Posted: May 10, 2020
EL SEGUNDO, CALIF. – Beyond Meat, Inc.’s first-quarter played out in a similar fashion to other food and beverage companies. Strong sales through January and February gave way to mid-March disruption as stay-at-home orders pressured foodservice and led to a surge in retail sales.
“We began the year with strong momentum across our enterprise, followed by a meaningful slowdown in our foodservice business during the latter half of March as various regions around the world implemented stay-at-home orders,” said Ethan Brown, president and chief executive officer, during a May 5 conference call with analysts. “Although we did see a simultaneous boost in sales to retail customers, this was not enough to offset the deterioration of demand in our foodservice business.
“Nevertheless, we believe our dual-pronged approach of aggressively expanding the availability of Beyond Meat products in both retail and foodservice outlets served us well and helped to mitigate even more significant COVID-19-related disruptions to our revenues.”
Despite the disruption, the company had a strong quarter. Net income for the quarter ended March 28 totaled $1.8 million, equal to 3¢ per share on the common stock, and an improvement over the first quarter of 2019 when the company recorded a loss of $6.7 million.
Sales during the quarter surged to $97 million from $40 million the year prior.
“Growth in net revenues for the first quarter of 2020 was primarily driven by an increase in volumes sold, partially offset by lower net price per pound,” said Mark J. Nelson, chief financial officer. “Growth in volume sold was driven by expansion in the number of distribution points, both domestically and abroad, higher sales velocities at existing retail customers and contribution from new products introduced subsequent to the first quarter of 2019.”
The uncertainty caused by the coronavirus (COVID-19) outbreak prompted Beyond Meat to withdraw its fiscal 2020 guidance. Headwinds management anticipates affecting results include volume deleveraging and packaging costs to repurpose existing foodservice inventory to retail applications.
“We shifted foodservice lines over to retail production,” Mr. Brown said. “We've been repacking foodservice into retail sale units and doing things like launching an Amazon Fresh nationwide. We're also establishing our own direct-to-consumer system that will launch later this quarter.
“I'm working very hard with partners such as DoorDash and others … to help get the product to the consumer, even if it’s still in the QSR system. And then going much more aggressively in club, so we can get consumers value packs and allow them to have more at home.”
Despite the challenges, Mr. Brown sees an opportunity. A long-term goal of Beyond Meat has been to achieve price parity with conventional meat. Current issues with the animal-protein supply chain in the United States and a subsequent rise in prices means the price gap is closing in the near term.
“We are also offering lower-cost value packs, not just in the club channel, but to retailers nationwide that are interested in taking advantage of lower-cost pricing and higher quantities,” he said. “And, so, it’ll be interesting to see the uptake there given the spike in beef prices.”
He added that the company will do more discounting this summer to capitalize on the rise in conventional meat prices and possible shortages at retail.
“That’s helping retailers who have an issue with filling their shelves with protein,” he said. “It helps consumers because it provides very healthy and reasonably priced protein for them during this period.”
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