Flowers Foods (FLO) shares fell early Friday as the packaged bakery food producer cut its full-year outlook amid a challenging operating environment and reported lower-than-expected fiscal second-quarter results.
Adjusted earnings are now anticipated to come in between $0.75 and $0.85 per share for fiscal 2026, down from the company's prior guidance of $0.80 to $0.90, it said late Thursday. Sales are pegged at $5.07 billion to $5.14 billion, compared with previous projections of $5.16 billion to $5.27 billion.
The current consensus on FactSet is for non-GAAP EPS of $0.83 and sales of $5.17 billion. The stock dropped 4.6% in the most recent premarket activity.
"Given our first-half performance and the category backdrop, we are updating our full-year guidance to reflect a more conservative outlook for the balance of the year," Chief Executive Ryals McMullian said in prepared remarks available on the company's website.
Flowers Foods is taking measures to strengthen its competitiveness and align resources with opportunities to generate long-term value, McMullian said. The company is also carrying out additional efforts to reduce costs and improve efficiency, the CEO added.
For the three-month period ended July 18, the company's adjusted EPS declined to $0.21 from $0.30, below the Street's view for $0.22. Sales decreased 4% to $1.19 billion, as a 1.8% gain in price/mix was offset by a 5.8% drop in volume. The average analyst estimate on FactSet was for sales of $1.23 billion.
"Our second-quarter results reflect the continued challenges across the fresh packaged bread category, as ongoing pressure on household budgets, evolving consumer purchasing behavior, and continued competitive dynamics created a more difficult operating environment than anticipated," McMullian said. "While we expected many of these headwinds to persist, their pace and magnitude intensified during the quarter, contributing to softer demand across much of our portfolio and results that fell short of our expectations."
Branded retail sales slipped 3.8% to $794.6 million amid volume declines. Revenue in the other segment fell 4.4% to $398.3 million due to inflationary pressure on consumer spending impacting store branded sales, according to the company.
Looking ahead to 2027, the company acknowledged that headwinds related to commodity ingredients exposure and fuel are rising and it is implementing actions to offset some of the risk, Chief Financial Officer Anthony Scaglione said in the prepared remarks. "These actions are designed to help us navigate the current environment, improve execution, and strengthen profitability through the balance of 2026 and into 2027," Scaglione said.
Campbell's (CPB), which offers a variety of breads and sweet baked goods under the Pepperidge Farm and other brands, is scheduled to release its latest quarterly results next month. In July, Conagra Brands (CAG) issued a full-year earnings outlook below market estimates after recording mixed fiscal fourth-quarter results.
