Beyond Meat posted a surprise quarterly loss and lower-than-expected sales on Monday, hurt by weaker demand for its plant-based meat at restaurants and retail stores after a surge at the start of the COVID-19 pandemic.
Shares slumped 29% as sales grew at its slowest pace since the company went public in May 2019. They had closed down 4%, partly due to McDonald’s Corp’s decision to launch a new line of plant-based meat option called “McPlant”, which was seen as the chain developing its own line of faux meat.
Several reports called the move by the world’s biggest burger chain earlier in the day as the end to Beyond Meat’s partnership with the company, but Chief Executive Officer Ethan Brown said that was “greatly exaggerated”.
“Our relationship with McDonald’s is good. It’s really strong. Our work there on behalf of what they’re doing continues,” he said. McDonald’s, however, declined to comment on its suppliers.
Beyond Meat also said it had co-created the plant-based patty for McPlant after working to develop a so-called “PLT” burger, which was tested in Canada earlier this year.
Brown said Beyond Meat would sell its burgers at 7,000 locations of pharmacy healthcare company CVS Health Corp in the United States as more people buy groceries there. The company will also sell its Beyond Meatballs at 5,000 CVS pharmacy stores.
SLOWEST QUARTER
After a nearly 200% rise in retail sales in the last quarter, growth eased to 40.5% in the third quarter, as consumers who had stocked up their freezers with Beyond Meats sausages, burgers and meatballs at the start of the pandemic, slowed purchases.
The company was also hit by a sharp drop in sales at locations such as academic institutions and offices due to the COVID-19 pandemic as well as delays in launches with some of its quick service restaurant partners.
U.S. restaurant sales fell 11.1% in the quarter, while Beyond spent more than expected to deal with the fallout of weak demand from restaurants.
Excluding items, the company posted a loss of 28 cents per share compared with analysts’ expectations of a 5 cent profit.
Net sales rose 2.7% to $94.4 million (£71.83 million), but widely missed the $132.81 million estimate.
The company decided to keep its outlook suspended, saying it was unable to predict the impact of COVID-19 on its business for the rest of the year.
(Additional reporting by Praveen Paramasivam in Bengaluru; Editing by Aditya Soni and Arun Koyyur)
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