Mama's Creations: Everyday Items Replace Promotional Peaks as Growth Engine Fires
Revenue up 50% while lapping a $10M Costco MVM; gross margin dips on deliberate launch investments, but the structural story is stronger.
MAMA · Earnings Call · 2026-06-08
A Threshold Crossed
When Mama's Creations reported its fiscal first quarter on June 8, the headline numbers were impressive: revenue grew 50% to $52.8 million, net income jumped 66% to $2.1 million, and adjusted EBITDA expanded 71% to $4.9 million. But the more significant tell was qualitative. The company lapped a $10 million digital Costco MVM from the prior year and still delivered that growth, without any incremental Costco programming. As CEO Adam Michaels explained, “this is not a story of Costco growing on top of itself. This is the entire enterprise stepping up on top of last year's higher promotional base.” — Adam L. Michaels, Chief Executive Officer · 2026-06-08 That single statement marks a shift from a promotional, episodic business to a structurally diversified one. The proof is in the customer wins. During the quarter, the company launched over 12 new items with major retailers, including branded SKUs at Walmart, Target, and Food Lion. It also secured a second Costco everyday item—this time in San Diego, the last holdout region from 2024. This is a far cry from the earlier days when the company's fortunes hinged on a single meatball rotation. The everyday item status now gives MAMA a predictable, recurring volume base, and the rest of the business is filling in around it.The Margin Trade-Off
The margin picture, however, is more nuanced. Gross margin fell to 23.6% from 26.1% in the year-ago quarter, a decline of 250 basis points. Management was upfront about the causes: labor and raw material inefficiencies from new packaging technologies and protein form factors, plus a deliberate shift of about $500,000 from marketing into trade promotion to support the new-item launches. In the Q&A, Michaels quantified the impact: “there is probably somewhere between almost $500 thousand to, I do not think, a million... we took about half a million dollars out of marketing to put that into trade to support the new launches at Target.” — Adam L. Michaels, Chief Executive Officer · 2026-06-08 He also indicated that without these front-loaded investments, gross margin would have been north of 25%. This is a classic investment thesis: sacrifice near-term margin to build long-term distribution. The gross margin at 23.6% is below the company's mid-to-high-twenties target, but management expects it to recover as these new items move from launch into steady state production. The company's own keyword trajectory highlights this focus on steady state production and new packaging—the very enablers of that margin recovery.Scale and Technology: Building the Platform
Underpinning the growth is a clear operational maturation. The company completed its ERP integration across all three manufacturing facilities, transitioning Bayshore onto the same platform that runs East Rutherford and Farmingdale. This gives real-time cost visibility by line and SKU, a faster month-end close, and sharper inventory accuracy. Management also advanced its WMS and introduced its first TMS, tools that will drive labor efficiency and route optimization. The new Rutherford expansion, which literally shares a wall with the existing facility, adds blast freezer and refrigerated storage capacity. This is a platform built to scale, and the numbers bear it out: revenue is up 1,106% over the last decade, and the company has generated $4 million in free cash flow in the latest quarter, even after absorbing the launch costs. But the most compelling evidence of a structural change is in the company's own narrative. At the prior earnings call, Michaels was still framing growth around the Costco MVM and the need to replicate programming. In April, he said, “Yes, I feel proud of the team. The team is just getting started. Hopefully, you're seeing like I am opening new doors.” — Adam Michaels, CEO · 2026-04-14 That tone persists, but the emphasis has shifted from winning the next promotion to building a durable, everyday-item business. As he put it on the current call, “The important point is that we lapped that $10 million comp on a whole company basis year over year, adjusting out our recent acquisition.” — Adam L. Michaels, Chief Executive Officer · 2026-06-08 That is the definition of a company that has outgrown its promotional past. The market, however, has taken notice of the margin near-term. The stock peaked at $20.65 on June 29, just weeks after the report, and is now 20% below that level. The pullback feels like a classic “sell the news” reaction to a miss on gross margin, even as the underlying growth accelerates. The company is still trading at roughly 3.8x price-to-revenue, a premium that reflects the growth but also the risk that margin recovery takes longer than promised.In a sector where many packaged-food names are struggling to grow volume, Mama's Creations is doing the opposite. The deli prepared foods category is still building, and the company's dual-track approach—branded and private label—puts it in the center of a secular shift toward fresh, value-oriented meal solutions. The form factors and ERP system are not just operational buzzwords; they are the infrastructure that allows a small-cap to behave like a scaled national player. If management's margin recovery timeline holds, this dip could be a buying opportunity. But the real story is already clear: Mama's Creations is no longer riding a wave—it is becoming the wave.We grew revenue 50% to $52.8 million in the first quarter, grew net income 66% to $2.1 million, and expanded adjusted EBITDA 71% to $4.9 million... without any incremental Costco programming.