Fitch cuts Flowers Foods rating to ’BB+’ on volume pressures
Fitch Ratings has lowered Flowers Foods' Long-Term Issuer Default Rating from 'BBB-' to 'BB+' and updated its unsecured instrument ratings to 'BB+' with a Recovery Rating of 'RR4', citing volume pressures and higher EBITDA leverage expectations. The downgrade is due to pronounced volume headwinds and Fitch's projection of increased leverage, which is expected to remain in the mid-3x range in 2026 and 2027, up from 3.1x in 2025.
Despite a 50% dividend cut, leverage is projected to stay high, with EBITDA margins declining to around 9.5% in 2026 from 11% in 2024 and 2025. Flowers' fresh packaged bread business has experienced elevated volume erosion, with unit sales falling by 9.5% in the second quarter of 2026 compared to 6.6% in the first quarter of 2026 and 3.7% in the fourth quarter of 2025, primarily due to weakness in the traditional loaf bread category.
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