By Evie Liu
Shares of Simply Good Foods, a packaged food company that sells low-carb, low-sugar, and high-protein products, fell after it reported first-quarter sales that missed analysts' expectations.
For the three-month period that ended in November, Simply Good Foods posted earnings of 49 cents a share, beating the 46 cents expected by analysts polled by FactSet. Sales of $341 million in the quarter fell short of expectations for $347 million.
The stock declined 2% to $35.96 in Wednesday trading.
Sales in the quarter were 10.6% higher than the same period last year, largely due to the recent acquisition of Only What You Need, a plant-based ready-to-drink protein shake brand.
"We continue to see increased relevance and 'mainstreaming' of nutritional snacking products as consumers seek high protein, low-sugar, low-carb foods," said chief executive Geoff Tanner.
The CEO noted that Simply's retail takeaway -- the actual amount of product sold to customers -- was up about 8% in the first quarter, representing a solid start to the year. Gross margins were also better than expected, which led to a 14% growth in earnings.
"We have strong marketing plans in place to support all our brands in the upcoming 'New Year, New You' season that should result in solid overall volume driven growth," said Tanner.
Simply maintained its outlook for fiscal 2025. Management expects sales to increase 8.5% to 10.5% and earnings before interest, taxes, depreciation, and amortization to increase 4% to 6% for the fiscal year ending in August 2025.
Simply was a Barron's stock pick in November.
Simply stock has tumbled 17% since its peak in April 2022, even though the company's sales have grown 20% over the period.
The main reason for the stock's lagging performance is the firm's legacy brand Atkins, which has seen declining sales in the past few years as it struggles to compete in an increasingly crowded market. CEO Tanner joined the company in 2023 to turn Atkins around.
Simply said it will focus on improving Atkins' return on investment in fiscal 2025. This could affect the brand's net sales, but management says it is necessary to ensure the brand remains a sustainable and profitable business over the long term.
Write to Evie Liu at evie.liu@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 08, 2025 10:42 ET (15:42 GMT)
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