US bakery group Flowers Foods has cut sales and earnings forecasts after lower-than-expected sales in the second quarter.
Ryals McMullian, the chairman and CEO of Flowers Foods, pointed to “softness in traditional loaf sales and a more-intense competitive environment, which we expect to persist throughout the year”.
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The parent company of Nature’s Own and Dave’s Killer Bread now expects full-year net sales in the range of $5.23bn to $5.3bn, representing an increase of 2.7% to 4% year on year.
It marks a downward revision from its earlier outlook of $5.29bn to $5.39bn, which implied growth of 3.8% to 5.7%.
In January, Flowers Foods expanded its snacks portfolio with the $795m purchase of Simple Mills.
Excluding this acquisition, sales are projected at $5.02bn to $5.08bn, a decline of 1.6% to 0.4% from last year.
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By GlobalDataThe previous forecast, also excluding Simple Mills, was $5.07bn to $5.17bn, equating to a range that would have represented a decline of 0.5% up to growth of 1.3%.
The company reiterated that Simple Mills is expected to add $218m to $225m in revenue, consistent with earlier projections.
Guidance for adjusted EBITDA has also been cut to $512m–$538m, compared with an earlier range of $534m–$562m.
On a standalone basis, excluding Simple Mills, adjusted EBITDA is forecast at $482m–$505m, down from the prior $504m–$529m.
Adjusted diluted EPS is now expected to be $1.00–$1.10, versus the earlier $1.05–$1.15.
Without Simple Mills, the forecast stands at $1.08–$1.17, compared with the prior $1.13–$1.22.
McMullian added: “We are proactively investing in innovation and M&A to transform our portfolio and align it with consumer demand for better-for-you and value-oriented products.”
For the second quarter, net sales rose 1.5% to $1.24bn, with Simple Mills contributing 5.1 percentage points of the growth. Second-quarter volumes fell 2.4%.
Net income dropped 12.8% to $58.4m, or 4.7% of sales, reflecting an 80-basis-point contraction.
Diluted EPS fell $0.04 to $0.28.
Adjusted EBITDA for the quarter declined 4.0% to $137.7m, or 11.1% of sales, with a 60-basis-point reduction.
Simple Mills delivered $61.4m in sales, $10.9m in adjusted EBITDA, a net loss of $2.1m and reduced Flowers Foods’ diluted EPS by $0.01.
