Freshpet Inc (NASDAQ:FRPT) Will Take Expansion Ahead As Planned

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Undeterred by the disappointing quarter, Freshpet Inc (NASDAQ:FRPT)s remains serious about its expansion plans. The company’s CEO Richard Thompson has reportedly expressed that the company will go ahead with its local expansion strategy as planned earlier.

The earnings setback

The company disappointed the Wall Street after missing the earnings forecasts provided by the research firms ahead of its third-quarter report. For the three-month period ended on September 30, 2015, the company posted an earnings loss of ($0.05) on revenues of $30.6 million as against the analysts’ estimate of ($0.04) earnings loss on revenues of $32.56 million.

Freshpet Inc (NASDAQ:FRPT) held lower-than-anticipated Freshpet Fridge growth responsible for the earnings miss. Moreover, the company said that the manufacturing inefficiencies due to new product innovation had negatively hurt its gross margin.

On the backdrop of subdued third-quarter results, the company was forced to trim down its full-year revenue outlook. As per the revised number, the company predicts to attain revenues in between $115.5 million and $117 million in the current year as opposed to its earlier forecast of $117 million to $119.5 million of revenues. The company’s sales that showed a growth of 35% on a yearly basis led by velocity across the channels was one positive aspect during the company’s earnings session.

Plans remain unchanged

Thompson’s mail has made it clear that the gloomy numbers will not hold the company from expanding its presence. The company plans to open new Freshpet Kitchens facility in Lehigh Valley Industrial Park IV. The company is confident that the expansion will help it boost its production capacity by as much as 130% and will also create 60 jobs.

However, the expansion plans have failed to mitigate the company’s poor earnings performance. It is to be noted that Credit Suisse has downgraded the outlook on Freshpet Inc (NASDAQ:FRPT) to ‘Neutral’ from ‘Outperform”. The research firm has also trimmed its price estimate to $9 from $19.

The company’s stock ended the previous session at $8.61, 1.53% higher than the stock’s closing price a day earlier.

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