Flower Foods cuts annual forecast as shoppers pull back

what happened

Flower Foods, which makes Nature's Own and Wonder breads, lowered its guidance for the year after a tough consumer backdrop and heavier discounting hurt its third quarter, according to Dow Jones Newswires. Net income for the period came to $14.4 million, or 7 cents per share, versus $39.5 million, or 19 cents, a year earlier. Adjusted earnings reached 10 cents a share, below the 15 cents analysts polled by FactSet had expected. Sales dropped 4.7% to $1.17 billion, slightly under the $1.18 billion Wall Street forecast, as higher prices and a better product mix failed to offset weaker volumes.

Chief Executive Ryals McMullian said pressure on household budgets, shifting shopper habits and aggressive promotions will persist, and that the company must execute faster. Flower Foods now expects full-year sales of $5.02 billion to $5.06 billion, down from $5.07 billion to $5.14 billion, and adjusted EPS of 63 to 68 cents, versus 75 to 85 cents previously. Shares fell 12% to $5.30 in after-hours trading and were already down 45% this year through Thursday's close.

why it matters

The guidance cut suggests weak demand for packaged baked goods could last longer than expected, and investors in the packaged food sector will watch volume trends closely in upcoming reports. The stock had already lost about 45% this year, so the news adds pressure on the shares.

market impact

Flower Foods shares: weaker outlook and profit miss pressure the stock.

• ▼Flower Foods shares pressure down — weaker guidance and profit miss pressure the stock

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