Oat milk brand Oatly plans to cut jobs as coronavirus restrictions in Asia reduce 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 third-quarter earnings missed expectations.
The company said it plans to cut costs by up to 25%, in part by cutting jobs in its corporate roles and divisions in Europe, the Middle East and Africa.
An Oatly spokeswoman told CNN Business on Tuesday that they could not confirm the number of anticipated job losses until discussions with unions were completed.
“We are committed to treating all departing employees with respect and empathy,” added the spokesperson.
Oatly’s valuation has fallen nearly 90% since its $10 trillion Nasdaq debut last May, when it priced its shares at $17. Today, it is worth 1.3 billion dollars.
The company, which makes an oat milk substitute, reported revenue of $183 million in the July-September period, down from $212 million forecast by analysts at Refinitive.
Oatly expects sales to grow to $720 million in 2022, up 12% from the previous year, but down from its previous estimate of $830 million.
Chief executive Toni Petersson said in a statement that the results were “largely driven” by coronavirus restrictions in Asia, production problems in America and foreign exchange pressures.
The coronavirus restrictions in Asia led to “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 meet its new annual revenue targets if there is a “reasonable containment” of the coronavirus globally and no major lockdowns in Asia, the company said.
“[Oatly is] Facing downward pressure from uncertain macroeconomic factors, like any other company operating globally,” 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 turn 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 investors.
But it is operating in an increasingly crowded market, competing with rival Danone ( DANOY ), whose Alpro and Silk brands sell a range of milk substitutes.
Credit Suisse, in a Tuesday note, said Oatly’s setbacks “result [its] an advantage over competitors,” and dropped the company’s stock price from $3.43 to $3.30.
“Expectations for Oatly to regain its leadership position in a highly competitive category should be tempered,” the bank said.
— Hanna Ziady contributed reporting.