Simply Good Foods Sales Fall as 2027 Outlook Combines Lower Revenue With Margin Improvement
Key Facts
Simply Good Foods issued its fiscal 2027 outlook in a filing dated October 27, forecasting a 13% to 17% decline in net sales and a 9% to 14% decline in adjusted EBITDA. At the same time, the company forecast gross margin would rise by 250 to 300 basis points. The outlook follows weak sales in the fourth quarter of fiscal 2026, which the company attributed to lower retail traffic and distribution pressures related to product turnover. CEO Joe Scalzo said, "Fiscal 2027 will be challenging but important in our transformation journey." He added that the company is reinvesting part of its margin recovery in its brands to support consumer engagement and brand health.
Weak demand extended to the main brands: Atkins sales fell 14.9% in the fourth quarter, while OWYN sales declined 20.6%. Across retail channels, the company’s products recorded an overall traffic decline of about 8% during the quarter. Traffic for Atkins fell about 23%, for OWYN by 7% and for Quest by 2%. The difference between the sales and traffic figures indicates that weakness was not limited to one brand or one channel, according to details provided by the company. For fiscal 2026 as a whole, Atkins sales fell 20.9% and OWYN sales declined 9.7%, while Quest sales rose 0.7%.
The company swung to net income of $30.5 million in the fourth quarter of fiscal 2026, compared with a net loss of $12.4 million in the year-earlier period. Diluted earnings per share were $0.34, versus a diluted loss of $0.12 per share a year earlier. But adjusted EBITDA fell to $57.5 million, down 13.2% year over year. Adjusted earnings per share also declined to $0.44 from $0.46 in the year-earlier quarter. These figures show net income moving in a different direction from the adjusted profitability measures the company reported for the quarter.
Gross profit was $113.3 million, down 10.5% from the year-earlier period, while gross margin reached 34.0%, down 30 basis points. The company attributed the lower gross profit to reduced sales volumes, higher input costs and restructuring costs. Ahead of the fourth quarter, the company recorded non-cash impairment charges of $331.0 million for fiscal 2026, related to goodwill and intangible assets for the Atkins and OWYN brands. The company said the charges were primarily related to the year’s performance, updated revenue forecasts and the decline in its share price. At the end of fiscal 2026, cash totaled $138.4 million, against a term loan principal balance of $350.0 million, and net debt to adjusted EBITDA was 0.9 times.
The company forecast that pressure would be more severe in the first quarter of fiscal 2027, with sales down 19% to 22% and adjusted EBITDA down 28% to 33% year over year. By contrast, it forecast gross margin would rise by about 100 basis points in the quarter. For the full fiscal year, management said it expects performance to improve as marketing investments take effect, pricing’s impact on volumes eases and year-over-year comparisons improve. Scalzo said, "We expect performance to improve during the year as our marketing investments begin to take effect, pricing’s impact on volumes eases and year-over-year comparisons improve." That trajectory leaves the first quarter facing expected declines greater than the full-year ranges, alongside expected margin improvement in both periods.
The company forecast net interest expense of $18 million to $20 million in fiscal 2027 and capital expenditures of $15 million to $20 million. The financial outlook followed the results announcement on October 27, when the stock fell 0.40% in premarket trading, according to Investing.com coverage. The report said investors weighed the results beating expectations against weak guidance for the coming year. The early market response thus combined quarterly results that exceeded estimates with annual forecasts that include declines in sales and adjusted earnings. Management described 2027 as a challenging and important year in its transformation journey, linking the expected improvement in performance to the effects of marketing, easing pricing pressure and better comparisons.