Plant-based meat maker Beyond Meat reported lower-than-expected sales in the third quarter due to a slump in U.S. demand.
Beyond Meat said its sales increased 12.7% to $106.4 million for the July-September period. That was lower than the $109 million Wall Street forecast, according to analysts polled by FactSet.
Shares in the company based in El Segundo, California, dropped 18% in after-hours trading.
Beyond Meat President and CEO Ethan Brown said the results were especially disappointing because they came on the heels of the second quarter, when the company reported record revenue of $149 million.
In the third quarter, U.S. retail sales were down nearly 16% while food service sales fell 7%.
Brown said the delta variant of the coronavirus diminished restaurant demand, particularly at the independent restaurants where the majority of Beyond Meat’s products are sold.
Labor shortages at Beyond Meat manufacturing plants and grocery stores hurt product distribution. And severe weather impacted one of its manufacturing facilities in Pennsylvania, cutting off water supplies for two weeks.
Brown said Beyond Meat also lost some market share to an increasing number of competitors in the plant-based meat category. But he said he doesn’t believe the results indicate declining consumer interest in Beyond Meat’s products. He noted that repeat-buying rates rose in the quarter.
“I think all of these factors are coming together to create an unusual quarter for us, but there is no indication in my view that … there is some fundamental change in the consumer mindset toward our product,” Brown said in a conference call with investors.
He said the company plans to push the health and climate benefits of its products in an aggressive marketing push next year.
But in the meantime, Beyond Meat expects the turmoil to continue in the current quarter. The company said it expects net revenue in the range of $85 million to $110 million in the October-December period, far below Wall Street’s forecast of $130.5 million.
International revenue was a bright spot in the third quarter, jumping 142% as Beyond Meat expanded in China and Europe. Brown said initial tests of McDonald’s McPlant burger __ which was made in partnership with Beyond Meat __ have been positive in Europe and the U.S.
Beyond Meat said inflation has not yet been an issue with its raw ingredients, like the pea protein it uses to make its burgers, because it has long-term contracts in place. But higher prices for packaging could impact fourth quarter results.
The company reported a net loss of $54.8 million, or 87 cents per share. That also fell short of analysts’ forecast of a 37-cent loss.