Beyond Meat posts surprise loss as storage slackens and restaurant sales falter

(Reuters) – Beyond Meat BYND.O on Monday posted a surprise quarterly loss and lower-than-expected sales, hurt by weaker demand for its plant-based meat in restaurants and retail stores after an early surge in the COVID-19 pandemic.

Shares fell 29% as sales rose at their slowest pace since the company’s IPO in May 2019. They had closed down 4%, in part due to McDonald’s Corp’s. MCD.N decision to launch a new line of plant-based meat options called “McPlant”, which was seen as the chain developing its own line of fake meat.

Several reports called the world’s largest burger chain’s decision earlier today to end Beyond Meat’s partnership with the company, but chief executive Ethan Brown said it was “grossly over the top”.

“Our relationship with McDonald’s is good. It’s really strong. Our work there on behalf of what they do continues,” he said. McDonald’s, however, declined to comment on its suppliers.

Beyond Meat also said it co-created the plant-based patty for McPlant after working to develop a so-called “PLT” burger, which was trialled in Canada earlier this year.

Brown said Beyond Meat will sell its burgers at 7,000 locations of pharmaceutical health company CVS Health Corp CVS.N in the United States as more and more people shop there. The company will also sell its Beyond Meatballs at 5,000 CVS pharmacies.

SLOWEST DISTRICT

After a nearly 200% rise in retail sales last quarter, growth slowed to 40.5% in the third quarter as consumers who had stocked their freezers with Beyond Meats sausages, burgers and meatballs at the start of the pandemic, have slowed down their purchases.

The company has also been hit by a sharp drop in sales in places such as academic institutions and offices due to the COVID-19 pandemic as well as delays in launches with some of its fast food partners.

U.S. restaurant sales fell 11.1% in the quarter as Beyond spent more than expected to deal with the fallout from weak restaurant demand.

Excluding items, the company posted a loss of 28 cents a share compared to analysts’ expectations for a profit of 5 cents.

Net sales rose 2.7% to $94.4m (£71.83m) but largely missed the $132.81m estimate.

The company decided to keep its outlook suspended, saying it was unable to predict the impact of COVID-19 on its business for the rest of the year.

Additional reporting by Praveen Paramasivam in Bengaluru; Editing by Aditya Soni and Arun Koyyur

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