in which earnings vital farms started flagging oversupply issue?

Vital Farms (VITL) officially and heavily flagged its severe egg oversupply issue during its Q1 2026 earnings release and conference call on May 7, 2026.

While the company had experienced mild macroeconomic and promotional pressures during its Q4 2025 earnings report in February, management maintained a highly confident outlook at that time. The full scale of the supply-demand mismatch was laid bare in the Q1 2026 results, triggering a major operational reset.

The key disclosures regarding the oversupply from that specific earnings call include:

• Massive Margin Compression: Vital Farms swung to a surprise net loss of $1.5 million (an EPS of -$0.03 vs. expected +$0.16). Gross margins collapsed from 38.5% down to 28.3%, driven heavily by having to dump excess egg inventory into low-margin "breaker" and wholesale channels at prices as low as $0.10 per dozen. This single channel diversion reduced gross profit by an estimated $4.9 million in Q1 alone.
• $32 Million Supply-Management Drag: Management announced that the company would incur an estimated $32 million negative impact in fiscal year 2026 purely from costs tied to managing the egg oversupply. To right-size inventory, they began working with farmer partners via voluntary contract amendments to temporarily cease production from existing flocks or delay future flock placements.
• Aggressive Guidance Slashes: Due to the oversupply and the need to aggressively narrow retail price gaps to restore volume growth, Vital Farms slashed its full-year 2026 Adjusted EBITDA guidance from its previous target of $105–$115 million down to just $0–$10 million.
• Capex and Expansion Pauses: To protect cash flow against oversupply costs, they slashed 2026 CapEx guidance in half (to $70–$75 million) by meaningfully slowing development on their new facility in Seymour, Indiana, and pausing the build-out of their "Accelerator Farms."