THOMASVILLE, GA. — Earnings at Flowers Foods, Inc. in the first quarter ended April 25 rose 4.5% on a 19% increase in sales, overcoming continued higher ingredient costs.
Net income in the first quarter was $37,381,000, equal to 40c per share on the common stock, up from $35,783,000, or 39c per share in the same period last year. Despite the gain, earnings per share fell just short of analysts’ expectations of 41c per share, and the company’s stock fell nearly 8% in early New York Stock Exchange trading on May 27.
Net sales were $807,007,000, up from $676,707,000 in the first quarter of fiscal 2008. The jump in sales was attributed to a 12 percentage point gain from acquisitions, a 6.8 point boost from favorable pricing/mix and a 0.5 point gain in volume. Flowers said the strong sales reflected strength in its branded retail business, which grew 14.8% in the quarter.
"We are pleased with the results this quarter," said George E. Deese, chairman, president and chief executive officer. "Our team delivered sales growth in excess of 19% and earnings in line with our expectation in spite of headwinds from the economy and competitive pressures. We are particularly pleased with the results considering we faced continued challenges in the quarter from higher input costs compared to the same time frame last year. Our branded retail sales grew 14.8% in the quarter, evidence that Flowers’ brands are performing well in recessionary conditions and a testament to our product quality, brand strength and execution in the marketplace."
Gross margin in the first quarter was 46.8% of sales, versus 48.3% in the same quarter in 2008. The decrease in margin was due primarily to an increase in ingredient costs, Flowers said, though start-up costs associated with the company’s new bakery in Bardstown, Ky., also was a factor in the decline.
Materials, supplies, labor and other production costs rose 22% in the quarter to $429,462,000, while selling, marketing and administrative expenses climbed 17% to $294,022,000. Flowers said it invested more in advertising to support its Nature’s Own brand during the quarter.
In a breakdown of results by segment, first-quarter EBIT (earnings before interest and taxes) was $56,930,000 in the Direct-Store-Delivery segment, up 7% from $53,392,000 in the same period a year ago. Sales were $668,275,000, up 21%
In the company’s Warehouse Delivery segment, EBIT in the quarter was $14,224,000, up 72% from $8,259,000. Sales were $138,732,000, up 12%.
Flowers left its projected sales growth for the full year unchanged at 12.6% to 14.5%, with acquisitions accounting for 7 or 7.5 points of the increase. Sales for the year are expected to total $2,720 million to $2,765 million.