Boulder says it has eliminated the holes in its bread.

BOULDER, COLO. — Boulder Brands, Inc. said stepped up competition in the gluten-free category contributed to a sharp, broad sales decline and a quarterly loss for the Boulder, Colo.-based maker of gluten-free products. In the second quarter ended June 30, Boulder sustained a loss of $3,339,000, compared with a net profit of $2,789,000, equal to 5c per share on the common stock, in the second quarter last year. Net sales were $117,717,000, down 10% from $131,348,000.

Jim Leighton, interim chief executive officer and chief operating officer, said during an Aug. 6 conference call with analysts that Boulder is focused on improving bread velocities through a strategy of working with retailers to merchandise an assortment of Udi’s baked goods in one freezer door to ease consumer shopping.

Meanwhile, the company will try to drive velocity in its Glutino brand by effectively managing price gaps on core categories to stay competitive, he said.

The challenges are touching all areas of the company’s gluten-free business, including bread, pretzels and pizza.

“We have a bread issue, which really — the velocities on bread was driven by some quality issues we’ve had,” he said. “We’ve addressed those relative to what the consumer has seen. They are not seeing holes in our bread anymore. We still have some challenges to reduce the cost side of that, because there’s a cost to compliance.

“Pretzels, it’s more about price. Pizza, a lot of competition has come in — some big players are in there. So we’ve just renovated that. We actually have our new renovated product and also different size product out there.”

Gluten-free pizza also has been an important part of Boulder’s food service business, as the company has partnered with Papa Murphy’s and Pizza Hut to provide gluten-free pizza crusts. While food service remains an important channel for the company, Mr. Leighton acknowledged during the call that Boulder has “really drawn back on that channel relative to sales support.”

“It’s really all about bigger, better and best,” he said. “So we are very focused. We are not going to speak to specific customers, but there’s still a tremendous amount of interest in gluten-free.

“The percentage of consumption across all consumers tends to be the same. In the places where we do have it … they’ve had a lot of success with it. And they’ve taken it to additional stores. And we are talking with other top five Q.S.R. (quick-service restaurants) right now.”