Simply Good Foods Slashes Guidance Following Steep Sales Slump

Simply Good Foods (SMPL) saw its shares decline following a disappointing second-quarter fiscal 2026 report, characterized by a sharp drop in net sales and a downward revision of annual guidance. Despite the prevailing consumer trend toward high-protein, low-sugar diets, the company's core brands are failing to maintain momentum. For the quarter ending February 28, net sales fell 9.4% year-over-year to $326 million. This decline was significantly steeper than the 3.5% to 4.5% drop management had forecasted in January. The company's Atkins and OWYN brands suffered steep sales declines of 26.6% and 16.8%, respectively, while Quest sales remained nearly flat with a marginal 0.3% increase. Profitability was further squeezed by rising cocoa prices and tariff-related expenses. Gross margins contracted by 4.6 percentage points to 31.6%, contributing to an 18.4% drop in EBITDA, which landed at $55.5 million. CEO Joe Scalzo stated that the company is not satisfied with current performance and has initiated fundamental actions to turn around financial and in-market results. Looking ahead, the company has issued a downbeat forecast. Simply Good Foods now expects fiscal 2026 net sales to fall by as much as 10% to $1.3 billion. Additionally, the company guided for adjusted EBITDA to plunge approximately 20% to $221 million, reflecting a challenging environment for its high-protein snack and drink portfolio.