KANSAS CITY — Hostess Brands, Inc. benefited from improved consumer mobility as well as continued elevated levels of at-home snacking in the second quarter, prompting the company to raise its outlook for the fiscal year.
Executives at the Kansas City-based company now expect adjusted net revenue growth of 7.5% to 9%, up from a previous guidance of 3% to 4.5%, and earnings per share of 83¢ to 87¢, compared to 80¢ to 85¢ in the previous outlook.
Hostess gained market share in both the convenience and grocery channels and saw sales grow across both single-serve and multi-pack offerings, Andrew P. Callahan, president and chief executive officer, said during an August 4 conference call with analysts.
“What we’re seeing is increased mobility, improving our on-the-go and immediate consumption sales,” he said. “Even with the return of that mobility, we’re still seeing an elevated level of consumers in the home. When consumers are in their home more, they’re snacking more.”
Net income at Hostess in the second quarter ended June 30 was $32.2 million, equal to 23¢ per share on the common stock, up 10.3% from $29.2 million, or 22¢ per share, in the same period a year ago. On a two-year basis, net income was up 25%. Sales increased nearly 11% to $291.5 million from $265.4 million a year ago and 12% from $256.2 million two years ago.
Hostess in the second quarter reported market share was 21.8% within the sweet baked goods category, driven by gains in the convenience and grocery channels.
The company’s market share in the convenience channel increased nearly 325 basis points to 29.9%. Its market share in the grocery channel increased nearly 180 basis points to 15.7%, with Hostess posting 5.4% point-of-sale-growth in the channel, despite lapping strong COVID-driven growth last year. Sales of single-serve offerings grew 19.4% year-over-year and 15.4% on a two-year basis, while the company’s multipack business was up 5.4% from 2020 and 24.2% from 2019.
Hostess-branded breakfast sales grew 23% in the quarter, with breakfast pastry sales up 35% and donut sales up 12%. The company also benefited from new breakfast offerings, including recently launched Baby Bundt cakes.
“Baby Bundts, one of our key innovation items in breakfast, is off to a very strong start across multiple channels,” Mr. Callahan said. “In fact, Baby Bundts Lemon and Baby Bundts Cinnamon were the No. 1 and No. 4 fastest-growing SKUs in the category across total Nielsen Universe over the past four weeks ending July 17.”
Other recent breakfast launches include Muff’n Stix and Pecan Spins. New product momentum is expected to continue with the introduction of new Baby Bundts flavors later this year, Mr. Callahan said.
“We will also be launching a number of other new products, including On-The-Go versions of Cr!spy Minis in the coming months,” he said.