Beyond Meat shares rally as price hikes, cost-cutting drives up profit margins

Beyond Meat (NASDAQ:BYND) shares rallied on Thursday and wiped out losses from the past month as the company’s efforts to lower costs and cash consumption resulted in a narrower loss from a year ago.

Coupled with higher prices and scaled back promotions, net revenue per pound increased 6.1% year-over-year and drove the company’s gross margin to 14.7%, significantly higher than the 2.2% margin in Q2 last year.

“We expect to see further gross margin progress across the balance of the year, reflecting combined impact of more fully distributed pricing adjustments, continued moderation of promotional spending, and ongoing COGS improvements as we consolidate our network and continue on our lean management journey,” Beyond Meat CEO Ethan Brown said on the company’s earnings call.

And although the company attributes some of the margin improvement to higher prices, the increase has not impacted demand as much as expected as there was growth in certain accounts that are significant national grocer accounts and stabilization in others.

“We’re quite pleased [to see growth in certain accounts] given we instituted a significant price increase, [and] pulled back on trade,” Brown added on the call.

The results and upbeat comments from the CEO launched shares to a 25% gain at the close, it’s largest one-day move since May.