Simply Good Foods has slashed the Atkins brand owner’s outlook for sales and profits, with a “turnaround” plan set in motion as it slipped to a loss.
The most pronounced shift made in the second-quarter results announcement today (9 April), which also included an impairment charge, is in adjusted EBITDA, which the US business now envisages falling 19% to 22% to a range of $217m to $225m.
In January, when the maker of Quest and Only What You Need (OWYN) products announced its first-quarter performance, the fiscal 2026 guidance was reaffirmed as likely to be up 1% to down 4%. No end figures were provided at that stage.
Meanwhile, Colorado-based Simply Good Foods has lowered its outlook for net sales, now expected to be down 7-10% compared to the January forecast of up 2% to a decline of 2%. The range is expected at $1.31bn to $1.35bn.
The company is also more downbeat on gross margins, which it sees dropping 300 to 350 basis points versus the 100-150-point retreat at the start of the year.
“I want to make it quite clear that we are not satisfied with our current performance,” president and CEO Joe Scalzo said in today’s (9 April) commentary as he reported the results to 28 February.
“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.”
Simply Good Foods reported a net loss for the second quarter of $159.7m versus a $36.7m profit a year earlier.
Share earnings also deteriorated, coming in at a $1.73 loss per diluted share compared to a positive $0.36. Adjusted diluted EPS remained in the black at 45 cents, little changed from 46 cents in the corresponding period.
Scalzo set out his stall as net sales and adjusted EBITDA also fell.
“The long-term fundamentals of our category, our portfolio and our company capabilities are compelling, but in the near-term our organisation must focus on three priorities, which are strengthening our business model economics by improving our cost structure and margins, ensuring consistency in our strategic choices driving organisational clarity and efficiency, and rebuilding brand investment behind superior marketing execution to drive household penetration,” he said.
Net sales over the three months fell 9.3% to $326m, while adjusted EBITDA was down 18.3% at $55.5m.
The decline in sales was led by the Atkins and OWYN brands, which each notched up a drop of 26.6% and 16.8%. Quest offset the slide, eking out growth of 0.3%.
“The company's net sales performance was largely driven by poor retail takeaway relative to what we experienced in the first quarter,” the announcement read.
“Quarter over quarter, Quest consumption was affected by slower base velocity in chips and bars. OWYN consumption declined year over year due to lapping the heavy promotional period in the prior year and poor base velocities, including on newly expanded distribution.”
Simply Good Foods recorded a non-cash impairment charge of $249m related to the Atkins and OWYN brands.
“The impairment is largely the result of a challenging fiscal year 2026 and updated projections of future revenue,” the company said.
