Simply Good Foods Co

The Simply Good Foods Company operates in the nutritional snacking industry, which is included in the general snack foods industry and is described as large, fragmented, and intensely competitive. The company develops, markets, and sells protein bars, ready-to-drink protein shakes, sweet and salty protein snacks, confectionery products, and protein powders under the Quest, Atkins, and OWYN brand names. The nutritional snacking category is shaped by consumer trends including increased consumption of smaller, more frequent meals, strong preference for convenient better-for-you snacks, greater focus on health and wellness, demand for convenient sources of protein and fiber, and movement toward increasing protein consumption while limiting simple carbohydrates or avoiding certain allergens. The company believes the category will continue to grow given relatively low household penetration and favorable consumer trends of snacking, health and wellness, convenience, and on-the-go consumption. The industry is subject to rapid and frequent changes in consumer demands, and the company's geographic focus is primarily North America, with international net sales representing approximately 2.2% of total net sales for the fifty-two weeks ended August 29, 2026 ¹.

The nutritional snacking industry is fragmented and highly competitive, with competition based on brand awareness and loyalty, product ingredients including sourcing and allergen profiles, macronutrient profiles, product claims, taste and texture, convenience, advertising spending, perceived value, product variety and packaging, access to retailer shelf space, and product positioning on e-commerce retailer sites. The company competes against numerous multinational, regional, and local companies selling protein bars, chips, confections, shakes, and nutritional supplements, often with a focus on specific dietary approaches such as keto, paleo, vegan, gluten free, and vegetarian. Some competitors have resources substantially greater than the company and market brands that may be more widely recognized. The company believes it competes effectively with respect to each competitive factor. The company's Quest, Atkins, and OWYN brands are described as leading brands with combined scale in protein bars, protein chips, confections, RTD protein shakes, and protein powders, providing a leading position within retailers' nutrition and wellness aisles and meaningful shelf space. The company's brand attributes of protein-rich and low-carb nutrition are described as well-aligned with consumer mega trends, supported by over 100 independent, peer-reviewed clinical studies showing the benefits of controlling carbohydrates ².

The company generates revenue primarily through product sales less the cost of promotional activities, slotting fees, and other sales credits and adjustments including product returns. The business is an asset-light model that retains core in-house capabilities including sales, marketing, brand management, customer relationships, product development, and supply-chain expertise, while collaborating with a diversified pool of contract manufacturers and distributors to execute manufacturing and distribution. The company distributes products in major retail channels primarily in North America, including grocery, club, and mass merchandise, and through e-commerce, convenience, specialty, and other channels. A substantial majority of sales are generated from a limited number of retailers. Sales to Walmart Inc. represented approximately 30% of consolidated sales in fiscal year 2026, with approximately 24% through their mass retail and e-commerce channels and approximately 6% through their Sam's Club channel ³. Sales to Amazon represented approximately 20% of consolidated sales in fiscal year 2026 ⁴. No other customer represents more than 10% of consolidated sales. The company sells products on questnutrition.com, Atkins.com, liveowyn.com, Amazon.com, and the e-commerce platforms of brick-and-mortar customers.

The Quest brand targets consumers seeking a variety of protein-rich foods and beverages that also limit sugars and simple carbohydrates. Core Quest products consist of protein bars, salty snacks, and RTD protein beverages. Quest's protein chips and crackers line became a high-selling product offering with an attractive nutrition profile compared to conventional chip and cracker products. Quest's rich and creamy ultra-processed milk protein milkshake contains 45 grams of protein and the Quest regular rich and creamy protein shake contains 30 grams of protein ⁵. For fiscal year 2026, approximately 77% of Quest's gross sales in the U.S. were through the mass retailer, grocery and convenience store distribution channels, and approximately 22% of Quest's gross sales were through the e-commerce channel ⁶.

The Atkins brand targets consumers following a low-carbohydrate lifestyle or seeking to manage weight or blood sugar levels. Core Atkins products consist of protein bars, RTD protein shakes, and confections. Atkins RTD protein shakes contain 10 to 30 grams of protein, as well as other important vitamins and minerals ⁷. The Atkins Endulge line consists of desserts without all the added sugar. For fiscal year 2026, approximately 78% of Atkins' gross sales in the U.S. were through the mass retailer, grocery and convenience store distribution channels, and approximately 22% of Atkins' gross sales were through the e-commerce channel ⁸. The OWYN brand targets consumers seeking protein-rich beverages that are plant-based and tested for the top nine allergens. OWYN RTD protein shakes and powders are plant-based, contain 20 to 32 grams of protein, and appeal to consumers mindful of certain allergens ⁹. For fiscal year 2026, approximately 72% of OWYN's gross sales in the U.S. were through the mass retailer, grocery and convenience store distribution channels, and approximately 25% of OWYN's gross sales were through the e-commerce channel ¹⁰.

During fiscal year 2026, the company recorded a loss on impairment of $200.0 million for the OWYN brand indefinite-lived intangible asset and $93.0 million for the Atkins brand indefinite-lived intangible asset ¹¹. The company also recorded a goodwill impairment of $38.0 million for the fifty-two weeks ended August 29, 2026 ¹². During the fifty-two weeks ended August 30, 2025, the company recorded a loss on impairment of $60.9 million for the Atkins brand indefinite-lived intangible asset and the licensing agreements finite-lived intangible asset ¹³. The company incurred $19.5 million of costs for restructuring activities in fiscal year 2026, of which $5.7 million were included within Cost of goods sold, $1.1 million within Selling and marketing, and $12.7 million within General and administrative, including $2.6 million of impairment charges related to assets utilized at contract manufacturing facilities ¹⁴. The company expects to incur approximately $25.0 million in restructuring and other costs, which were paid throughout fiscal 2026 and will continue to be paid throughout fiscal 2027 ¹⁵. In connection with restructuring activities, the company recorded incremental stock-based compensation expense of $1.0 million in the second quarter of fiscal year 2026 related to the separation of the prior President and Chief Executive Officer in January 2026 ¹⁶. On January 6, 2026, the Board of Directors approved a $200.0 million increase in its repurchase authorization under its stock repurchase program ¹⁷. As of August 29, 2026, approximately $157.4 million remained available under the Current Authorization ¹⁸. During the period July 26, 2026 to August 29, 2026, the company repurchased 10,467 shares at an average price of $9.96 per share ¹⁹.

Net sales decreased 6.5% to $1,356.5 million for the fifty-two weeks ended August 29, 2026, compared to $1,450.9 million for the fifty-two weeks ended August 30, 2025, driven by continued velocity-related declines driving distribution-related declines for Atkins and OWYN, partially offset by Quest volume-driven growth ²⁰. Gross profit decreased $83.4 million, or 15.9%, to $442.4 million, and gross profit margin decreased 360 basis points to 32.6% of net sales from 36.2% ²¹. The company reported a net loss of $155.9 million for fiscal year 2026, compared to net income of $103.6 million for fiscal year 2025 ²². Adjusted EBITDA decreased $52.3 million, or 18.8%, to $225.9 million, compared to $278.2 million in the prior year ²³. The company had approximately $350 million in outstanding term loan indebtedness and a revolving credit facility with availability of up to $75 million with no amounts drawn as of August 29, 2026 ²⁴.

In fiscal 2027, the company will be launching new advertising campaigns across all three brands to potentially increase consumer demand and drive velocities. The company expects margins to remain under pressure and dependent on its ability to realize incremental benefits from productivity and cost savings initiatives, recently announced and implemented pricing actions, and other mitigating actions. The company anticipates increases in the cost of certain core ingredients and supplies during fiscal year 2027. The United States has announced tariffs on imports from a broad range of countries, including the European Union, Canada, Mexico, and China, which are causing inflationary pressures and higher costs on certain ingredients and packaging and imports from the affected countries during fiscal year 2026, which is expected to continue in fiscal year 2027. The company expects to incur approximately $25.0 million in restructuring and other costs, which were paid throughout fiscal 2026 and will continue to be paid throughout fiscal 2027 ²⁵.

The company's growth strategy includes innovating and expanding the portfolio of product offerings to meet consumer demand for higher protein products and new product forms. The company intends to continue to enhance, strengthen, and expand product offerings with new and innovative flavors and forms and packaging alternatives while maintaining a commitment to delivering products that meet targeted nutritional profiles. The company's in-house research and development laboratories allow it to develop new products internally and bring them to market quickly through its contract manufacturing network. The company also intends to satisfy developing and changing consumer preferences through the continued pursuit of merger and acquisition transactions. The company believes the fragmented snacking category presents an opportunity for growth and the opportunity to build, through disciplined acquisitions, a leading platform in the nutritional snacking space. The company sees significant opportunity for growth and synergies in complementary adjacent snacking categories such as sports/active and adult nutritional snacks, salty snacks and protein snacks, as well as in the better-for-you eating space.

The company's growth strategy also includes expanding distribution in white space opportunities. For fiscal year 2026, approximately 77% of Quest's gross sales in the U.S., approximately 78% of Atkins' gross sales in the U.S., and approximately 72% of OWYN's gross sales in the U.S. were through the mass retailer, grocery and convenience store distribution channels ²⁶. Management believes there is opportunity for each brand to further penetrate those channels as well as other distribution channels such as club stores. In fiscal year 2026, approximately 22% of Quest's gross sales, approximately 22% of Atkins' gross sales, and approximately 25% of OWYN's gross sales were through the e-commerce channel ²⁷. The company intends to leverage brand recognition to develop further the distribution channels through which it reaches consumers, including through continued expansion of the e-commerce channel. The company also intends to expand marketing efforts to bring first-time buyers into the Quest, Atkins, and OWYN brand franchises, and to communicate to consumers who have elected to use weight management medications what the company believes are the complementary benefits of using its products to support achieving or maintaining weight management goals.

The company's margin and cost outlook reflects expectations that margins will remain under pressure and are dependent on the company's ability to realize incremental benefits from productivity and cost savings initiatives, recently announced and implemented pricing actions, and other mitigating actions. The company's gross margin was affected by the unfavorable effects of higher input costs and restructuring costs compared to the prior year, with productivity a modest offset. Economic pressures on customers and consumers, including the challenges of high inflation and consumer sensitivity to price increases, are expected to have corresponding elasticity impacts which may have adverse effects on net sales and profitability. The company anticipates increases in the cost of certain core ingredients and supplies during fiscal year 2027. The company expects to incur approximately $25.0 million in restructuring and other costs, including the $19.5 million incurred in fiscal 2026, which were paid throughout fiscal 2026 and will continue to be paid throughout fiscal 2027 ²⁸.

The company operates an asset-light business model and relies on contract manufacturers to manufacture its products. The company believes its contract manufacturers have capacity to meet anticipated supply needs, although short-term high demand or production equipment issues can cause disruptions. The company monitors both near-term and long-term capacity as well as fulfillment rates and overall performance of its manufacturing partners and qualifies alternate suppliers as needed. The company leases two distribution centers in Greenfield, Indiana, and utilizes over 1.6 million square feet of floor space among its distribution centers ²⁹. The company's supply chain for its international business uses exclusively contract manufacturers. The company's products are manufactured in North America and shipped internationally through a network of service providers, and the business is managed by a small number of employees in Australia and New Zealand. As of August 29, 2026, the company's workforce consisted of 282 employees globally, with approximately 72% based in an office or in research and development lab locations ³⁰. Of that total, approximately 95% of employees were in the United States, and the rest were in Canada, Australia, and New Zealand ³¹. Of these total employees, 122 employees were engaged in marketing and sales, 83 were engaged in research and development, operations and quality, and 77 were engaged in administration ³². Of United States employees, 25 employees were hourly and 242 were salaried ³³. No employees were covered by a collective bargaining agreement.

The company's capital allocation priorities include maintaining liquidity and investing in the business. As of August 29, 2026, the company had approximately $350 million in outstanding term loan indebtedness and a revolving credit facility with availability of up to $75 million with no amounts drawn on that revolving credit facility ³⁴. The company's revolving credit facility has a maximum total net leverage ratio equal to or less than 6.00:1.00 contingent on credit extensions in excess of 30% of the total amount of commitments available under the revolving credit facility ³⁵. On January 6, 2026, the Board of Directors approved a $200.0 million increase in its repurchase authorization under its stock repurchase program ³⁶. As of August 29, 2026, approximately $157.4 million remained available under the Current Authorization ³⁷. The company currently does not pay dividends and has not paid any cash dividends on its common stock to date, and does not expect to pay any cash dividends in the foreseeable future. The company's interest expense decreased $1.8 million for the fifty-two weeks ended August 29, 2026, compared to the prior year, primarily due to the decrease in interest rates on the Term Facility to 5.8% as of August 29, 2026 from 6.3% as of August 30, 2025 ³⁸.

The company faces structural headwinds including reduced household penetration leading to reduced velocities and continued distribution-related losses for Atkins and OWYN. In recent periods, retail distribution for the Atkins brand has been under pressure due to declining velocities. The Atkins brand has had, and continues to have, a large retail presence on-shelf, which was reduced in the current fiscal year and could be reduced in future periods. In fiscal year 2026, OWYN's reduced household penetration contributed to softer velocities, including on newly expanded distribution, which has resulted in distribution-related declines in the current fiscal year, and which could continue in future periods. During fiscal year 2026, Walmart and other retailers reduced the number of Atkins products they carry in their stores and in the future may reduce the total assortment of Atkins and OWYN products they carry. The company's geographic focus makes it particularly vulnerable to economic and other events and trends in North America. The company's operations are dependent on a global supply chain and the effects on the company or its suppliers of supply chain constraints and inflationary pressures, including those related to tariffs, could adversely affect operating results.

The company faces execution risks related to its growth plan, including the risk that it may fail to implement its growth strategies successfully, timely, or at all. The company's success depends largely on its ability to implement its growth strategies effectively, including identifying and successfully catering to new demographics and consumer trends, developing new and innovative products, identifying and acquiring additional product lines and businesses, securing shelf space in grocery stores, wholesale clubs and other retailers, increasing consumer awareness of its brands, entering into distribution and other strategic arrangements with third-party retailers and other potential distributors, and competing with numerous other companies and products. The company may fail in reaching and maintaining the loyalty or purchase frequency rate of new consumers to the same extent as with historical consumers. The company may also not succeed in evolving its advertising and other efforts to appeal to target consumers. If the company cannot identify and capture new audiences and demographics for its brands, its ability to integrate additional brands successfully may be adversely affected.

The most material risks to Simply Good Foods center on brand-specific distribution losses and impairment exposure. The Atkins and OWYN brands have seen a reduction of retailer shelf space and total points of distribution, which has had, and is expected to continue to have, a negative effect on those brands' net sales. During fiscal year 2026, Walmart and other retailers reduced the number of Atkins products they carry in their stores and in the future may reduce the total assortment of Atkins and OWYN products they carry. The company recorded a loss on impairment of $200.0 million for the OWYN brand indefinite-lived intangible asset and $93.0 million for the Atkins brand indefinite-lived intangible asset during fiscal year 2026, plus a goodwill impairment of $38.0 million ³⁹. Significant declines of future revenue projections or changes of other assumptions used in estimating fair values could result in further impairment charges that could materially affect the consolidated financial statements. Customer concentration is acute: sales to Walmart Inc. represented approximately 30% of consolidated sales in fiscal year 2026, with approximately 24% through their mass retail and e-commerce channels and approximately 6% through their Sam's Club channel, and sales to Amazon represented approximately 20% of consolidated sales ⁴⁰. No other customer represents more than 10% of consolidated sales. The company maintains at-will contracts with these retailers, which do not require recurring or minimum purchase amounts. Ingredient and packaging costs are volatile and have risen, and the company anticipates increases in the cost of certain core ingredients and supplies during fiscal year 2027. United States tariffs on imports from a broad range of countries, including the European Union, Canada, Mexico, and China, are causing inflationary pressures and higher costs on certain ingredients and packaging and imports from the affected countries during fiscal year 2026, which is expected to continue in fiscal year 2027. The company had approximately $350 million in outstanding term loan indebtedness as of August 29, 2026, and its indebtedness bears interest at variable rates using SOFR as a benchmark, exposing earnings and cash flows to interest rate changes ⁴¹.

Management's message to shareholders emphasizes a year of significant challenges alongside continued strategic focus on the company's three-brand platform. The company's results of operations during the fifty-two weeks ended August 29, 2026 were primarily driven by declines for Atkins and OWYN, which were partially offset by Quest growth. For Atkins and OWYN, results were affected negatively by reduced household penetration leading to reduced velocities and continued distribution-related losses. In response, management has been taking action to bolster the highest performing Atkins products and simultaneously working with retailers to replace lower performing Atkins products with higher performing products. In fiscal 2027, the company will be launching new advertising campaigns across all three brands to potentially increase consumer demand and drive velocities. The company's gross margin was affected by the unfavorable effects of higher input costs and restructuring costs compared to the prior year, with productivity a modest offset. Margins are expected to remain under pressure and are dependent on the company's ability to realize incremental benefits from productivity and cost savings initiatives, recently announced and implemented pricing actions and other mitigating actions. During the second quarter of fiscal year 2026, the company announced certain restructuring activities in conjunction with the implementation of the company's modified organization design and actions to streamline its operations, which will create a more efficient organization that will continue to support and build its business. These restructuring plans primarily included workforce reductions, changes in management structure, actions to streamline its operations and other cost savings initiatives. The company expects to incur approximately $25.0 million in restructuring and other costs, including the $19.5 million incurred in fiscal 2026, which were paid throughout fiscal 2026 and will continue to be paid throughout fiscal 2027 ⁴². The company's strategic priorities for the period ahead include innovating and expanding the portfolio of product offerings to meet consumer demand for higher protein products and new product forms, leveraging the platform to expand in attractive food and snacking categories through disciplined acquisitions, expanding distribution in white space opportunities, and continuing marketing efforts and strategies to both increase household penetration and reach consumers beyond core historic buyers. The company also continues to monitor and evaluate macroeconomic trends including consumer purchasing behavior and sentiment, economic uncertainty, key ingredient inflation, supply chain challenges, and the effects of tariffs.