Oat milk brand Oatly is planning to cut jobs as coronavirus restrictions in Asia dampen its sales forecast for this year.
Shares in the Swedish alternative milk brand sank 12.7% to trade at $2.14 on Monday after the company said that its third-quarter earnings had missed expectations.
The company said it plans to slash costs by up to 25% partly through cutting jobs in its corporate roles as well as its divisions in Europe, the Middle East and Africa.
An Oatly spokesperson told CNN Business on Tuesday that they could not confirm the planned number of job losses until it had finished its discussions with unions.
“We are committed to treating all departing employees with respect and empathy,” the spokesperson added.
Oatly’s valuation has fallen nearly 90% since its mammoth $10 billion debut on the Nasdaq last May, when it priced its shares at $17 each. It is now valued at $1.3 billion.
The company, which produces a milk substitute made from oats, reported revenue of $183 million between July and September, short of the $212 million analysts at Refinitiv had predicted.
Oatly expects sales to grow by as much as $720 million in 2022, up 12% from the year before but still down from its previous upper estimate of $830 million.
CEO Toni Petersson said in a statement that the results were “largely driven” by coronavirus restrictions in Asia, production issues in the Americas and foreign exchange pressures.
Coronavirus restrictions in Asia led to an “underutilization” of Oatly’s production facilities in the region, the company said in its earnings report.
“We continue to… see year-over-year sales volume growth,” Petersson said.
The company expects to hit its annual new revenue target provided there is a “reasonable containment” of coronavirus globally and no further major lockdowns in Asia, the company said.
“[Oatly is] facing downward pressure from uncertain macroeconomic factors, like any other company operating on the global stage,” a company spokesperson told CNN Business.
The company, which launched its first product in 2001, has grown rapidly in recent years as health-conscious consumers flock to dairy-free alternatives to milk, ice cream and yogurt.
It counts private equity giant Blackstone, former Starbucks CEO Howard Schultz and Oprah Winfrey among its high-profile list of investors.
But it is operating in an increasingly crowded market, competing with rival Danone (DANOY) whose Alpro and Silk brands sell a range of dairy substitutes.
Credit Suisse, in a note Tuesday, said that Oatly’s setbacks “give [its] competitors an edge,” and downgraded the company’s target share price from $3.43 to $3.30.
“Expectations for Oatly to reclaim a leading position in a highly competitive category should be scaled back,” the bank said.
— Hanna Ziady contributed reporting.