By Juveria Tabassum
(Reuters) -Beyond Meat said it would ramp up product prices and "steeply reduce" costs this year after topping market expectations for quarterly revenue on Tuesday, sending its shares up 75% in extended trade.
About 40% of the company's shares were short at the end of January, as per LSEG data.
Beyond Meat (NASDAQ:BYND), which supplies its plant-based meat patties to fast food chains such as McDonald's (NYSE:MCD) and Yum Brands, said it would increase prices on some of its product lines from the second quarter in a bid to restore margins.
"Though varied across channels and product lines, we expect the overall impact of these pricing changes to meaningfully impact margin across the balance of the year," CEO Ethan Brown said on a post-earnings call.
In the past, the company had lowered prices to bridge the gap between faux meat and traditional protein to appeal to budget-conscious U.S. consumers, as demand lagged in the country.
It now expects gross margin in 2024 to be in the mid to high teens range, compared to gross margin of negative 24.1% in 2023, as it benefits from cost cut measures, including the discontinuation of its Beyond Meat jerky product line.
"We're cautious in our optimism. We've obviously had some tough years, but by making these changes and creating the sustainable baseline ... we're going to create some room for ourselves to get back on track for growth," Brown added.
The company's Beyond IV beef patties, which will be launched in U.S. retail channels, "bodes well" to regain consumers who moved away from the faux meat category due to health concerns and a negative consumer sentiment around Beyond Meat's ingredients, said John Oh, analyst at research firm Third Bridge.
Volumes rose 8% in the quarter ended Dec 31, compared to a 3.5% increase in the third quarter.
Net revenue for the fourth quarter fell 7.8% to $73.7 million, but topped analysts' average estimate of $66.7 million, as per LSEG data.