Flowers Foods' first quarter results reflected ongoing challenges in the packaged bakery sector, as sales volumes and organic revenue declined amid persistent category headwinds. Management pointed to softer consumer demand and a shift toward value products, with CEO Ryals McMullian noting that "things actually weakened further than we had anticipated." The company maintained unit share, particularly in differentiated brands such as Dave's Killer Bread and its Keto offerings, but broader softness in traditional bread segments weighed on overall performance. Management acknowledged the difficult environment and highlighted that improvements are unlikely in the near term, citing a combination of consumer health trends and economic uncertainty.
Is now the time to buy FLO? Find out in our full research report (it’s free).
Flowers Foods (FLO) Q1 CY2025 Highlights:
- Revenue: $1.55 billion vs analyst estimates of $1.60 billion (1.4% year-on-year decline, 2.7% miss)
- Adjusted EPS: $0.35 vs analyst expectations of $0.37 (6.3% miss)
- Adjusted EBITDA: $162 million vs analyst estimates of $167.9 million (10.4% margin, 3.5% miss)
- The company dropped its revenue guidance for the full year to $5.35 billion at the midpoint from $5.45 billion, a 1.8% decrease
- Management lowered its full-year Adjusted EPS guidance to $1.10 at the midpoint, a 6.4% decrease
- EBITDA guidance for the full year is $548 million at the midpoint, below analyst estimates of $570.2 million
- Operating Margin: 7.3%, in line with the same quarter last year
- Organic Revenue was down 3% year on year
- Sales Volumes fell 2.7% year on year (-0.8% in the same quarter last year)
- Market Capitalization: $3.40 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Flowers Foods’s Q1 Earnings Call
- Jim Salera (Stephens) asked if unit share stabilization is likely in the near term. CEO Ryals McMullian responded that meaningful improvement is unlikely this year and may not occur until 2026, given current trends.
- Max Gumport (BNP Paribas) inquired about increased promotional activity and its implications for price mix. McMullian explained that Flowers Foods uses promotions selectively to drive trial, especially for differentiated brands, and avoids heavy discounting that could hurt long-term value.
- Mitchell Pinheiro (Sturdivant & Company) questioned the long-term EBITDA margin target given current margin compression. McMullian emphasized no change to the long-term outlook but acknowledged that progress may be slower due to near-term setbacks.
- Steve Powers (Deutsche Bank) asked about the performance and outlook for new product initiatives such as Simple Mills and DKB snacking. McMullian confirmed both are performing well but that guidance now incorporates consumer caution and macro pressures.
- Scott Marks (Jefferies) sought details on the impact of private label and away-from-home business weakness. McMullian noted foodservice softness but said restructuring has improved margins, while new private label contracts are expected to help regain lost volume.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) early results from new product launches addressing health and wellness trends, (2) the company’s ability to manage input cost pressures from tariffs and other inflationary factors, and (3) evidence of stabilization or improvement in bread category volumes and Flowers Foods’ market share. The effectiveness of supply chain optimization efforts and progress in growing differentiated brands will also be important markers of success.
Flowers Foods currently trades at $15.86, down from $17.06 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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