Why Is Simply Good Foods Stock Trading Lower Today?

Simply Good Foods SMPL shares are trading lower on Wednesday after the company reported Q2 results. While EPS and sales came in above estimates, gross profit declined year over year.

Simply Good Foods reported quarterly adjusted earnings of $0.32 per share which beat the analyst consensus estimate of $0.29. The company also reported quarterly sales of $296.60 million, beating the consensus of $293.55 million and almost flat on a year-over-year basis. Besides, the company’s gross profit was $102.7 million, with a gross margin contracting 200 basis points year-over-year to 34.6%, weighed by higher ingredient and packaging costs.

For outlook, Simply Good Foods continues to expect FY23 net sales to increase slightly greater than its long-term algorithm of 4-6%, including a headwind of almost 1% related to frozen pizza licensing. Besides, the company continues to foresee adjusted EPS to increase less than the adjusted EBITDA growth rate.

"We continue to anticipate that U.S. retail takeaway will moderate over the remainder of the year due to a more challenging comparable in the year ago period and a recessionary economic environment.....Full year fiscal 2023 gross margin will decline greater than our previous estimate due to the year-to-date gross margin performance and slightly higher costs within our supply chain over the remainder of the year," said CEO Joseph E. Scalzo.

Simply Good Foods expects its "solid plans" in place for Atkins and Quest brands to drive sales and earnings growth, particularly in the fourth quarter of fiscal 2023.

SMPL Price Action: Simply Good Foods has a 52-week high of 45.77 and a 52-week low of $29.21.

Simply Good Foods shares are down 5.10% at $36.72 at the time of writing, according to Benzinga Pro.