Simply Good Foods misses Q2 revenue estimates, posts loss on impairment charge

Overview

• U.S. nutritional snacks maker's Q2 revenue fell 9.4% yr/yr, missing analyst expectations

• Company posted net loss on $249 mln impairment charge on Atkins and OWYN brands

• Adjusted EPS beat analyst expectations

Outlook

• Simply Good Foods sees FY 2026 net sales between $1.31 bln and $1.35 bln, down 10%-7% y/y

• Company expects FY 2026 gross margins to decline 300-350 basis points y/y

• Simply Good Foods guides FY 2026 adjusted EBITDA between $217 mln and $225 mln, down 22%-19% y/y

Result Drivers

• BRAND SALES DECLINES - Q2 net sales fell due to 26.6% declines for Atkins and 16.8% drop for OWYN, with Quest up only 0.3%; company cited poor retail takeaway and slower product velocities, especially in chips and bars

• HIGHER INPUT COSTS - Gross margin declined 460 basis points to 31.6%, mainly due to inflationary costs, especially cocoa, and tariffs, as well as one-time costs to address OWYN product quality issues

• IMPAIRMENT CHARGE - Company recorded $249 mln non-cash impairment charge on Atkins and OWYN brand intangible assets, citing a challenging fiscal year and updated projections of future revenue

Company press release: ID:nGNX8B6vGS

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 7 "strong buy" or "buy", 5 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the food processing peer group is "buy"

• Wall Street's median 12-month price target for Simply Good Foods Co is $24.00, about 66.6% above its April 8 closing price of $14.41

• The stock recently traded at 7 times the next 12-month earnings vs. a P/E of 10 three months ago

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