Flowers Foods Q4 Earnings Beat Estimates, Sales Advance 11%

Flowers Foods, Inc. FLO reported fourth-quarter fiscal 2025 results, wherein adjusted earnings per share surpassed the Zacks Consensus Estimate. The company concluded fiscal 2025 at the high end of its guidance range, supported by the strong performance of leading brands and disciplined efficiency initiatives.

Flowers Foods’ Quarterly Performance: Key Insights

Flowers Foods reported adjusted diluted earnings per share of 22 cents, which was flat year over year and exceeded the Zacks Consensus Estimate of 16 cents. The bottom line included a 2-cent benefit from an extra week.

Net sales increased 11% year over year to $1,232.9 million, marginally surpassing the Zacks Consensus Estimate of $1,232 million. The year-over-year growth was driven by the additional week in fiscal 2025, contributions from the Simple Mills acquisition and favorable price/mix, partly offset by volume declines in certain categories.

Branded retail sales rose 16.6% to $811.6 million, benefiting from acquisition-related contributions and price/mix gains. Other sales, which include store-branded retail and foodservice, rose 1.6% to $421.3 million. 

On a comparable 12-week basis, underlying sales growth was more modest, reflecting softness in branded traditional loaf, foodservice and store-brand cake. Volume declined 2.2% in the quarter, while pricing/mix contributed 70 basis points to the growth.

Decoding FLO’s Costs & Margin Performance

Gross margin, excluding depreciation and amortization, declined 30 basis points year over year to 48.5%. The decrease was primarily due to increased outside purchases associated with the Simple Mills business model, partly offset by lower labor and ingredient costs and improved sell-through of finished goods.

Selling, distribution and administrative expenses were 39.9% of net sales, down 10 basis points from the prior-year period. Excluding matters affecting comparability, adjusted SD&A improved 60 basis points to 39% of sales, driven by efficiency initiatives and lower distributor distribution fees following the California conversion, as well as the addition of Simple Mills.

Adjusted EBITDA increased 14.7% year over year to $117.4 million, representing 9.5% of net sales, an expansion of 30 basis points. The Simple Mills acquisition contributed $57.5 million in net sales, $6.3 million to adjusted EBITDA and a three-cent adjusted diluted EPS loss in the quarter, including related financing costs.

FLO’s Financial Snapshot

At the end of fiscal 2025, Flowers Foods had cash and cash equivalents of $12.1 million and long-term debt of $1.76 billion. Stockholders’ equity totaled $1.3 billion. Net debt to trailing 12-month adjusted EBITDA stood at approximately 3.3 times, reflecting debt incurred to fund the Simple Mills acquisition.

For fiscal 2025, cash flow from operating activities increased to $446.2 million. Capital expenditures totaled $127.1 million, while dividends paid to shareholders amounted to $209.3 million, underscoring the company’s continued commitment to shareholder returns alongside balance sheet management.

FLO’s Fiscal 2025 Summary

For fiscal 2025, net sales increased 3% to $5,256.5 million. Adjusted EBITDA declined 0.6% to $535.2 million, forming 10.2% of sales, while adjusted diluted EPS decreased to $1.09 from $1.28 in fiscal 2024.

Fiscal 2026 Outlook by FLO

For fiscal 2026, which will consist of 52 weeks, Flowers Foods expects net sales in the range of approximately $5.163-$5.267 billion. This indicates net sales growth between a decline of 1.8% and an increase of 0.2% year over year. Adjusted EBITDA is projected to be between $465 million and $495 million, while adjusted diluted EPS is expected in the range of 80-90 cents.

Management indicated that guidance reflects one less week of operations, continued category headwinds — particularly in traditional loaf — and inflationary pressures, including labor. The company described 2026 as an investment and transition year, with an increased focus on brand portfolio optimization, innovation in better-for-you and value-oriented offerings, supply-chain enhancements and disciplined capital allocation aimed at driving sustainable long-term value.

The Zacks Rank #3 (Hold) stock has dipped 0.4% in the past year compared to the industry’s growth of 2.8%.

Stocks to Consider

The Hershey Company HSY, a confectionery product and pantry item company, currently sports a Zacks Rank #1 (Strong Buy). HSY delivered a trailing four-quarter earnings surprise of 17.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Hershey’s fiscal 2026 sales and earnings suggests growth of 4.4% and 27.1%, respectively, from the year-ago figures.

Philip Morris International Inc. PM, a tobacco giant, currently carries a Zacks Rank of 2 (Buy). PM delivered a trailing four-quarter earnings surprise of 4.2%, on average. 

The consensus estimate for Philip Morris’ current fiscal-year sales and earnings implies growth of 5.7% and 11.7%, respectively, from the year-ago figures. 

Kimberly-Clark Corporation KMB manufactures and markets personal care products, with a Zacks Rank #2 at present. KMB delivered a trailing four-quarter earnings surprise of 18.9%, on average. 

The Zacks Consensus Estimate for Kimberly-Clark’s current fiscal-year sales and earnings indicates declines of 2.1% and 6.2%, respectively, from the year-ago figures. 

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This article originally published on Zacks Investment Research (zacks.com).

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