Oatly (OTLY 25.40%), the leading maker of oat milk and related alternative dairy products, is having another tough week.

The company reported another quarter of sluggish top-line growth and bottom-line losses, which is a problematic combination for any stock, but especially for one that is supposed to be a growth stock.

As of 3 p.m. ET Thursday, Oatly shares were down 14.3% for the week.

Image source: Getty Images.

The turnaround continues

Like other plant-based food companies such as Beyond Meat, Oatly's business was growing briskly a few years ago, but it seems to have saturated its market sooner than expected and is now focused on right-sizing its operations in pursuit of profitability rather than pursuing further rapid growth.

Revenue in the fourth quarter rose 5% year over year to $214.3 million, which was shy of the consensus estimate of $218.1 million. It did grow sales in all three of its regions, but 5% growth is still an underwhelming result for the company.

Oatly also made improvements in profitability. Its gross margin rose from 23.4% to 28.8%, and it narrowed its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss from $13.1 million to $6.1 million. Its GAAP (generally accepted accounting principles) loss per share also contracted from $0.50 to $0.15, but that still came up short of the $0.07 per share loss that analysts had expected.

The company has made a number of key changes in its efforts to turn around the business. It shrunk its supply chain, reduced its number of plants, and lowered its production capacity. It also reduced its workforce and shifted its strategic focus from growth to profitable growth.

While those efforts are yielding results, they don't seem to be happening as fast as investors want.

What's next for Oatly

Oatly's guidance calls for 2025 revenue growth of 2% to 4% on a constant-currency basis. That forecast factors in 300 basis points of headwinds due to the loss of a large North American customer. Management also forecasts adjusted EBITDA of $5 million to $15 million.

Notably, after the stock fell by 34% on Wednesday, it did bounce back on Thursday, jumping by around 25% as of late afternoon, a sign that some investors saw the sell-off as creating a buying opportunity.

Oatly's turnaround could eventually be successful, but at this point, the company still has a long way to go.