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Flowers Foods (FLO) Offers Preliminary Update on Q2 Show

Zacks Equity Research
·3 min read

Flowers Foods, Inc. FLO offered a preliminary update on its second-quarter 2020 performance. The company anticipates 4.5-5% year-over-year growth in net sales during the second quarter. Further, adjusted earnings are projected in the band of 30-33 cents per share. Notably, the company had posted adjusted earnings of 25 cents per share in the year-ago quarter. The Zacks Consensus Estimate for second-quarter earnings is currently pegged at 27 cents per share.

To augment product innovation, growth of its brands as well as enhance cake business, management announced certain structural changes in the organization, which took effect from July 17. Among other moves, Flowers Foods has consolidated the Fresh Packaged Bread and Specialty/Snacking business units into one function which will include all brands. Also, the company formed a separate innovation function. Moreover, it eliminated nearly 250 job positions in various departments as well as levels to limit complexity in the business along with increasing margins for long-term growth.


Other Growth Efforts on Track

Flowers Foods is progressing well with Project Centennial and is undertaking several efforts to revive core business, lower costs, make use of product advances and develop leading capacities. The company launched "Project Centennial" in 2017, which is an enterprise-wide multi-year initiative. The plan is aimed at streamlining operations, fueling efficiencies, improving margins by curtailing cost, optimizing supply chain and making prudent investments to solidify Flowers Foods’ competitive position, aid revenue growth as well as return value to stockholders.

Also, management is on track with various key priorities that include refreshing key brands to drive profitably and boost market share, making use of adjacencies as well as enhancing supply-chain productivity to lift margins. Apart from Project Centennial, the company is also executing a multi-year supply-chain optimization plan to reduce fixed costs. This is essential for the company to achieve margin targets for the long term.

Apart from these, this Zacks Rank #3 (Hold) company is gaining from burgeoning demand amid the coronavirus-led stockpiling as well as increased at-home consumption. This was reflected in the company’s first-quarter 2020 results, with the top and the bottom line increasing year over year and beating their respective Zacks Consensus Estimate.

Other consumer staple companies like B&G Foods, Inc. BGS, General Mills, Inc. GIS and United Natural Foods, Inc. UNFI, to name a few, are also gaining from increased demand owing to the pandemic.

Coming back to Flowers Foods, shares of the company have gained 2.2% year to date against the industry’s decline of 4.4%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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