Shares of The Simply Good Foods Company (NASDAQ:SMPL) fell sharply in early trade despite the company reporting second-quarter sales and earnings that narrowly beat expectations.
Simply Good Foods, which develops, markets and sells branded nutritional foods and snacking products, posted net sales of $296.6 million for the 13 weeks to February 25, 2023, slightly lower than the $296.7 million reported for the same period a year earlier but ahead of the $290.7 million expected by analysts surveyed by Zacks Investment Research.
Adjusted diluted earnings share (EPS) fell to $0.32 from $0.36 in 2Q 2022, but above the $0.30 expected by the Zacks analysts.
“Marketplace performance was driven by strong retailer programming, new product success and marketing investments that continue to drive household penetration of our brands,” Simply Goods Foods CEO Joseph Scalzo said in a statement.
“As expected, retail takeaway growth outpaced the net sales change principally due to the significant prior year retail customer inventory build.”
The company said it believes it is well-positioned to maintain its marketplace momentum in a challenging economic environment.
Over the remainder of the financial year, it said there are solid plans in place for both its Atkins and Quest brands, including, innovation, advertising, customer programming and display that it expects to drive sales and earnings growth, particularly in the fourth quarter of fiscal 2023.
It has guided investors to expect net sales to increase slightly above the 4-6% long-term algorithm, while adjusted underlying earnings (EBITDA) will increase slightly but less than the net sales growth. Adjusted diluted EPS will increase by less than its expected adjusted EBITDA growth rate due to higher interest rates.
The company's shares traded 7.5% down at $35.80 in early trade.
Contact the author at stephen.gunnion@proactiveinvestors.com