Beyond Meat Reports Larger-than-Expected First Quarter Loss and Lower Sales By Reuters

(Reuters) -Beyond Meat posted a bigger-than-expected quarterly loss and an 18% drop in sales on Wednesday as its higher-priced plant-based meat products hit sales.

Why is it important?

Demand for Beyond Meat’s (NASDAQ:) products, including burger patties, sausages and ground beef, has weakened as customers such as McDonald’s (NYSE:) and Yum Brands have experienced sluggish consumer demand due to inflation.

context

Beyond Meat raised prices this quarter, but the company’s sales fell 16.1% as consumers severely limited their spending.

Despite the price increases, the company’s margins were pressured by rising manufacturing and material costs. Gross margin for the quarter increased 4.9%, compared with 6.7% last year.

key quotes

“An uphill battle remains for the plant-based industry as consumers are still tightening their belts and unlikely to try new luxury grocery brands,” said eMarketer analyst Blake Droesch.

market reaction

Shares of the company, which maintained its outlook for full-year revenue and gross margin, fell about 14% to $7.04 in trading after the bell.

by numbers

The company reported revenue of $75.6 million in the first quarter, compared with analysts’ average estimate of $75.2 million, according to LSEG data.

In its U.S. foodservice segment, the company’s revenue fell 16.2% to $12.3 million, compared with a 5.3% decline a year ago to $14.7 million.

On an adjusted basis, Beyond Meat reported a loss of 72 cents per share for the quarter ended March 30, compared with analysts’ estimates of a loss of 67 cents per share.