Beyond Meat's share prices dropped by as much as 18% in extended trading on Wednesday after the company released worse-than-expected third-quarter earnings results.
The artificial meat producer reported widening losses for its latest quarter, which it blamed on slowing demand for its products and higher overall costs. For its third quarter, Beyond Meat reported a loss of $54.8 million or 87 cents per share, significantly higher than the $19.3 million or 39 cents per share Wall Street expected.
The company reported total revenues of $106.4 million for the quarter, lower than the $109.2 million expected. The slight drop in sales over the period is counter to the typical seasonal trend for the company's artificial meat products, which typically increases during the third quarter.
The company attributed the higher losses for the quarter to higher transportation and warehousing costs and an increase in inventory write-offs, which it said greatly ate into its profits for the period. The write-offs include a $9 million loss due to major water damage at one of its manufacturing plants.
Outside of the United States, the company reported excellent growth, with revenues in the international grocery and restaurant sectors more than doubled during the quarter.
Meanwhile, sales in the United States declined 13.9% year over year, owing mostly to lower grocery demand. In contrast to 2020, CEO Ethan Brown told analysts that supermarket sales did not help make up for declining orders.
Beyond Meat said lower demand and operational problems, such as bad weather and supply chain issues, hampered domestic sales. Brown claims that new market rivals are placing pressure on its market share, but the evidence does not show that decreasing demand is the result of rivals snatching its clients. New items, such as meatless chicken, helped to overcome sales reductions in the United States.
In October, the business issued a warning to investors, stating that sales would be lower than expected due to a variety of circumstances, including the new wave of Delta variant infections and distribution issues.
The company spooked investors with its fourth-quarter outlook, where it predicted that sales would likely continue to decline in the short term. Beyond Meat stated that it expects some of the operational issues that plagued it in the third quarter to continue in the fourth quarter.
Other variables influencing the prediction include labor shortages in restaurants and reluctant ordering behavior owing to the pandemic's unpredictability. For its fourth quarter, Beyond expects net revenues of $85 million to $110 million. During the quarter, Wall Street expected sales of $131.6 million.
