Simply Good Foods Persists With Atkins As Downbeat Outlook Hits Shares

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The descent successful Simply Good Foods’ shares connected nan backmost of its latest yearly results appears much related to nan below-consensus outlook for nan caller twelvemonth than nan ongoing challenges pinch nan Atkins weight-loss brand.

Colorado-based Simply Good Foods put Atkins into “revitalisation” mode past twelvemonth pinch a scheme to trim underperforming SKUs but statement up nan brand’s portfolio done invention successful high-protein, low-sugar snack bars and shakes.

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While nan trimming of low-hanging SKUs is still having a antagonistic effect connected Atkins unit sales, analysts expect nan losses to mean arsenic nan scheme progresses, pinch gross support from Simply Good Foods’ different 2 brands – Quest and nan precocious acquired Only What You Need (OWYN).

As it stands, immoderate talk of a imaginable disposal of Atkins – from guidance aliases different – has not surfaced arsenic president and CEO Geoff Tanner made his committedness clear, contempt incurring fourth-quarter and full-year impairment charges and paring backmost gross expectations relating to nan SKU cuts.

The rising usage of nan GLP-1 weight-loss drugs, peculiarly successful nan US, is apt to bring further support for Atkins fixed nan request for dietary enhancements from protein- and fibre-rich foods for those taking nan medication. And astatine nan aforesaid time, a much generalised inclination for macromolecule is besides playing out.

That was besides a position shared by UK-based FMCG business Supreme, which announced this week it was acquiring nan SlimFast weight-loss marque from Ireland’s Glanbia.

“Our imagination is to beryllium nan scaled leader successful high-protein, low-sugar and low-carb nutrient and beverage products, wherever maturation is being fuelled by a generational displacement successful user eating habits that continues to mainstream,” Tanner said arsenic he presented nan latest results yesterday (23 October).

“Our outlook for fiscal twelvemonth 2026 balances our semipermanent ambition, continued maturation expectations for Quest and OWYN and nan benefits from productivity, pricing and investments successful our brands, against nan 2 important challenges of reduced distribution for Atkins and costs pressures from ostentation and tariffs.”

Bernstein expert Alexia Howard wrote successful a follow-up investigation statement that yesterday’s diminution successful Simply Good Foods’ stock value – it closed down 17% astatine $20.63 – “seems oversold for a business that is still well-aligned pinch user liking successful precocious macromolecule and low-sugar foods and beverages”.

Howard provided immoderate further perspective: “The Atkins marque is going done a purge but it seems arsenic though this is now completed and will beryllium mostly lapped arsenic we participate FY-27: 75% of nan Atkins marque income (which now represents conscionable 25% of company-wide sales) are increasing healthily pinch coagulated margins.”

However, she added that “a agelong tail of mini and unprofitable SKUs introduced by a erstwhile squad has precocious been rationalised”, and is apt to further measurement connected income successful nan caller 2026 fiscal twelvemonth to nan tune of astir 20%.

While Simply Good Foods notched up reported and integrated income maturation of 9% and 3%, respectively past year, on pinch a 3% summation successful adjusted EBITDA, nan guidance for 2026 was much blimpish and beneath statement expectations.

Projections from nan institution are for integrated income successful a scope of down to up by 2% and adjusted EBITDA to scope betwixt a diminution of 4% and a affirmative 1%. The gross separator is expected to driblet by 100 to 150 ground points.

“Although nan institution is forecasting invention and income maturation for some nan Quest and OWYN brands, arsenic good arsenic productivity improvements, these will beryllium offset by accrued input-cost ostentation and continued Atkins challenges,” Howard wrote, noting nan statement estimates for income and adjusted EBITDA successful nan caller twelvemonth of 2.7% and 1.6%, respectively.

The shake-out successful nan Atkins portfolio looks to beryllium taking longer than expected though nan unit connected income for 2025 was predicted by Tanner astatine nan aforesaid constituent past year, erstwhile nan CEO said nan “revitalisation plans are progressing arsenic planned and nan motorboat of halfway barroom and shingle invention is search well”.

Tanner said astatine nan clip that “optimising and improving” nan return connected finance from Atkins was “necessary to guarantee nan marque remains a sustainable and profitable business complete nan agelong term”.

Atkins impairment charges

Fast-forward to this October, Simply Good Foods said full unit income roseate 4% successful nan last 4th of past year, driven by gains of astir 11% for Quest and 14% for OWYN, but Atkins declined astir 12%.

Over nan year, group unit income were up 5% – 12% for Quest and 34% for OWYN – but a alteration of 10% for Atkins.

Simply Good Foods took a $60.9m non-cash impairment nonaccomplishment related to nan Atkins brand, which was “primarily nan consequence of a challenging fiscal twelvemonth 2025 and updated projections of early revenue”.

William Blair expert Jon Andersen wrote yesterday that nan full 4% unit income maturation successful nan 4th fourth “masked what stay highly divergent trends astatine a marque level – some Quest and OWYN grew double digits, while Atkins continued to decline”.

He added arsenic William Blair kept its ‘outperform’ standing connected nan shares: “Our consciousness is nan 2026 guidance, while initially disappointing, is achievable fixed nan request programming down Quest and OWYN, immoderate downside protection connected Atkins based connected perchance blimpish readying assumptions (impact of nan tail SKUs should moderate)…”

Simply Good Foods was built connected acquisitions and Andersen suggested much could materialise, albeit possibly complete nan longer term.

The business was formed successful 2017 done a SPAC merger betwixt Conyers Park Acquisition Corp. and Atkins Nutritionals. Quest Nutrition was past acquired successful 2019 for $1bn and plant-based shakes and powders shaper OWYN past twelvemonth for $280m.

“While existent user and competitory dynamics effect near-term visibility, we judge successful our thesis that Simply Good’s target nutritious snacking market, on-trend brands successful Quest and OWYN, and asset-light cash-generation model, tin support coagulated integrated maturation augmented (over time) by acquisitions,” Andersen said.

Simply Good Foods fundamentally expressed support for early M&A successful yesterday’s results announcement arsenic nan institution projected a tougher operating situation successful nan first half compared to nan 2nd for some income and profits.

“Continued invention and distribution-driven nett income maturation from Quest and OWYN crossed nan twelvemonth are expected to beryllium offset by challenges for Atkins, pinch nan timing of value elasticity and lapping of definite year-ago promotional events expected to bespeak incremental headwinds to maturation successful nan first half of nan year,” Simply Good Foods explained.

“Management is focused connected semipermanent maturation for nan full institution and will look to supply much substance for maturation should it find nan opportunity to do so.“