OWYN and Quest Fuel Growth at Simply Good Foods as Atkins Faces Headwinds: Fiscal 2025 Review and 2026 Outlook

Quest and OWYN Brands Lead Retail Growth Despite Overall Margin Compression

The Simply Good Foods Company, parent to Quest, Atkins, and OWYN, has delivered its fiscal 2025 results alongside guidance for the coming year. While the top line grew 9%—fueled by the full integration of OWYN and ongoing double-digit expansion for both OWYN and Quest—profitability faced challenges, with a notable drop in margins and a non-cash impairment related to Atkins. Let’s break down what’s driving the numbers and where the focus is for 2026.

Retail Takeaway Highlights a Brand Divide

During Q4 2025, Simply Good Foods reported a net sales decline of 1.8% to $369 million, which was primarily attributed to the lack of an extra week present in last year's comparison period and elevated input costs. Organic growth was still evident—retail sales for Quest climbed approximately 11%, while OWYN soared by 14%. However, Atkins fell by about 12%, underlining shifting consumer preferences toward high-protein, low-sugar brands. For the year, Quest and OWYN’s sales were up 12% and 34% respectively, while Atkins dropped 10%.

Gross Margin Pressure and Significant Impairment for Atkins

Gross margin shrank 450 basis points to 34.3% in Q4, largely due to inflationary input costs and an unfavorable sales mix. Full-year gross margin was 36.2%, down 220 basis points year-over-year. The bottom line was hit hard by a $60.93 million impairment for the Atkins brand, which, coupled with lower gross profit, led to a Q4 net loss of $12.36 million versus $29.29 million net income a year prior.

Strong Cash Generation Enables Debt Reduction and Increased Buybacks

Despite earnings headwinds, the company generated $178.46 million in cash flow from operations for the year. This enabled a repayment of $150 million in term loan debt and $50.89 million of stock repurchases. With a trailing twelve-month Net Debt to Adjusted EBITDA ratio at just 0.5x, Simply Good Foods enters 2026 with substantial balance sheet flexibility. Additionally, the board expanded its stock repurchase authorization by $150 million, bringing total authorization to $171 million as of October 23, 2025.

2026 Outlook: Investment Focused on Growth Brands, Margin Recovery in H2

The fiscal 2026 forecast is conservative. Net sales are expected to range between -2% and +2% year-over-year, with further gross margin compression of 100-150 basis points anticipated. Adjusted EBITDA is forecast between -4% and +1%. The company’s outlook underscores heavier marketing investment behind Quest and OWYN to capture continued double-digit growth in these segments, especially for OWYN as Simply Good Foods seeks to accelerate trial and brand awareness. Meanwhile, Atkins is projected to face continued distribution and consumption declines.

Importantly, management expects the first half of 2026 to be weaker, with profit recovery building into the third and fourth quarters as productivity gains and cost mitigation strategies take hold. The balance between premium brand growth and managing cost headwinds is front and center in the company’s path to delivering sustainable shareholder value.

Key Takeaway for Investors: Brand Focus and Cost Discipline Drive the Next Chapter

Simply Good Foods is at a turning point. As Quest and OWYN lead category expansion and Atkins resets amid market shifts, investors will want to watch whether increased investment can reignite overall growth and if margin improvement plans deliver in the back half of 2026. With solid cash flow, low leverage, and continued shareholder returns, the foundation is in place—now the question is whether strategic bets on health-forward brands will offset broader category challenges ahead.

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