Why Simply Good Foods Stock Dropped Today
Key Points
High-protein foods are all the rage.
Yet Atkins, OWYN, and Quest are struggling to capitalize on this trend.
- 10 stocks we like better than Simply Good Foods ›
Shares of Simply Good Foods (NASDAQ: SMPL) sank on Thursday after the packaged-food and beverage purveyor's sales fell short of investors' expectations.
Image source: Getty Images.
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Simply subpar results
Simply Good Foods' net sales fell 9.4% year over year to $326 million in its fiscal 2026 second quarter, which ended on Feb. 28. That was far larger than the 3.5% to 4.5% decline management forecasted back in January.
The healthy snack company's Atkins and OWYN brands saw steep sales declines of 26.6% and 16.8%, respectively. Quest sales, meanwhile, inched up 0.3%.
"I want to make it quite clear that we are not satisfied with our current performance," CEO Joe Scalzo said. "Our recent results have not met our expectations, and we have taken immediate and fundamental actions to turnaround both our financial performance and our in-market performance."
Moreover, higher cocoa and tariff-related costs weighed on Simply Good Foods' profit margins. Its gross margin decreased by 4.6 percentage points to 31.6%.
All told, Simply Good Foods' earnings before interest, taxes, depreciation, and amortization (EBITDA) shrank by 18.4% to $55.5 million.
More challenges ahead
Worse still, management was forced to cut its full-year guidance. Simply Good Foods now expects its net sales to fall by as much as 10% to $1.3 billion in fiscal 2026. The company also guided for its adjusted EBITDA to plunge roughly 20% to $221 million.
The downbeat forecast was particularly disappointing, as Simply Good Foods, with its focus on high-protein, low-sugar snacks and drinks, should be well positioned to profit from current nutritional trends. Yet the company's brands do not appear to be resonating with consumers.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Simply Good Foods. The Motley Fool has a disclosure policy.
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