Philadelphia-based Tasty Baking Company, one of the largest independent baking companies in the US, has announced that for its Q1 ended 30 March 2002, gross sales fell to US$64m, from US$65.7m year on year.

Gross sales, less discounts and allowances, resulted in net sales of US$40.7m, compared with US$42.2m reported for the same period last year. Net income for the thirteen weeks was US$1,205,000 or US$0.15 per diluted share compared to US$2,119,000 or US$0.26 per diluted share, during the comparable period in 2001.

Carl S. Watts, chairman and CEO, commented: "Our Q1 results were a reflection of a continuing difficult marketplace. Although sales at the beginning of the quarter were on budget, our attempts to better manage our pricing and promotional costs, especially in our route territories, were met with heavy consumer resistance.

"In addition, unprecedented promotional activity by all competitors in the snack food category had a negative impact on sales. As a result, our route territories experienced an 8% sales decrease. National sales increased almost 17% driven by continued positive results with our mass merchandisers."

Watts continued: "In the Q2, we have already adjusted our pricing and promotional activities, in our route territories, to meet the increased level of competition. Our business with mass merchandisers continues to grow and our efforts to sell products to new channels of distribution continues on target in the national sales area. We believe our approach and long-term strategy will help us grow our business, not only in the route areas, but also in other alternative methods of distribution.''

Watts continued: "Although our sales results were disappointing, we continued our efforts to control costs and Q1 costs were within budgeted levels."

Watts concluded: "We remain cautiously optimistic and we feel confident the adjustments to our business plan will see positive results in the Q2."