Executives offer glimpse into Flowers with Wonder
by Josh Sosland
NEW YORK -- The addition of the Wonder bread brand will lift Flowers Foods, Inc. sales in its core markets and will give an even greater boost in new markets, said Allen L. Shiver, president and chief operating officer.
Mr. Shiver and George E. Deese, chairman and chief executive officer, commented on what the Wonder bread brand will mean to Flowers during a meeting with financial analysts March 20 at the New York Stock Exchange.
Their remarks were made a day after a bankruptcy judge approved Flowers’ bid for a majority of the Hostess Brands, Inc. bread business.
“We do feel like in our core markets we will see an increase in sales once we own the brands,” Mr. Shiver said in response to an analyst question. “Wonder being a very strong brand in some of those markets, Merita and Home Pride as well. The growth will be important in our core markets but will be even more important in our new markets -- areas we recently expanded into where our current market share is very low. The addition of strong brands like the ones I just mentioned will be very important.”
Mr. Deese emphasized the value of having a strong roster of bread and cake brands as Flowers expands into new markets.
“It’s not just the Hostess brands like Wonder or just Merita in the South, but what I think about is the success we’ve had on Nature’s Own -- it’s a billion dollar market at this point annually,” he said. “It’s a strong Wonder brand tagging along will be Nature’s Own in these new markets as well as well as other brands like Tastykake going along also. So, Hostess is one set of factors, but you also need to consider Nature’s Own and Tastykake in these new markets we do not serve today.”
Both executives said they would not yet be able to quantify prospective share gains once the Wonder transaction is completed. In formal comments, they noted the judge’s approval hardly represents the completion of the transaction.
“We are pleased with the outcome of the bankruptcy court review in which the court approved the sale this week, subject to the finalizing of the sales order, which we expect to occur shortly,” Mr. Deese said. “However, this process is not over. Now, the transaction must continue through the regulatory process. We anticipate completing the transaction in the second half of the year. Because the transaction is not finalized and for competitive reasons, we will not share any specific plans regarding the pending acquisition.”
Robert Drain, a U.S. bankruptcy judge, approved a transaction in which Flowers Foods, Inc. will pay $360 million for the majority of the bread business of Hostess Brands, Inc., Irving, Texas. The transaction includes brands, 20 bakeries, 38 depots and other assets.
Year-to-date sales for Flowers Foods already are up 20% to 25%, Mr. Deese said.
R. Steve Kinsey, executive vice-president and chief financial officer of Flowers, said, “We are very optimistic about our fiscal 2013 outlook. We are seeing strong sales and earnings trends, and we expect to deliver a strong first quarter. However, due to the pending Hostess transaction, we are limited in regard to the information we can provide on the full year.”