SMPL · The Simply Good Foods Company

The Simply Good Foods Company reported disappointing fiscal second quarter 2026 results, marked by a significant net loss of $159.7 million compared to net income of $36.7 million in the prior year period. This dramatic reversal was primarily driven by a $249.0 million non-cash impairment charge related to the Atkins and OWYN brand intangible assets, which management attributed to a challenging fiscal year 2026 and updated projections of future revenue. Net sales declined 9.4% to $326.0 million, with Atkins sales plummeting 26.6% and OWYN declining 16.8%, while Quest showed minimal growth of only 0.3%. The company's gross margin contracted sharply by 460 basis points to 31.6%, pressured by inflationary costs (notably cocoa), tariffs, and one-time effects from actions taken to mitigate OWYN product quality issues. Excluding certain one-time items, gross margin still declined 350 basis points to 32.8%. Management expressed clear dissatisfaction with current performance, with CEO Joe Scalzo stating 'we are not satisfied with our current performance' and outlining three immediate priorities: strengthening business model economics by improving cost structure and margins, ensuring consistency in strategic choices driving organizational clarity and efficiency, and rebuilding brand investment behind superior marketing execution to drive household penetration. The company significantly lowered its full-year outlook, now expecting net sales of $1.31-$1.35 billion (representing a 10% to 7% decline year-over-year) and Adjusted EBITDA of $217-$225 million (a 22% to 19% decline year-over-year). For the third quarter, the company anticipates further pressure with net sales expected to decline 14% to 11% year-over-year and Adjusted EBITDA projected to decline 38% to 32%. The company ended the quarter with $107.4 million in cash and $400.0 million in term loan debt, having repurchased approximately 4.6 million shares for about $89 million during the quarter.