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Beyond Meat Shares Tumble After Earnings Miss, Cautious Sales Guidance

Slowing restaurant sales and rising expenses ate into Beyond Meat's first quarter margins and produced a wider-than-expected loss of 42 cents per share.

Beyond Meat  (BYND) - Get Report shares tumbled in pre-market trading Friday after the plant-based food group posted a wider-than-expected first quarter loss as expenses piled up and restaurant sales slowed in the waning months of the coronavirus pandemic. 

Beyond Meat's first quarter loss of 42 cents per share, on sales of $108.7 million, came amid tough comparables for the El Segundo, California-based group, given last year's pre-pandemic stockpiling, and were hit by rising costs for freight, marketing and new product testing. 

U.S. foodservice sales fell 26% to $16.7 million, Beyond Meat said, and 44% to $10.4 million internationally. U.S. retail sales rose 27.8% to $63.8 million, while international retail sales jumped 189% to $17.2 million.

Current quarter sales were forecast between $135 million and $150 million, a 32% increase from last year's levels at the higher end of the range, but the group said it was unable to provide full-year guidance with "reasonable certainty" given the economy's current pandemic conditions.

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"We spent the last year investing heavily in our business, establishing infrastructure, personnel, innovation capabilities, partnerships and product pipeline against our long-term growth and market share objectives," CEO Ethan Brown told investors on a conference call late Thursday. "Making these sizable investments during a period of serious disruption to important segments of our business impacts our operating margin and important metrics such as gross margin through higher fixed overhead."

"These outcomes are not unexpected and are a direct result of our belief that it makes little sense to limit our ability to capture future growth due to transient pandemic conditions," he added. "We will continue to make such investments, and I'm grateful for all of our team members who work so diligently to keep building our foundation through such a tumultuous time."

Beyond Meat shares were marked 5.3% lower in early trading Friday to change hands at $112.70 each, a move that extends the stock's four-month decline to around 33%.

"Challenges in foodservice, an aggressive investment agenda, and margin headwinds continue to weigh upon profitability," said Oppenheimer analyst Rupesh Parkih, who carries a market-perform rating on the stock. 

"We view Street projections as overly optimistic and would await a full reset before becoming involved in shares," he added. "We continue to be optimistic that a post COVID-19 environment coupled with recent partnerships could lead to improved fundamentals down the road, but the near term outlook remains still quite challenging."