Simply Good Foods Company (SMPL) Q3 2026 Financial Results Summary
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The Simply Good Foods Company (SMPL) Q3 2026: Significant Losses and Declining Sales — Disappointing Quarter
The Simply Good Foods Company (Nasdaq: SMPL) reported a disappointing fiscal third quarter for 2026, with net sales of $357.0 million, a decrease of $24.0 million or -6.3% compared to $381.0 million in the same quarter last year. This decline reflects ongoing challenges within the company's key brands, particularly Atkins, which experienced a significant drop in sales.
Key Financial Metrics
- Net Sales: $357.0 million (down $24.0 million or -6.3% YoY)
- Net Loss: $52.0 million (compared to net income of $41.1 million YoY)
- Loss per Diluted Share: $0.58 (versus earnings per diluted share of $0.40 YoY)
- Adjusted Diluted EPS: $0.42 (down from $0.51 YoY)
- Adjusted EBITDA: $57.2 million (down $16.7 million or -22.5% YoY)
Analyst Opinion
This quarter is disappointing for shareholders, primarily due to the substantial net loss and declining sales figures. The company not only reported a significant net loss of $52.0 million but also faced a 22.5% decrease in adjusted EBITDA, indicating operational challenges that are not being effectively managed. The decline in sales, particularly from the Atkins brand, which fell 24.6%, raises concerns about the company's market position and brand strength.
Operational Challenges
The decline in sales was largely driven by:
- Atkins Sales Decline: A 24.6% drop, attributed to distribution-related issues and softer retail takeaway.
- Total Retail Takeaway: Decreased by 6.7%, with Atkins contributing a 23.9% decline.
- Gross Profit: Decreased by 16.2% to $116.1 million, with gross margins falling to 32.5%, a decline of 390 basis points YoY.
Cost Management and Restructuring
The company has initiated cost actions to address these challenges, but the impact has yet to be fully realized. Selling and marketing expenses increased by 15.9% to $39.2 million, reflecting investments aimed at long-term brand growth. However, these costs, combined with restructuring expenses, have not translated into improved financial performance.
Impairment Charges
A significant factor in the financial results was an $82.0 million non-cash impairment charge related to goodwill and intangible assets for the Atkins and OWYN brands. This charge reflects the company's declining stock price and performance expectations, further complicating its financial outlook.
Fiscal Year 2026 Outlook
The company has updated its fiscal year 2026 outlook, projecting:
- Net Sales: Expected to range between $1.345 billion and $1.355 billion, reflecting a decline of approximately 7% to 6% year-over-year.
- Adjusted EBITDA: Expected to be between $220 million and $225 million, a decline of 21% to 19% year-over-year.
- Gross Margins: Anticipated to decline by approximately 375 basis points year-over-year.
Shareholder Returns
During the quarter, Simply Good Foods repurchased approximately 2.1 million shares for about $25 million, which may provide some support to the stock price in the short term. However, the overall financial performance raises concerns about the sustainability of such actions.
Forward Catalysts
Investors should closely monitor the company's efforts to stabilize and grow its core brands, particularly Atkins, in the upcoming quarters. Key areas to watch include:
- The effectiveness of cost management strategies and restructuring efforts.
- Sales performance in the fourth quarter, which is expected to range between $322 million and $332 million, indicating a potential decline of 13% to 10% year-over-year.
- Any further developments regarding brand revitalization initiatives and consumer response to marketing efforts.
In conclusion, the Simply Good Foods Company faces significant challenges as it navigates a difficult market environment. The disappointing results this quarter highlight the need for a robust turnaround strategy to restore shareholder confidence and drive future growth.
Note: The following tables present amounts in thousands.
| Thirte… | May 30, 2026 | May 31, 2025 | Thirty… | May 30, 2026 | May 31, 2025 | |
|---|---|---|---|---|---|---|
| Net sales | $ 356,983 | $ 380,956 | $ 1,023,137 | $ 1,081,537 | ||
| Cost of goods sold | 240,884 | 242,437 | 694,162 | 682,737 | ||
| Gross profit | 116,099 | 138,519 | 329,032 | 399,142 | ||
| Operating expenses | ||||||
| Selling and marketing expenses | 39,173 | 33,799 | 97,017 | 101,871 | ||
| General and administrative ("G&A") expenses | 40,453 | 41,229 | 113,334 | 115,306 | ||
| Depreciation and amortization | 4,337 | 4,171 | 13,279 | 12,479 | ||
| Business transaction costs | — | — | — | 820 | ||
| Loss on impairment | 82,000 | — | 331,000 | — | ||
| Total operating expenses | 165,963 | 79,199 | 554,630 | 230,476 | ||
| (Loss) income from operations | -49,864 | 59,320 | -225,598 | 168,666 | ||
| Other income (expense) | ||||||
| Interest income | 689 | 673 | 2,068 | 2,150 | ||
| Interest expense | -5,776 | -4,900 | -15,895 | -19,099 | ||
| Gain (loss) on foreign currency transactions | 1 | -337 | 134 | -342 | ||
| Other income | 15 | -14 | 151 | 20 | ||
| Total other expense | -5,071 | -4,578 | -13,542 | -17,271 | ||
| (Loss) income before income taxes | -54,935 | 54,742 | -239,140 | 151,395 | ||
| Income tax expense (benefit) | -2,963 | 13,640 | -52,739 | 35,424 | ||
| Net (loss) income | -51,972 | 41,102 | -186,401 | 115,971 | ||
| Other comprehensive income | ||||||
| Foreign currency translation, net of reclass adj | 101 | 309 | 946 | -504 | ||
| Comprehensive (loss) income | -51,871 | 41,411 | -185,455 | 115,467 | ||
| (Loss) earnings per share from net (loss) income | Basic $ -0.58 | $ 0.41 | $ -1.99 | $ 1.15 | ||
| Diluted $ -0.58 | $ 0.40 | $ -1.99 | $ 1.14 | |||
| Weighted average shares outstanding | Basic 89,940 | 100,927 | 93,677 | 100,782 | ||
| Diluted 89,940 | 101,632 | 93,677 | 101,668 |
Note: The following table presents amounts in thousands.
| May 30, 2026 | August 30, 2025 | |
|---|---|---|
| Assets | ||
| Current assets: | ||
| Cash | $ 123,884 | $ 98,468 |
| Accounts receivable, net | 156,067 | 164,978 |
| Inventories, net | 164,314 | 167,217 |
| Prepaid expenses | 4,432 | 7,209 |
| Other current assets | 15,441 | 15,812 |
| Total current assets | 464,138 | 453,684 |
| Long-term assets: | ||
| Property and equipment, net | 42,334 | 39,738 |
| Intangible assets, net | 956,883 | 1,261,603 |
| Goodwill | 551,974 | 589,974 |
| Other long-term assets | 47,115 | 51,046 |
| Total assets | $ 2,062,444 | $ 2,396,045 |
| Liabilities and stockholders’ equity | ||
| Current liabilities: | ||
| Accounts payable | $ 57,025 | $ 78,298 |
| Accrued interest | 63 | 44 |
| Accrued expenses and other current liabilities | 39,690 | 46,219 |
| Total current liabilities | 96,778 | 124,561 |
| Long-term liabilities: | ||
| Long-term debt, less current maturities | 397,037 | 249,066 |
| Deferred income taxes | 107,057 | 166,091 |
| Other long-term liabilities | 43,452 | 49,494 |
| Total liabilities | 644,324 | 589,212 |
| See commitments and contingencies (Note 9) | ||
| Stockholders’ equity: | ||
| Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued | — | — |
| Common stock, $0.01 par value, 600,000,000 shares authorized, 104,050,545 and 103,688,071 shares issued at May 30, 2026, and August 30, 2025, respectively | 1,041 | 1,037 |
| Treasury stock, 15,609,338 shares and 3,957,571 shares at cost at May 30, 2026, and August 30, 2025, respectively | -344,670 | -129,337 |
| Additional paid-in-capital | 1,358,758 | 1,346,687 |
| Retained earnings | 404,478 | 590,879 |
| Accumulated other comprehensive loss |
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