Flowers income up 1% in 'eventful' quarter
May 19, 2011
by Eric Schroeder
THOMASVILLE, GA. — In what the company’s top executive deemed an “eventful” quarter, net income at Flowers Foods, Inc. in the first quarter ended April 23 totaled $41,161,000, equal to 45c per share on the common stock, up 1% from $40,687,000, or 44c per share, in the same period a year ago. Excluding $4.2 million in charges related to the closing of a bakery and the pending merger with Tasty Baking, Flowers said earnings per share was 50c in the first quarter of fiscal 2011.
Net sales also advanced, rising 1% to $801,825,000 from $795,026,000. Flowers attributed the sales increase to favorable net pricing/mix of 2.1%, partially offset by decreased volume of 1.2%. Volume was affected adversely by lower-than-planned sales in the branded retail and food service channels.
Sales within the company’s direct-store delivery segment increased 0.1%, as positive net pricing/mix offset a volume decline. Flowers said the volume decline reflected decreases in white bread, and soft variety bread resulted in lower branded volume, while declines in quick-serve and other restaurants primarily caused lower food service volume.
Warehouse sales also advanced, rising 4.1% due to positive net pricing/mix. Volume was flat during the quarter.
“The first quarter of 2011 was eventful for Flowers Foods,” said George E. Deese, chairman and chief executive officer. “We achieved a modest sales increase and solid growth in earnings per share, excluding one-time charges. At our analyst event in March, we reset our growth targets, anticipating that ongoing industry consolidation will bring greater opportunity for mergers and acquisitions. In April, we announced the merger agreement with Tasty Baking, which will strengthen our snack cake business and extend the geographic reach of our Nature’s Own brand and other fresh bakery foods.
“As the year unfolds, we expect to grow sales as we reach new customers, new markets, and take advantage of opportunities presented with the Tasty merger. Our focus is on improving operations and increasing prices to offset higher costs, managing our core business to maintain share and volume, completing the Tasty merger and planning for a smooth integration, and exploring growth opportunities.”
The merger with Tasty is expected to be completed in the second quarter of fiscal 2011.
Gross margin as a per cent of sales for the quarter increased 80 basis points to 48.6% compared with 47.8% in the first quarter of fiscal 2010. The increase was due primarily to a decrease in ingredient costs as a per cent of sales, partially offset by increases in packaging and workforce-related costs as a per cent of sales.
Flowers said it expects sales growth of 3% to 6% and earnings-per-share growth of 5% to 10% in fiscal 2011.