Beyond Meat (NASDAQ:BYND) posted better-than-expected results for the first quarter. The alternative meat maker experienced strong retail demand for its products. The strong demand partially offset the disruption to foodservice sales amid COVID-19.
The pandemic has severely hurt the supply chain for meat processors like Tyson Foods (NYSE:TSN). Notably, Tyson Foods and peers like Smithfield Foods temporarily closed some plants where COVID-19 spread among workers. Beyond Meat thinks that meat shortage amid the current crisis might help it reach new customers.
However, the company withdrew its fiscal guidance despite more demand in the retail channel. The company suspended its 2020 outlook due to uncertainty related to the foodservice channel amid the pandemic.
Beyond Meat stock has risen by 17.3% as of 11:09 AM ET today. The stock has risen by 32.5% year-to-date as of May 5.
Beyond Meat’s strong Q1 results
Beyond Meat’s net revenue grew 141% YoY (year-over-year) to $97.1 million in the first quarter. Higher volumes drove the top-line growth, which was partially offset by a lower net price per pound. The plant-based meat maker faced a decline in its sales to foodservice customers in the second half of March. However, retail sales surged amid the pandemic. The company’s US revenue grew 156% to $72.6 million. The retail revenue grew 157% to $49.9 million, while the foodservice revenue rose 156% YoY to $22.6 million in the US.
The international net revenue rose 106% YoY to $24.5 million. Notably, the company’s international retail sales increased to $5.95 million in the first quarter of 2020 compared to 118,000 in the first quarter of 2019. The retail sales got a boost due to an increased number of distribution points, accelerated sales among existing retail customers, and new products. Meanwhile, the international foodservice revenue grew 57% to $18.6 million in the first quarter.
Beyond Meat posted an EPS of $0.03 in the first quarter of 2020 compared to a net loss per share of $0.95 in the first quarter of 2019. Higher revenue and strong margins boosted Beyond Meat’s first-quarter earnings. The company beat analysts’ revenue forecast of $88.3 million. Also, analysts expected a loss per share of $0.07.
The company’s gross margin rose to 38.8% in the first quarter of 2020 compared to 26.8% in the first quarter of 2019. Higher volumes, production yield improvements, cost savings related to direct materials and packaging, and efficiency in direct labor and other variable overhead costs helped boost the gross margin.
Strong growth plans
According to a Reuters report, Beyond Meat plans to capture additional market share amid the disruption in the traditional meat market. The company plans to offer discounts to some US retailers this summer. Many customers think that Beyond Meat’s products are expensive. Offering discounts amid the pandemic might boost the company’s sales. The Reuters report also mentioned Beyond Meat’s plan to offer large value packs this summer.
Recently, Beyond Meat entered the Chinese market through its partnership with Starbucks (NASDAQ:SBUX). Starbucks’ menu in China now offers three new dishes in collaboration with Beyond Meat. The new dishes are Beyond Beef Pesto Pasta, Beyond Beef Classic Lasagna, and the Beyond Beef Spicy & Sour Wrap. Previously, the company collaborated with Starbucks to launch Beyond Breakfast Sausage in Canada.
To capture more opportunities in the Chinese retail and foodservice channels, Beyond Meat has partnered with Sinodis—a leading local distributor. Overall, the company is optimistic about its long-term growth prospects despite the short-term disruption due to COVID-19.