Packs of Beyond Meat plant-based burger patties are displayed for sale.
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Beyond Meat on Thursday reported a wider-than-expected loss as higher costs and investments in its business weighed on margins.
The company also expressed caution for the second half of the year, citing the delta Covid variant.
Shares of the company fell more than 4% in extended trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Loss per share: 31 cents vs. 24 cents expected
- Revenue: $149.4 million vs. $140.8 million expected
In the fiscal second quarter, Beyond said its net loss widened to $19.7 million, or 31 cents per share, from a loss of $10.2 million, or 16 cents per share, a year earlier. Analysts surveyed by Refinitiv were expecting a loss per share of just 24 cents.
The company said losses accelerated due to investments it is making to support its expansion efforts, such as adding to its workforce and spending more on marketing, as well as higher freight costs.
Net sales rose 31.8% to $149.4 million, topping expectations of $140.8 million.
In the United States, which accounts for two-thirds of Beyond’s revenue, grocery demand fell as the company faced tough comparisons with a year ago, when consumers were stockpiling food in the face of lockdowns. Grocery outlets still account for roughly three-quarters of Beyond’s U.S. sales.
U.S. food service sales more than tripled compared with a year ago as diners returned to restaurants. However, the company said that it saw a significant reduction in the number of Dunkin’ locations that carry its Beyond Sausage. CEO Ethan Brown said the company is still engaged with Dunkin’ about new products and distributing its sausage alternative to locations in the western U.S.
Outside the U.S., both grocery and food service saw sales more than double. The company has been looking to Europe and China as key parts of its plan to become a global supplier of meat alternatives and has been investing in expanding production capabilities in those regions. Beyond launched its meatless meatballs in Europe for the first time during the quarter.
Looking ahead to the third quarter, Beyond said it expects revenue of $120 million to $140 million, falling short of Wall Street’s estimates of $153.3 million. The company said that it expects food service sales growth to moderate because restaurants and cafeterias restocked their bare refrigerators and freezers during the second quarter.
Brown told analysts on the earnings call that some restaurants are being more conservative about how much they order because of the rise of the delta variant and a shortage of willing workers. He also said that labor issues delayed at least one of its food service launches, which has been postponed to early next year.
The delta variant has become the dominant form of Covid in the United States, leading to a surge of new cases in recent weeks, particularly in areas with low vaccination rates. While many restaurant companies say so far they haven’t seen a material impact to their sales, some localities are beginning to impose restrictions. New York City, for example, will require proof of vaccination for some indoor activities, such as eating inside, which could hurt restaurant sales.
“I’m optimistic about what lies ahead,” Brown said in a statement. “That said, given the recent uptick of Covid-19 cases, which could disrupt demand patterns, we believe caution for the balance of the year generally remains appropriate.”