Beyond Meat Inc. (BYND) has issued a profit warning for the third quarter and full year, leading to the announcement of a workforce reduction. The plant-based food company revealed that it would be cutting 19% of its global non-production workforce after failing to achieve the expected return to growth.
Lower Expected Revenue and Gross Loss
For the third quarter, Beyond Meat now anticipates a gross loss of approximately $7 million to $8 million. Additionally, the company expects revenue to amount to roughly $75 million, falling short of the $88 million consensus projected by FactSet. However, Beyond Meat does anticipate positive free cash flow at around $7.6 million.
Chief Executive Ethan Brown acknowledged the company’s disappointment, stating, “We anticipated a modest return to growth in the third quarter of 2023 that did not occur, reflecting further sector-specific and consumer headwinds.” Brown also shared that Beyond Meat plans to implement measures to address these challenges within their influence. Furthermore, the company intends to pursue a substantial reduction in operating expenses to enhance their cost structure.
Strategies to Improve Performance
In addition to workforce cuts, Beyond Meat will be reassessing its pricing strategy with the aim of boosting margins. The company will also focus on inventory management to reduce working capital and prioritize geographies that demonstrate revenue growth. Furthermore, in the U.S. retail market, they will leverage their portfolio and marketing efforts to counteract any misinformation circulating about their products.
Factors Impacting Q3 Revenue
Weaker-than-expected sales volume in U.S. retail and foodservice channels, underwhelming returns from promotions, and unfavorable changes in product sales mix have contributed to the decline in third-quarter revenue.
Following the announcement, Beyond Meat’s stock initially showed gains but eventually slid lower. Year-to-date, the stock has dropped by 52%, while the S&P 500 has seen a 10% increase.