The Simply Good Foods Company (NASDAQ:SMPL) shares fell sharply Thursday after the company reported mixed second-quarter results and lowered its full-year outlook.

The packaged food maker posted adjusted earnings of 45 cents per share, topping analysts' estimates of 40 cents. However, revenue declined 9.4% year over year to $326.0 million, missing the consensus estimate of $345.6 million.

Chief Executive Officer Joe Scalzo said the company is not pleased with its current performance and is taking steps to address the shortfall.

Sales Decline Driven by Brand Weakness

The revenue drop was largely driven by steep declines in its Atkins and OWYN brands, which fell 26.6% and 16.8%, respectively. Growth in the Quest brand was modest at 0.3% and did little to offset the broader weakness.

Retail takeaway declined about 6.4% overall. Gains of 2.4% in Quest were outweighed by declines across Atkins and OWYN, with Atkins down 23.4%, broadly in line with expectations.

Gross profit fell 20.8% to $103.0 million, pressured by higher input costs, including cocoa, as well as tariffs. Gross margin narrowed to 31.6%, down 460 basis points from a year earlier.

Adjusted EBITDA declined 18.4% to $55.5 million.

At quarter-end, the company reported cash of $107.4 million and a term loan balance of $400.0 million.

Outlook Cut Signals Continued Pressure

The company lowered its fiscal 2026 sales forecast to a range of $1.31 billion to $1.35 billion, down from its prior outlook of $1.42 billion to $1.48 billion and below analyst estimates of $1.45 billion.

For the third quarter, Simply Good Foods expects revenue between $329 million and $338 million, also below Wall Street projections of about $381.0 million.

Scalzo said recent results fell short of expectations, prompting immediate and fundamental actions to improve both financial performance and execution in the market.

Turnaround Plan Targets Costs and Growth

Management said it will focus on improving its cost structure and margins while maintaining more consistent strategic decisions to boost efficiency.

The company also plans to increase brand investment through stronger marketing efforts aimed at expanding household penetration.

SMPL Price Action: Simply Good Foods shares were down 19.26% at $11.63 at the time of publication on Thursday. The stock is trading at a new 52-week low, according to Benzinga Pro data.

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