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Mission Produce Inc. executives said Thursday that prices for its main product, avocados, jumped by 50% from a year ago, a move that would typically mean booming revenue and profit for the fruit grower.
That isn’t what happened at Mission Produce
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however, as a problematic software switch and difficulty sourcing enough of the fruit amid a brief U.S. ban on imports from Mexico kept the company from achieving expectations in a Thursday earnings report. Shares in the grower, which provides avocados to large U.S. chains like Walmart Inc.
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and Costco Wholesale Corp.
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dove more than 15% in after-hours trading and were headed for their lowest prices since the company went public in 2020.
Mission Produce reported a fourth-quarter loss of $13.4 million, or 19 cents a share, on sales of $216.6 million, up from $173.2 million a year ago. After adjusting for stock-based compensation and other effects, the company reported a loss of 17 cents a share, down from adjusted earnings of 11 cents a share a year ago and well lower than analysts’ estimates.
Analysts on average expected adjusted earnings of 6 cents a share on sales of $243.2 million. After closing with a 0.3% gain at $13.34, shares dove to less than $11.50 in after-hours trading; shares have never traded for less than $11.75 a share in the regular session, with a closing low of $11.86, since selling for $12 apiece in the company’s September 2020 initial public offering.
Mission Produce executives noted the 50% gain in average avocado sales prices in the report on Thursday, crediting the rise to overall inflation as well as the problems with U.S. imports. However, they said unit sales fell 18%, which executives blamed on an inability to source enough of the fruit, as well as consumers balking at the increased prices.
Don’t miss: The Avocado Import Ban Has Ended. The Problems for Avocado Lovers Continue.
The bigger problem appeared to be the switch to new enterprise-resource planning software, which helps companies track their finances. Attempting to get new software up and running late in 2021 “limited our ability to effectively manage our supply chain during the first quarter,” executives said.
“We are disappointed in our fiscal first-quarter performance where we experienced greater-than-anticipated operational challenges associated with our ERP system conversion on November 1, 2021,” founder and Chief Executive Steve Barnard said in a statement. “The ERP implementation caused certain operational issues that temporarily limited our ability to manage our business and operations efficiently and eroded our ability to drive the per-unit margins that we have historically generated.”
Executives said in a limited outlook that they expect avocado prices to be higher in the fiscal second quarter than the first quarter, though supply issues in Mexico will also remain. They expect volume of Mexican avocados “to remain lower than prior year by amounts comparable to those experienced in the first quarter of 2022, primarily due to supply constraints associated with the Mexican harvest.”
