Jefferies Downgrades Simply Good Foods as Company Projects 2027 Decline

On Oct. 28, Jefferies moved The Simply Good Foods Company to Hold from Buy and lowered its price target by $4, to $11. The move came as the food company’s fiscal 2027 outlook called for lower sales and adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA.

Simply Good Foods expects fiscal 2027 net sales to decline 13% to 17% year over year and adjusted EBITDA to fall 9% to 14%. It projects GAAP gross margin will rise 250 to 300 basis points year over year. The company’s fiscal 2027 outlook also includes a weaker first quarter, with net sales expected to fall 19% to 22% and adjusted EBITDA down 28% to 33% from a year earlier.

For the first quarter, the company expects GAAP gross margin to increase about 100 basis points year over year. Adjusted EBITDA is a non-GAAP measure of operating performance. Simply Good Foods owns the Quest, Atkins and OWYN brands.

Fiscal 2026 net sales fell 6.5% to $1.36 billion, from $1.45 billion a year earlier. Fourth-quarter net sales declined 9.7% to $333.3 million. Lower sales for Atkins and OWYN drove the annual decline, partly offset by growth at Quest.

Overall retail purchases fell about 8% in the fourth quarter. The declines were about 23% for Atkins, 7% for OWYN and 2% for Quest. Fourth-quarter results also reflected softer retail takeaway and distribution pressure tied to product velocity.

President and CEO Joe Scalzo called fiscal 2027 “a challenging but important year in our turnaround.” The company plans to reinvest part of its margin recovery in its brands. It expects performance to improve as marketing investments take hold, pricing effects ease and year-over-year comparisons become more favorable.