Simply Good Foods has reaffirmed its optimistic full-year growth outlook as healthy eating trends persist, though the company reported sales growth that fell short of market expectations in the fiscal first quarter. The nutritional food powerhouse confirmed its sales growth projection, anticipating an increase of 8.5% to 10.5% over fiscal 2024's revenue of $1.33 billion.
Analysts surveyed by FactSet predict sales to reach $1.46 billion in the current year. Furthermore, management projects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to grow between 4% and 6%. Chief Executive Geoff Tanner expressed confidence in the company's marketing initiatives, stating, "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." In the first quarter, revenue climbed to $341.3 million from $308.7 million a year earlier; however, this figure fell short of analysts' expectations of $347.3 million.
Adjusted earnings per share increased to $0.49 for the three months ending November 30, up from $0.43 the previous year, surpassing the consensus estimate of $0.47. It's important to note that results from the prior year do not factor in Simply Good Foods' acquisition of Only What You Need, or OWYN, completed in June.
The company’s shares experienced a 2% drop during intraday trading. Tanner noted, "We continue to see increased relevance and 'mainstreaming' of nutritional snacking products as consumers seek high protein, low-sugar, low-carb foods." He explained that this trend has contributed to substantial retail takeaway growth for both the industry and the company.
Mimicking the momentum, the parent company of Atkins and Quest brands reported approximately 8% retail takeaway growth in the first quarter, with impressive point-of-sales growth of around 10% for Quest and a remarkable 67% for OWYN. Conversely, Atkins retail takeaway saw a decline of about 4%, yet slightly exceeded estimates.
Tanner also indicated that as they concluded the first quarter, Quest chips' production capacity returned to optimal levels, enabling enhanced merchandising, programming, and expanded distribution capabilities for these offerings..