THOMASVILLE, GA. — Net income of Flowers Foods Inc. in the third quarter ended Oct. 9 was $31,166,000, equal to 34c per share on the common stock, down narrowly from $31,926,000, or 34c per share, in the same quarter of fiscal 2009. Net sales were $597,894,000, down 1% from $602,570,000.

“This quarter proved to be another challenging one,” said George E. Deese, chairman, chief executive officer and president. “As the economy continued under pressure from high unemployment, consumers shopped in different patterns and promotional levels for fresh bread products increased. These marketplace dynamics, coupled with higher-than-anticipated costs for starting up new manufacturing lines and introducing new products, resulted in flat sales and earnings compared to last year’s third quarter.”

Flowers attributed the sales decline in large part to negative pricing/mix due to continued pricing pressures and substantial promotional activity. Helping offset the declines were increased volume and 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 volume increases were partially offset by declines in white bread, specialty bread and breakfast breads in the branded retail channel. 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.”

Direct-store delivery sales decreased 2.5% during the quarter.

Gross margin as a percentage of sales was 47.1% versus 46.5% in the third quarter of 2009. Flowers said the increase reflected decreases in ingredient costs 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, and start-up costs associated with new production lines at several bakeries.

Updating guidance for fiscal 2010, Flowers said it now expects sales to be flat to slightly up. Earnings per share are expected to grow 10% to 12%, and capital spending is expected to be approximately $95 million to $100 million.

For the nine months ended Oct. 9, Flowers net income was $105,609,000, equal to $1.14 per share on the common stock, up 6% from $99,648,000, or $1.07 per share, in the first three quarters of fiscal 2009. Net sales were $2,000,636,000, down 1% from $2,024,025,000.