Shares of Simply Good Foods Company (SMPL) tumbled 6.90% in pre-market trading on Thursday following the release of its fiscal third-quarter earnings report. The nutritional snack maker narrowed its full-year sales growth forecast and reported pressure on gross margins, overshadowing a slight earnings beat.

For the quarter ended May 31, Simply Good Foods posted adjusted earnings per share of $0.51, edging past analysts' expectations of $0.50. However, revenue came in at $381 million, just shy of the $381.7 million consensus estimate. The company narrowed its fiscal 2025 net sales growth outlook to 8.5-9.5%, down from the previous range of 8.5-10.5%, signaling potential headwinds in the coming months.

Investors' concerns were further amplified by a significant 350 basis point decline in gross margin to 36.4%, reflecting inflationary pressures and integration costs from the OWYN acquisition. Additionally, the company's Atkins brand saw a 13% decline in sales, though this was partially offset by strong performance in the Quest and OWYN brands. The combination of tempered growth expectations, margin compression, and weakness in a key brand appears to be driving the sharp pre-market selloff as investors reassess the company's near-term growth prospects.