Beyond Meat moves forward following a terrible year.
By the end of December 31, 2022, Beyond Meat, Inc. had lost $366 million in its fiscal year 2022—more than twice as much as it had lost $182 million the year before. Even worse, revenues in 2022 were $419 million, 10% less than the previous year.
The year-round increase in expenses and the persistently low customer demand for more costly meat substitutes put significant pressure on the outcomes.
Following the company’s dismal third-quarter results in November 2022, management said that the corporation would be shifting from an operational style that prioritized growth above all else to one that focused more on positive cash flow and sustainable growth. During a conference call with equities analysts on February 23, Ethan Brown, the company’s president and CEO, gave an explanation of the complete pivot while talking about Beyond Meat’s outlook for 2023 and its fourth-quarter performance.
The company has decreased its external production footprint in North America from a peak of eight copackers in 2022 to three, in addition to cutting manpower. The management of inventories has also gained importance.
In order to meet our 2022 goal of having inventory be a net source of cash for the year, we can disclose that we lowered our inventory balance by $48 million, or 17%, from Q1 to Q4, Mr. Brown stated. “In 2023, we plan to accelerate this momentum.”
Mr. Brown is working to restore the growth of the company’s core products—especially those found in the fresh meat case—while also stabilizing the long-term outlook of the business through targeted promotions, innovation, and messaging about the benefits of sustainability and health. Short-term initiatives include expanding the reach of core products in foodservice and pushing products like Beyond Steak farther into the frozen food aisle.
Compared to the fourth quarter of 2021, when the company lost $80 million, Beyond Meat’s fourth quarter loss of $67 million represents an improvement.
Sales for the quarter were $80 million, compared to $101 million in the previous year.
Because the quarterly loss was less than expected and Beyond’s stock price increased by 13% to $19.40 a share in overnight trading, some investors saw the loss as a “win.”
Beyond Meat has guided sales for the upcoming fiscal year 2023 to be between $375 million and $415 million. The management hopes to achieve cash flow positive operations in the second half of the year.
“We projected (a) net sales decline in the mid-teens range in the first half of 2023 and net sales growth in the low double-digit range in the second half of 2023,” stated Lubi Kutua, chief financial officer and treasurer, “in terms of the distribution of revenues for the year, on a percentage basis compared to their respective year ago periods.” “For the entire year 2023, gross margin is anticipated to be in the low double-digit range, starting the year slightly positive and increasing sequentially throughout the year.”
Mr. Brown believes the company will capitalize on general category weakness in the second half of 2022 to achieve second-half sales growth.
Looking at the third and fourth quarters of 2022, those weren’t particularly high figures that We don’t need to lap those enormous numbers, he continued. Thus, for the most part, we have a solid foundation for growth in the second half of the year.
Additional measures being implemented to accelerate growth in 2023 include more focused promotional efforts and targeted discounts.
“This is around a kind of strategic look at teasing out what happens when the consumer faces a decision to buy animal protein or Beyond Meat with a price delta that is not as significant as it has been in the past,” Mr. Brown said in reference to the discounting initiatives.
The pricing experiments have a very specific focus. Additionally, we’re focusing on segments where customers are considerably more interested in our value proposition rather than giving a general discount in the foodservice industry by using the same discipline and attention to pricing experiments.
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Similar to the discounted program, there will be targeted marketing initiatives. Reaching out to customers who are on statin drugs was one example provided by Mr. Brown.
“They ought to be aware of our offerings and comprehend the comparative health advantages between animal protein steak and Beyond Steak,” he remarked. Can we thus allocate our resources effectively in that way?
“How can we reach younger individuals who care about the environment and climate change when they enter the consumer group that will be doing their food shopping? We’re delving much further into those kinds of topics to learn how to get the most out of every dollar we spend.