sign that its strategy toward positive growth is working.
- The company’s net revenues in its fourth quarter were $79.9 million, a 20.6% decline from a year before. During the period, Beyond Meat reported a net loss of $66.9 million compared to $80.4 million a year ago. The company reaffirmed its expectation to be cash flow positive by the second half of this year.
- Plant-based meat has suffered in the last year and a half as consumers have become less willing to buy the often-more-expensive substitutes. Beyond Meat, which is the only publicly traded company in the space, has exemplified these struggles as its sales have slowed and losses have mounted.
Dive Insight:
While Beyond Meat’s problems are far from over, drastic measures taken in the last quarter are finally starting to pay off.
Food companies generally compare performance each quarter with the same time a year before, but executives pointed out in their call with analysts Thursday that several financial measures — operating expenditures, gross margins, and sales figures including consumer purchase frequency and repeat buys — had all improved compared to the company’s previous earnings report in November.
These came through reducing operating expenses — mostly through job cuts and reducing the number of co-packers the company works with, slimming down inventory by 17% throughout the fiscal year, and reducing marketing.
In his remarks in the earnings call, CEO Ethan Brown said Beyond Meat has been working to transition from a “growth above all” strategy to what he described as a “sustainable long-term growth model.”
“We have confidence that the efforts properly done will over time generate outsized gains,” he said. “We are demonstrating clear and meaningful early progress.”
Investors applauded the results, pushing Beyond Meat’s shares up about 20% in mid-day trading on Friday.
However, there’s still quite a hill to climb. The amount of plant-based meat the company sold in the last quarter is down sharply compared to last year, especially in the United States. In grocery stores, the company sold 22.5% less, and foodservice volumes were down 25.4%.
Brown said he understands the challenges of the current consumer product environment.
One of the biggest problems the entire plant-based meat sector has faced are high prices. While the newness of the segment has meant that costs are a bit higher, price parity has been a goal of plant-based meat companies. Brown has set a goal to have at least one of the company’s products at parity by 2024, and has said previously that the company is well on its way.
He didn’t mention the price parity goal again on Thursday, but Brown said Beyond Meat has been doing some limited tests of reduced prices and seen encouraging results. He said analysis looking at the drop in plant-based meat sales as across-the-board inflation has soared in the last year and a half that hasn’t taken its relatively high price into account has been missing a huge part of the story.
“For people to think that we’re going to just sail through that [period of inflation] with products that are literally twice the cost of the next available alternative that’s been consumed for thousands of years, I think is naive, right?” Brown said on the call. “So we’ll get through this period of inflation. We’ll get back to being able to communicate with the consumer the truth about our products versus some of the things that are being written. And you’ll see growth again.”
Analysts were encouraged by the earnings report, but remained skeptical. Brian Holland, a managing director and senior research analyst at Cowen, said in a note on the earnings that “plant based meat adoption trends thus far [are] exacerbated by a challenging macro we believe will make it more difficult to induce consumer trial.”
