Flowers Foods (NYSE:FLO) reported a 4.7% decline in third-quarter sales and revised its full-year outlook as lower bread volumes, heightened promotional activity and pressure on household budgets weighed on results.
Net sales fell to approximately $1.17 billion, while volume declined 7%, with the greatest pressure in traditional loaf, organic bread and store-branded products, Chief Financial Officer Anthony Scaglione said. Adjusted earnings before interest, taxes, depreciation and amortization fell 33% to $79 million.
Chairman and CEO Ryals McMullian said the company’s performance fell below expectations as consumers sought affordability and shifted toward smaller packages and differentiated products. Increased promotional activity also had a greater impact than anticipated, particularly in traditional and premium loaf.
“These early signs are encouraging, but they do not yet represent a broad-based recovery or change our assessment of the quarter,” McMullian said, referring to improving performance in parts of the Nature’s Own business.
Margins and earnings decline
Branded retail sales declined 5.1%, while other sales fell 4%. Non-retail sales rose 2.7%, supported by continued strength in food service. Flowers also reported growth in branded breakfast bread, gluten-free products and Simple Mills.
Gross margin, excluding depreciation and amortization, declined 120 basis points to 46.7%, as lower volume reduced operating leverage. Adjusted selling, distribution and administrative expenses increased by about 160 basis points as a percentage of sales, primarily because of higher marketing, fuel and logistics costs.
Adjusted EBITDA margin fell to 6.8% from 9.6% a year earlier. Adjusted diluted earnings per share declined to $0.10 from $0.23, while earnings under generally accepted accounting principles fell to $0.07 per share from $0.19.
Scaglione said Flowers continues to manage fuel exposure through freight contracts, hedging and forward purchases. Fuel is among the factors the company is monitoring as it evaluates costs for 2027.
Nature’s Own relaunch progresses slowly
McMullian said the Nature’s Own relaunch has improved brand awareness and consumer consideration, but the recovery has been slower than expected. Since the relaunch, unit share across the franchise has increased 40 basis points and dollar share has risen 10 basis points, he said. Those gains have not offset year-over-year pressure in traditional loaf, the franchise’s largest segment.
Flowers is expanding half-loaf and sourdough offerings to address gaps in its portfolio as shoppers gravitate toward smaller loaves and different products. McMullian said the company expects the sourdough offerings to gain momentum beginning in 2027 as distribution and sales velocity build.
Dave’s Killer Bread also faced unit and dollar share pressure, with category weakness, lower household consumption and competition weighing on results. Flowers plans stronger promotional and display support, targeted marketing and new products, including sourdough, to help stabilize the brand.
Other brands performed better. Canyon Bakehouse gained unit and dollar share, while Wonder Cake has grown to more than $100 million in revenue in less than two years, McMullian said. Simple Mills grew during the quarter, with tracked-channel volumes up 13%, led by cookies and crackers.
Updated outlook and 2027 priorities
Flowers now expects 2026 net sales of $5.016 billion to $5.063 billion, adjusted EBITDA of $415 million to $430 million and adjusted diluted earnings of $0.63 to $0.68 per share. The outlook assumes market and competitive conditions remain generally consistent through the rest of the year.
The company did not provide 2027 guidance. Scaglione said Flowers expects challenging operating conditions and a more difficult cost environment next year. Its priorities include strengthening volume, managing costs, preserving financial flexibility and improving investment returns.
Flowers reduced debt by $80 million year to date and generated $320 million in operating cash flow, Scaglione said. The company also is working with its bank partners to maintain flexibility for a range of market conditions in 2027.
McMullian said new food-service business wins are still ramping up and are expected to contribute to results in 2027 and beyond. The company is also reviewing its bakery and distribution network, simplifying its organization and evaluating artificial intelligence tools for consumer targeting and promotional effectiveness.
About Flowers Foods (NYSE:FLO)
Flowers Foods, Inc. is a U.S. bakery company that produces and markets packaged breads, buns, rolls, snack cakes and other baked goods. Its products are sold under brands including Nature’s Own, Dave’s Killer Bread, Wonder, Tastykake, Canyon Bakehouse and Mrs. Freshley’s. Founded in 1919 in Thomasville, Georgia, the company has grown from a local bakery into a national producer of baked goods. Flowers Foods serves consumers across the United States through grocery stores and other retail channels, using a mix of direct-store delivery and warehouse distribution.
