Simply Good Foods (NASDAQ:SMPL) reported a 33.7% drop in net income to $25.3 million for the first quarter ended Nov. 29, 2025.
The Denver-based company was hit by a significant contraction in gross margins, which fell 590 basis points to 32.3%.
Management attributed the squeeze primarily to elevated input inflation and tariff-related expenses, challenges that overshadowed a slight revenue beat relative to analyst expectations.
Total net sales remained largely flat at $340.2 million, a marginal 0.3% decrease from the prior year.
However, the top-line stability masked a stark divergence between the company’s core brands.
Quest Nutrition and the recently acquired OWYN brand continued their momentum, posting double-digit consumption growth of 12% and 17.8%, respectively.
These gains were almost entirely offset by a 19.3% drop in retail takeaway for the legacy Atkins brand, which has struggled to maintain its footing in an increasingly competitive nutritional snacking landscape.
Despite the earnings pressure, the company’s board of directors authorized a $200 million increase to its share repurchase program, bringing the total available capacity to approximately $224 million.
This move follows a quarter in which the company was already aggressive in the market, repurchasing approximately 5 million shares for $100 million.
Elsewhere, the company's balance sheet remains robust, finishing the quarter with $194.1 million in cash and a net debt-to-adjusted EBITDA ratio of 0.8x.
While adjusted EBITDA fell 20.6% to $55.6 million during the period, management reaffirmed its full-year 2026 outlook.
The company expects net sales to range between a 2% decline and 2% growth, with productivity initiatives and pricing adjustments expected to help rebuild margins as the year progresses.