- Flowers Foods said in a statement it will offer buyouts to salaried employees who meet certain defined age, length-of-service and business function criteria. The effort is part of the bread and snack maker's plan to "restructure, streamline operations, and better position the company for profitable growth."
- The initiative is expected to be largely completed by the end of this year. Flowers Foods does not know how many employees will participate, but expects to have an estimate before October.
- Earlier this year, Flowers announced it would split the company into fresh bakery and specialty snacking, and realign key leadership roles to help grow its brands, reduce costs and strengthen the company's long-term strategy.
Flowers Foods did not provide many details in its buyout announcement, but the plan is the latest step in the company's broader effort to cut costs and improve the firm's financial position. In June, Flowers launched Project Centennial, a five-year plan to strengthen its competitive position and drive profitable revenue growth.
As part of that initiative, the company announced in May it would separate the business into two units. The bakery business, which includes Nature’s Own, Wonder and Dave’s Killer Bread, will focus on driving brand growth and profitability through incremental innovation, execution and cost-efficiency.
The snacking and specialty section, which includes the items outside of the bread aisle such as Tastykake and Mrs. Freshley's, will drive brand growth and profitability using new product innovation and building scale in growing categories. It appears the company is positioning much of its future growth by tapping into consumers' interest in snacking. Flowers could even consider acquiring another company or brand to help boost this side of the business. The buyouts announced Monday could be part of its snacking focus.
During its most recent earnings report, Flowers reported sales decreased 0.9% from the prior year. It noted that the company expects sales for its fiscal year to be in the lower end of its previously provided range of $3.927 billion to $4.006 billion, representing growth of approximately 0% to 2%.
"During the first quarter, with Dave's Killer Bread, Nature's Own and Wonder, we gained share in our key segments of the bread category," Allen Shiver, Flowers Foods president and CEO, said in a statement in May. "We also delivered lower production costs as a percentage of sales, the result of investments in capacity and improved manufacturing efficiencies."
The improvement in the company's manufacturing operations, coupled with slumping sales that missed its own projections, place it in a good position for this move. While Flowers remains solidly profitable, it's smart for the bread and snack maker to tweak its business by seeking voluntary buyouts from some of its longer-tenured employees, who tend to earn more money and have larger benefits. The change may help the company better align itself with the current operating environment.