Simply Good Foods Co Reports 9.4% Drop in Q2 Sales

By Chris Stiles • Thursday, April 09 11:20 • Permanent Link

The Simply Good Foods Company reported fiscal second-quarter net sales of $326.0 million, down 9.4% from $359.7 million a year earlier.

The company swung to a net loss of $159.7 million from net income of $36.7 million in the prior-year quarter, a change driven in part by a $249.0 million non-cash impairment charge tied to the Atkins and OWYN brand intangible assets. Loss per diluted share was $1.73, compared with earnings per diluted share of $0.36 a year ago.

Adjusted EBITDA fell 18.4% to $55.5 million from $68.0 million. Adjusted diluted EPS edged down to $0.45 from $0.46.

Gross profit declined 20.8% to $103.0 million, while gross margin fell 460 basis points to 31.6%. The company said inflationary costs, especially cocoa, and tariffs weighed on margins. Selling and marketing expense dropped 19.7% to $28.2 million, and general and administrative expense fell 3.2% to $34.9 million.

By brand, second-quarter net sales declined 26.6% for Atkins and 16.8% for OWYN, while Quest rose 0.3%. Retail takeaway for the company fell about 6.4%, with Quest up 2.4%, OWYN down 2.4%, and Atkins down 23.4%.

For the first half of fiscal 2026, net sales were $666.2 million, down 5.0% from the prior year. Gross profit fell 18.3% to $212.9 million, and gross margin narrowed 520 basis points to 32.0%. Adjusted EBITDA decreased 19.5% to $111.1 million from $137.9 million. The company posted a net loss of $134.4 million for the period, versus net income of $74.9 million a year earlier.

Cash at quarter-end was $107.4 million, and term loan principal stood at $400.0 million. Year-to-date cash from operations was $58.2 million, compared with $63.3 million a year earlier. The company repurchased about 4.6 million shares for approximately $89 million during the quarter.

Looking ahead, Simply Good Foods cut its fiscal 2026 outlook. It now expects net sales of $1.31 billion to $1.35 billion, down 10% to 7% year over year, compared with the prior-year range implied by its earlier outlook. It also expects gross margin to decline 300 to 350 basis points and adjusted EBITDA to come in at $217 million to $225 million, down 22% to 19% year over year. For the third quarter, it forecast net sales of $329 million to $338 million and adjusted EBITDA of $46 million to $50 million. Following these announcements, the company's shares moved 0.49%, and are now trading at a price of $14.46. If you want to know more, read the company's complete 8-K report here.

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