THOMASVILLE, GA. — Net income at Flowers Foods, Inc. in the second quarter ended July 17 rose 11% to $33,756,000, equal to 37c per share on the common stock, up from $30,341,000, or 33c per share, in the same period a year ago. Last year’s second quarter included a $3,013,000 gain on acquisition related to the Cedar Rapids, Iowa, bread mix plant acquired from General Mills, Inc. in May 2009.

Net sales were $607,718,000, down 1% from $614,448,000 in the second quarter of fiscal 2009. The sales decrease was attributable in part to negative pricing/mix of 3.5 percentage points. Partially offsetting the decline were a 1.9 percentage point gain in volume and a 1 point contribution from acquisitions.

“The volume increase was primarily driven by Nature’s Own soft variety bread and Nature’s Own sandwich rounds in the branded retail channel and the cake category in the store-brand retail channel,” Flowers said. “These increases in volume were partially offset by sales declines in white bread, specialty bread, and food service. Overall, the branded retail channel was down as a result of lower white bread sales and a shift in snack cake sales from branded retail to store-brand retail as several of our customers introduced new store-brand cake programs.”

George E. Deese, chairman and chief executive officer, said the company delivered strong results in the face of a weak economy and continued higher-than-normal promotional activity in the fresh bakery category.

“Our earnings growth would have been even greater if you take into consideration the $3 million, or 2c per share, accounting gain on acquisition that was in last year’s second-quarter results,” Mr. Deese said. ”Even though sales for the quarter declined, we achieved volume increases in both operating segments. Since the beginning of the year, our sales trend has improved steadily as we executed our strategy to introduce new products and develop new business. In the most recent weeks, that trend has further improved, giving us confidence in our revised sales guidance.

“The underlying strength of our business model is evident in our cash flow, improved operating margin, the strength of our brands and market share growth. Our team continues to focus on improving all aspects of the business and we are poised to take advantage of opportunities in the marketplace.”

Gross margin in the second quarter was 47.7% of sales, which compared with 45.7% of sales in the second quarter of 2009. The company said the increase was due primarily to decreases in ingredient costs, particularly flour, as a per cent of sales. The decrease in ingredient costs was partially offset by higher workforce-related and packaging costs as a per cent of sales.

In a breakdown of results by segment, second-quarter EBIT (earnings before interest and taxes) was $47,787,000 in the Direct-Store-Delivery segment, up 5% from $45,693,000 in the same period a year ago. Sales were $489,919,000, down 3.5% from $507,475,000 a year earlier.

In the company’s Warehouse Delivery segment, EBIT in the quarter was $11,841,000, down 2% from $12,108,000. Sales were $117,797,000, up 10% from $106,973,000.

Flowers maintained its earnings guidance and revised sales guidance for fiscal 2010, and Mr. Deese said the company now expects sales growth of 1% to 2%. For 2010, the company continues to expect growth in diluted earnings per share of 10% to 15%. Capital spending in fiscal 2010 is expected to be about $95 million to $100 million.

For the first six months of fiscal 2010, net income at Flowers Foods was $74,443,000, or 81c per share, up 10% from $67,722,000, or 73c per share, in the first half of fiscal 2009. Net sales were $1,402,742,000, down 1% from $1,421,455,000.