Flowers Foods has booked an increase in sales and earnings during the first nine months of the year, but shares sank today (7 November) when the group failed to hit analyst forecasts.
The US baker said that sales in the first nine months of the year rose to US$2.91bn in the period, up from $2.29bn last year. Gains were driven by higher volumes and the contribution from acquisitions. Net income rose to $192m, up from $97.5m in the comparable period of last year.
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However, Flowers share price was down almost 10% at 12.30 (EST), declining to $22.48. The drop was prompted by a lower than expected third-quarter profit. Flowers reported Q3 EPS of $0.18, missing consensus expectations of $0.21 a share. Third-quarter net sales rose 22.5%, below expectations of 23.5%.
Janney analyst Jonathan Feeney said that the profit drop was driven by “higher costs to support this year’s accelerated business expansion” and “unexpected margin degradation in certain warehouse frozen foodservice business”.
“Margins were the source of the disappointment,” Feeney concluded.
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