Vital Farms to exit butter business as egg oversupply triggers Q1 loss

Vital Farms (NASDAQ:VITL) reported a sharp reversal in profitability for the first quarter of 2026, prompting a significant restructuring of its product portfolio and a reduction in its full-year outlook.

The Austin-based producer of pasture-raised eggs posted net revenue of $187.2 million for the quarter ended March 29, 2026, a 15.4% increase over the prior year, yet fell into a net loss as pricing dynamics in the egg industry shifted rapidly.

The company reported a net loss of $1.5 million, or $0.03 per diluted share, compared to a net income of $16.9 million in the first quarter of 2025.

Gross margin contracted severely to 28.3%, down from 38.5% a year earlier.

Management attributed the decline to a greater-than-expected impact from industry-wide promotional activity and a temporary oversupply of eggs that forced more volume into lower-priced wholesale and "breaker" channels.

In response to the earnings miss, Chief Executive Officer Russell Diez-Canseco announced a strategic pivot to streamline operations.

The most significant action includes a plan to wind down the company’s butter business, allowing Vital Farms to focus resources entirely on its high-growth egg category and other core musculoskeletal health-focused initiatives.

To preserve liquidity and protect margins, Vital Farms is slashing its 2026 capital expenditure guidance by 50%.

The company now expects capex to fall in the range of $70 million to $75 million, down from the previously forecasted $140 million to $150 million.

This reduction reflects a slower pace of capacity additions at its "VXR" facility and new accelerator farms.

Operating expenses during the quarter were impacted by $32 million in costs specifically related to managing the current excess supply of eggs.

Consequently, adjusted EBITDA fell to $5.0 million for the quarter, compared to $27.5 million in the prior-year period.