Dive Brief:
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Flowers Foods reported a 3.8% sales increase to $918.8 million for the third quarter, according to the company’s earnings report Wednesday.
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Quarterly net income declined 8.2% to $40.2 million, while diluted EPS decreased 9.5% to $0.19 per share.
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Flowers Foods also updated its full-year 2016 guidance, anticipating earnings of $0.90 to $0.95 per share and revenue in the range of $3.93 billion to $3.99 billion.
Dive Insight:
What Flowers Foods’ quarterly sales increase doesn’t clearly show is that the company’s core brands continue to struggle. Dave’s Killer Bread and Alpine Valley Bread, both of which Flowers acquired last year, contributed 4.4% sales growth, while sales for many other Flowers brands did not offset total sales growth for the quarter.
The company attributed the third quarter’s sales and income results to “challenging category dynamics and elevated marketing and legal costs,” CEO Allen Shiver said in a statement. However, Flowers also completed the first phase of its comprehensive business and operational review, Project Centennial.
In the first phase, the company identified opportunities to spur growth, cut costs and make strategic investments to strengthen the company’s portfolio and market position, as well as boost margins over the long term. Flowers began the second phase in October and is now focused on implementing strategies to capitalize on those growth opportunities.
Finding additional growth opportunities is key because depending solely on the sales of the Dave’s and Alpine brands could be risky — even with the brands’ strong performance in their respective categories. Natural and organic breads are growing, but the trend of gluten-free products and consumers’ health concerns could hinder category sales in the future.