Investors are challenging Simply Good Foods’ handling of its $280 million Only What You Need (OWYN) acquisition, alleging the company overstated the success of the integration as operational and brand problems mounted. The Complaint: Filed Aug. 14, the proposed class action lawsuit alleges that Simply Good Foods and several current and former executives misled investors about the challenges facing OWYN. The suit points to lost talent, organizational bloat, product quality issues and weak marketplace execution. A Changing Story: Management initially characterized the integration as progressing as planned, even after acknowledging problems with select OWYN products related to a change in pea protein sourcing. However, by April, returning CEO Joe Scalzo offered a more critical assessment, saying there had been broader challenges with how the brand had been managed since the deal closed. What They Said: “While the growth opportunity is compelling, we did not meet our own expectations with the integration of the brand into our parent company. As a result, we lost some brand expertise, our marketplace execution was poor and our brand performance fell short of plans.” – Joe Scalzo, CEO, Simply Good Foods The Cost: OWYN sales fell nearly 17% during the company’s second quarter, and Simply Good Foods reported a $187 impairment charge against the brand. A further $13 million charge in July brought cumulative impairments to $200 million – roughly 70% of the original acquisition price. What’s Next: Simply Good Foods maintains that OWYN’s underlying consumer opportunity remains intact, but expects distribution losses could continue for six to 12 months as it works to reset the business. Read the full story with added context on BevNET | 
