Beyond Meat is anticipating improved gross margins due to US price increases and reduced promotional spending. The group’s margin rose to 14.7% in the second quarter from 2.2% a year earlier, with further price adjustments planned for the rest of 2024. Founder and CEO Ethan Brown expects continued margin progress through the year, supported by pricing adjustments, reduced promotional spending, and ongoing cost improvements.
However, the company adjusted its fiscal 2024 gross margin outlook to mid-teens from mid-to-high teens, while narrowing its revenue guidance range to $320-340m. Second-quarter net revenue exceeded expectations but fell 8.8% year-on-year, marking another sequential decline.
Price increases contributed to a 6.1% rise in revenue per pound, but group volumes declined by 14%. In the US, weak category demand led to a 7.5% revenue decrease and a 23.2% drop in volumes. International retail revenue also decreased by 12.1%, with a 2.5% decline in foodservice revenue.
CFO Lubi Kutua noted that the increase in net revenue per pound was driven by reduced promotional spending and favorable product mix, rather than strict price hikes. Despite a net loss of $34.5m, compared to $53.5m a year earlier, Beyond Meat’s adjusted EBITDA loss improved to $23m from $40m.
The company’s share price rose following the results, despite remaining below its IPO price. Analyst John Baumgartner expressed concern about downside risks to revenue guidance and the possibility of a capital raise. Beyond Meat is banking on its new product launches, such as the Beyond Sun Sausage, to drive sales and profitability.
To optimize growth, Beyond Meat is focusing on cost reduction, cash preservation, and strategic pricing and promotion strategies. Analyst Jon Andersen believes the company’s path to sustained growth will be gradual. William Blair’s analyst also commented on the company’s limited ability to invest in demand-driving activities in the short term.
With a commitment to sustainability and innovation, Beyond Meat continues its journey to establish a strong foothold in the plant-based meat market.