Beyond Meat has reduced its yearly revenue projection and failed to meet net sales estimates for the second quarter, suggesting that the decreasing demand for its more expensive plant-based meat alternatives isn't about to bounce back. This news caused an 8% drop in share prices in after-hours trading on Monday.
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Facing inflationary challenges, consumers are now gravitating towards more affordable animal proteins rather than plant-based substitutes. Concerns about the genuine health advantages of plant-based meat are also impacting growth, highlighted by CEO Ethan Brown during a post-results discussion. "This shifting perspective has been influenced by interest groups who have managed to instil uncertainty and apprehension concerning the ingredients and the method we, and other brands, use to produce plant-based meats," he commented further.
In an attempt to appeal to a wider customer base, Beyond Meat has been "trialling" price reductions, aiming to match or even undercut the cost of traditional animal protein with its primary products. For 2023, the company now anticipates revenues to be in the range of $360 million to $380 million, down from their previous estimate of between $375 million and $415 million.
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The company also expressed doubts about reaching its goal of attaining positive cash flow by the latter half of 2023. CFRA Research analyst, Arun Sundaram, remarked, "This revised guidance is a letdown, especially after a promising start to the year. We're back to discussing cash consumption and potential capital injections... A strategic shift is needed to steer this company in the right direction."
In the quarterly figures, Beyond Meat reported a nearly 31% decrease in net revenue, landing at $102.1 million, which was below the analyst average prediction of $108.4 million based on Refinitiv data. On the brighter side, efforts to mitigate supply chain costs and other cost-controlling measures meant the company posted a smaller loss than anticipated: 83 cents against a forecasted 86 cents. It was noted last October that the company intended to make job cuts, which was predicted to result in an approximate saving of $39 million over a year.