SMPL - Simply Good Foods notches narrow earnings beat margin pressure persists

2023-04-05 07:22:37 ET

Shares of Denver-based health food company Simply Good Foods ( NASDAQ: SMPL ) wavered in premarket trading despite topping analyst expectations for the second quarter.

For its fiscal Q2 update, the company reported $0.32 in earnings per share, beating the analyst consensus by $0.02. Meanwhile, $296.6M in revenue for the quarter was $2.74M above the Street consensus. Gross margins contracted 310 basis points year over year to 35.8%.

“Marketplace performance was driven by strong retailer programming, new product success and marketing investments that continue to drive household penetration of our brands. As expected, retail takeaway growth outpaced the net sales change principally due to the significant prior year retail customer inventory build,” CEO Joseph E. Scalzo said. “The gross margin decline in the second quarter was greater than expectations due to slightly higher costs throughout the supply chain. We exceeded our Adjusted EBITDA estimate due to better than expected sales performance and slightly favorable operating expenses.”

He also indicated that the company expects to remain on track toward previous guidance provided in Q1. Management expects net sales growth to be “slightly greater than our 4-6% long-term algorithm.” Analysts had expected 6.6% sales growth year over year

Additionally, gross margin is due to decrease by a greater percentage than previously forecast, due to persistent supply chain pressure and higher costs.

Shares of Simply Good Foods ( SMPL ) rose over 5% shortly after the report before reversing course and falling over 4% .

Read more on the details of the results .

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