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Packaged bakery food company Flower Foods (NYSE:FLO) fell short of the market’s revenue expectations in Q1 CY2025, with sales falling 1.4% year on year to $1.55 billion. Its non-GAAP EPS of $0.35 per share was 6.3% below analysts’ consensus estimates.
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Flowers Foods' first quarter results reflected challenges in the packaged bakery market, with management pointing to ongoing softness in consumer demand and heightened economic uncertainty. CEO Ryals McMullian emphasized that while Flowers Foods maintained its unit market share, "none of us here are satisfied with our absolute performance in the quarter," citing further-than-anticipated declines in the overall bread category. He discussed the company’s continued investments in brand differentiation and innovation, particularly in faster-growing segments like better-for-you breads and snacking, as Flowers Foods navigates an increasingly value-focused consumer environment. McMullian also noted that the traditional white bread segment, where Flowers Foods has significant exposure, continues to face pressure and requires renewed differentiation efforts.
Looking ahead, Flowers Foods’ updated outlook is shaped by persistent headwinds, including soft category demand, value-seeking consumer behavior, and the impact of new tariffs on input costs. Management acknowledged that visibility into category recovery remains limited, with McMullian stating, "I don't know that we see a tremendous amount of improvement this year," and pointing to 2026 as a more realistic horizon for stabilization. CFO Steve Kinsey detailed the company’s approach to managing cost pressures, including targeted savings in selling, distribution, and administrative expenses while maintaining investment in core brands. Tariff impacts, especially on imported inputs like sugar and palm oil, are expected to weigh on gross margins, and management has adopted what it describes as a "fairly conservative" approach to full-year guidance.
Management attributed the quarter’s performance to declining industry-wide bread consumption, ongoing shifts in consumer preference, and higher input costs. They highlighted targeted innovation and operational adjustments to address these challenges.
Management’s outlook for the year centers on cautious consumer demand, input cost inflation from tariffs, and ongoing portfolio innovation.
Over the coming quarters, the StockStory team will focus on (1) tracking the performance of new product launches such as Wonder mini half loaves and health-oriented offerings, (2) monitoring the company’s ability to offset tariff-related margin pressures through operational efficiencies, and (3) watching for signs of stabilization or recovery in core bread category volumes. Progress in expanding distribution for Simple Mills and sustained improvement in foodservice profitability will also serve as important markers of execution.
Flowers Foods currently trades at a forward P/E ratio of 14.6×. Should you double down or take your chips? Find out in our full research report (it’s free).
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