Asked about the deceleration in Quest bar consumption, the impact of club rotation, and the ability to confidently increase marketing investment given ongoing changes.

Joe explained Quest's overall brand health, noting strong household penetration and growth in chips and milkshakes. He attributed bar underperformance to innovation not meeting expectations, suboptimal top-of-the-funnel communication, and insufficient marketing investment. He expects similar bar trends in Q4, with the club rotation burning off in FY27. Regarding marketing, he stated the immediate focus is reallocating existing spend to top-of-the-funnel activities and awaiting marketing mix study results. Structurally, he aims for higher gross margins to fund increased marketing spend, justifying investments with ROI. “I want to have the ability over time with increasing gross margins to put more money back into advertising to drive our top line and improve our overall brand metrics and attributes.”

Inquired about the expected distribution losses for Atkins and OWYN, and potential gains for Quest, asking for a 6-12 month outlook on portfolio-wide distribution.

Joe stated that the organization has been overly focused on distribution rather than household penetration and buy rate. For OWYN, distribution losses are expected for non-core items post-integration, with a refocus on core products and marketing. For Atkins, distribution losses are a consequence of reduced marketing and declining household penetration, with stabilization expected as comps improve in Q4 and FY27. Quest is expected to continue distribution gains, but the core issue is top-of-funnel communication and innovation to drive household penetration. “I have thought that the organization has been too focused on distribution as a key metric in running the business, rather than household penetration and buy rate.”

Asked about specific inflation drivers (cocoa, trucking, dairy), the expected cost growth, and the pricing action. Also, how the company plans to lean into the GLP-1 opportunity based on new insights.

Chris confirmed input inflation across multiple areas, including proteins, packaging, and freight. He reiterated the high single-digit price increase in September to offset these costs. He noted cocoa prices are seeing a consistent reduction in the P&L, providing deflation, but this is offset by high whey pricing. Joe requested patience on the GLP-1 strategy, stating that new strategic work and insights from a marketing agency are being finalized, with market testing planned for the next fiscal year. He highlighted high interactivity between Atkins snack buyers and GLP-1 users. “high interactivity between Atkins, snack, product buyers and the use of GLP-1s for weight management.”

SMPL

Simply Good Foods (SMPL) Q3 FY26 earnings call: guidance and Q&A

Earnings call· May 2026 (Q3 FY26)· Consumer Staples· Jul 9, 2026

Source: earnings call transcript

Executive summary

The Simply Good Foods Company Q3 FY26 — Turnaround Progress Amidst Declining Sales and Margins

The Simply Good Foods Company is in the early stages of a turnaround, with Q3 FY26 results ahead of expectations despite overall declines. The company is focused on strengthening business economics, improving execution, and rebuilding brand investment, with early signs of progress in organizational focus and accountability. Management is addressing execution-driven challenges in an attractive category, aiming to restore profitable growth and sustainable brand health.

Highlights

Quest net sales grew 1.1% and OWYN net sales grew 3.6%, both exceeding expectations.
Quest household penetration increased 120 basis points year over year to 20.5%.
Quest chips consumption grew over 17% in the quarter, with household penetration at approximately 11%.
The company repurchased approximately 2 million shares in Q3, totaling $213 million this fiscal year.

Concerns

Net sales declined 6.3% to $357 million.
Gross margin declined 390 basis points to 32.5%.
Adjusted EBITDA declined 22.5% to $57.2 million.
Atkins net sales declined 24.6% due to declining household penetration and insufficient marketing support.
Company-wide retail takeaway declined 6.7%, while the purposeful nutrition category grew 10%.

Guidance & targets

Category	Target	Timeline	Confidence
Fiscal Year 2026 Net Sales	$1.345 billion to $1.355 billion high materiality	FY26 · 2026	High
Fiscal Year 2026 GAAP Gross Margin Decline	roughly 375 basis points decline high materiality	FY26 · 2026	High
Fiscal Year 2026 Adjusted EBITDA	$220 million to $225 million high materiality	FY26 · 2026	High
Fiscal Year 2026 Effective Tax Rate	roughly 25% medium materiality	FY26 · 2026	High
Fiscal Year 2026 Capital Expenditures	$25 million to $30 million medium materiality	FY26 · 2026	High
Q4 FY26 Net Sales	$322 million to $332 million high materiality	Q4 · 2026	High
Q4 FY26 Adjusted EBITDA	$52 million to $57 million high materiality	Q4 · 2026	High
Price Increase	high single-digit high materiality	September 2026 onwards · 2027	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Quest Quest remains the largest brand and most important growth engine. Household penetration continues to expand, demonstrating brand relevance. Chips and milkshakes are performing well, but bar business performance is not satisfactory, impacted by innovation and marketing. Retail Takeaway Growth: 1.4%Retail Takeaway Growth (prior quarter): 2.4%Household Penetration: 20.5%Household Penetration YoY Change: +120 bpsChips Consumption Growth: >17%Chips Household Penetration: ~11%Milkshake Segment Growth: ~50%	—	1.1%	—	—
Atkins Declining household penetration and distribution losses are the main drivers of decline. The brand has not received proper marketing support. Focus is on resetting retail baseline and managing more disciplined. Retail Takeaway Decline: 23.9%Retail Takeaway Decline (prior quarter): 23.4%Household Penetration: 8.5%Household Penetration YoY Change: -220 bps	—	-24.6%	—	—
OWYN Performance negatively impacted by a product quality issue and ineffective marketing execution, leading to expected distribution losses. Long-term potential is still believed, with a focus on core ready-to-drink and powder business. Retail Takeaway Decline: 1.3%Retail Takeaway Decline (prior quarter): 2.4%Household Penetration: 4.3%Household Penetration YoY Change: flat	—	3.6%	—	—

Capital programs

Salty Snacks Capacity Expansion underway

Period spend: $10.1M

Benefit:additional capacity

Main investment reflected in Q3 capital expenditure, previously discussed.

Risks & headwinds

Overall business performance well below potential Q3 FY26

Net sales declined 6.3%, Gross margin declined 390 bps, Adjusted EBITDA declined 22.5%

Mitigation:Strengthening business economics, improving execution, rebuilding brand investment, focusing on three key turnaround priorities.

Atkins net sales decline due to insufficient marketing and declining household penetration Q3 FY26

Net sales declined 24.6%, household penetration down 220 bps to 8.5%

Mitigation:Resetting retail baseline, disciplined management, restoring clarity around consumer proposition, and exploring GLP-1 relevance.

OWYN performance negatively impacted by product quality issue and ineffective marketing execution Q3 FY26 and next 6-12 months

Retail takeaway declined 1.3%, expected distribution losses over next 6-12 months

Mitigation:Addressed product issue, refocusing growth on core ready-to-drink and powder business, improving marketing.

Significant cost inflation across proteins, packaging, and other key cost inputs Current fiscal year and continuing into next fiscal year

High single-digit price increase effective September to offset inflation

Mitigation:Implementing high single-digit price increase, productivity initiatives, cost reduction efforts.

Volume impact due to price increases and consumer elasticities FY27

Elasticities expected to be 1 or higher in FY27, leading to volume impact

Mitigation:Short-term pain for long-term gain, rebuilding gross margins to fund marketing investment, improving brand metrics.

Quest bar business underperformance Q3 FY26

Bar consumption declined by roughly 5%

Mitigation:Improving top-of-the-funnel communication, innovation pipeline reflecting consumer preferences, appropriate marketing investment, new marketing agency hired.

Non-cash loss on impairment of Goodwill and brand intangible assets Q3 FY26

$82M impairment

Mitigation:Not a direct operational risk, but reflects underlying business challenges being addressed by turnaround efforts.

Q&A highlights

Clarification on Q4 guidance implying weaker exit rate, gap between shipments and consumption, and how the high single-digit pricing action in September will impact FY27 top-line trajectory and elasticities.

Chris explained Q4 guidance incorporates continued Q3 consumption trends but anticipates undershipping consumption to right-size inventories, especially due to OWYN distribution losses. Joe added that FY27 planning is ongoing, but consistent consumption trends from the past two quarters are a starting point. He emphasized the necessity of the high single-digit price increase to offset inflation, expecting elasticities of 1 or higher in FY27, leading to volume impact. This is seen as short-term pain for long-term gain, aiming to rebuild gross margins to fund marketing.

“We would expect, as we look at fiscal '27, elasticities to be at 1 or higher. So there's going to be a volume impact to our business.”

asked by Peter Grom · answered by Joseph Scalzo

2 min read 6 chapters

Detailed narrative

Turnaround Priorities and Progress

The company is focused on three key priorities for its turnaround: strengthening business economics, ensuring consistency and discipline in strategic choices, and rebuilding brand investment. Early progress is noted in organizational focus and accountability, with Q3 financial performance exceeding expectations. The company is actively managing costs, implementing pricing actions to offset inflation, and gaining traction with productivity initiatives.

Brand Building and Consumer Insights

Simply Good Foods is revamping its brand-building capabilities by focusing on stronger consumer insights and effective marketing with an ROI-driven approach. Investments are shifting towards top-of-the-funnel streaming and connected brand media. A recent assessment of GLP-1 therapies' impact on consumption behaviors has provided valuable insights for future marketing and innovation efforts.

Quest Brand Performance and Strategy

Quest, the largest brand, saw retail takeaway growth of 1.4% and increased household penetration to 20.5%. Chips consumption grew over 17%, and milkshakes were up almost 50%. The primary challenge is to refocus on core bar and chip segments, improve buy rate in bars, and enhance top-of-the-funnel communication. A new marketing agency has been hired for Quest to reassert superior nutritionals and taste.

Atkins Brand Reset

Atkins retail takeaway declined 23.9%, driven by declining household penetration and distribution losses. The brand has suffered from insufficient marketing support and inconsistent messaging. The current focus is on resetting the retail baseline, managing the brand with discipline, and restoring clarity around its consumer proposition, particularly in the context of GLP-1 weight management. Comparisons are expected to become more favorable in Q4 and FY27.

OWYN Brand Challenges and Refocus

OWYN's retail takeaway declined 1.3%, impacted by a product quality issue and ineffective marketing execution, leading to expected distribution losses over the next 6-12 months. Despite these challenges, the company believes in OWYN's long-term potential, stemming from underlying consumer demand for clean label plant-based nutrition. The strategy is to complete the distribution reset and refocus growth on core ready-to-drink and powder businesses.

Long-Term Confidence and Strengths

Management remains confident in the future, citing an attractive purposeful nutrition category, strong brands (Quest, Atkins, OWYN), robust capabilities in marketing, sales, R&D, and outsourced supply chain, and an asset-light operating model. A strong balance sheet provides financial flexibility for investment and capital allocation, reinforcing the belief in restoring profitable growth.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.