BellRing Beats Estimates as Margins Collapse, CEO to Retire
Protein snack maker reports earnings beat but gross margins plunge 760 basis points, leadership transition announced
BellRing Brands exceeded Wall Street expectations in the first quarter of fiscal 2026, though the protein snack maker's gross margins collapsed to 29.9% from 37.5% a year earlier, signaling intensifying competitive pressure in the ready-to-drink protein market.
The St. Louis-based company reported adjusted earnings per share of $0.37 on revenue of $537.3 million for the quarter ended December 31. Analysts had expected earnings of roughly $0.32 per share on sales of $505.6 million, according to data compiled by Zacks. The stock rose 3.5% in pre-market trading to $25.24.
The revenue beat masked a sharp deterioration in profitability. Gross profit fell $38.8 million year-over-year to $160.8 million, driven by what management described as "significant input cost inflation" including tariffs, unfavorable product mix, and the absence of $5 million in non-recurring cost benefits from the prior year. The company's flagship Premier Protein brand saw sales decline 1.2%, with net pricing falling 1% due to increased promotional investment.
BellRing narrowed its full-year guidance, projecting net sales of $2.41 billion to $2.46 billion, representing 4% to 6% growth. The company expects adjusted EBITDA of $425 million to $440 million, with margins approximately 18% of sales. Management anticipates growth accelerating beyond the first quarter as merchandising initiatives and advertising investment increase.
Separately, the company announced that chief executive Darcy Davenport will retire by September 30, 2026, ending a 15-year tenure that saw the company expand from $140 million in annual sales to more than $2.3 billion. The board has initiated an external search for her successor. Davenport, who began at Premier Nutrition in 2011 and led the business through Post Holdings' 2014 acquisition and BellRing's subsequent spin-off, will transition to an advisory role after her successor is named.
BellRing repurchased $97 million of shares during the quarter, continuing the aggressive buyback program that has helped support the stock despite a 60% decline from its 52-week high of $79.57. The company currently trades at approximately 11.4 times forward earnings, with a consensus target price of $35.86 suggesting significant upside from current levels, according to analyst data compiled by MarketBeat.
The margin compression reflects broader challenges in the protein shake category. Premier Protein maintains a leading 26.4% market share in ready-to-drink shakes, but growth in the category has slowed as promotional activity intensifies across competitors. The company previously lowered its long-term sales growth target to 7% to 9% annually from double-digit expectations, citing increasing competitive intensity and slowing category growth.
Despite the near-term headwinds, the global protein supplements market continues to expand. Industry analysts project the high-protein powders market will reach $28.86 billion in 2026 and grow to $50.43 billion by 2035, with ready-to-drink formats expected to show the strongest compound annual growth rate through 2035, according to market research published by Globe Newswire.
BellRing faces additional scrutiny from a securities fraud class action lawsuit alleging that previous growth was driven by temporary inventory stockpiling rather than genuine consumer demand. The lawsuit, which claims a $2.9 billion value destruction following earnings reports in 2025, adds pressure on management during the leadership transition period.