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Shares of Beyond Meat, Inc. BYND have declined 11.8% on Oct 22 as the company trimmed revenue outlook for third-quarter 2021. Management believes that demand in the said quarter was hurt by the broader macro and micro-economic factors, also including the COVID-19 Delta-variant impacts. The company witnessed lower retail orders for a longer duration from a Canadian distributor, which coincided with the reopening of restaurants, delays in distribution expansion and shortfalls at some U.S. foodservice customers, attributed to the effects of the Delta variant.
Consequently, management lowered its net revenue outlook to $106 million for the third quarter, based on the preliminary results. This updated view is weaker than the prior guided range of $120-$140 million, which was issued on its last quarter’s earnings call on Aug 6. Beyond Meat generated net revenues of $94.4 million in the year-ago quarter.
We note that the company witnessed challenges in operations, resulting in unfulfilled orders with adverse weather conditions causing the loss of potable water for two weeks at a Pennsylvania facility and water damage to inventory in the other. These factors might have dampened the company’s revenues in the quarter to be reported apart from the aforesaid headwinds.
However, these impacts were somewhat offset by higher orders from an international customer in the same quarter. Beyond Meat is slated to release third-quarter 2021 earnings on Nov 10, 2021, after the closing bell.
We note that this presently Zacks Rank #4 (Sell) company has been witnessing higher operating costs for a while now. Increased marketing expenses along with higher production trial activities and elevated outbound freight costs are elevating costs. Escalated transportation expenses are also hurting the company’s performance. Higher costs stemming from marketing and promotional activities as well as expenses associated with operating amid the pandemic are also a concern.
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These factors might affect the company’s bottom-line results for the quarter to be reported. The Zacks Consensus Estimate for the September quarter’s earnings is currently pegged at a loss of 34 cents, indicating deterioration from the loss of 28 cents reported in the year-earlier quarter.
Nonetheless, Beyond Meat remains focused on product innovations and launches. The company is also witnessing a continued rise in its household penetration as well as a strong purchase frequency, buyer rates and repeat rates. These along with its prudent efforts to boost offerings and expand distribution capabilities might provide some cushion.
Shares of Beyond Meat have decreased 24% in the past three months against the industry’s 1.6% growth.
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