Flowers Foods (FLO) Leans On Sourdough While Bread Sales Wilt

Flowers Foods (NYSE:FLO) reported a 4% decline in net sales to $1.193 billion for the second quarter, with a 30.3% drop in net income to $40.7 million. The company's branded retail volume fell 7.6%, while its retail net sales dropped 3.8% to $794.6 million. Management attempted to explain the poor performance by noting that a 5.8% decline in volume overwhelmed the modest gains on price.

Flowers Foods is attempting to reposition itself by focusing on sourdough and protein-enriched loaves, categories where consumer tastes are shifting. The company anticipates $20 million in cost savings from its restructuring efforts, which should help the company execute the necessary cost initiatives. Despite these measures, the company's full-year guidance has been trimmed, with net sales expected to range between $5.070 billion and $5.142 billion, and adjusted EBITDA between $453 million and $481 million.

Hedge fund ownership of Flowers Foods decreased from 34 funds to 32, while short interest remains high at 23.45% of the float. Management expects to generate $241.5 million in operating cash flow year to date, providing the company with the resources to fund its turnaround efforts.