Packaged bakery food company Flower Foods (NYSE: FLO) missed Wall Street’s revenue expectations in Q2 CY2025 as sales only rose 1.5% year on year to $1.24 billion. The company’s full-year revenue guidance of $5.27 billion at the midpoint came in 0.7% below analysts’ estimates. Its non-GAAP profit of $0.30 per share was in line with analysts’ consensus estimates.
Is now the time to buy FLO? Find out in our full research report (it’s free).
Flowers Foods (FLO) Q2 CY2025 Highlights:
- Revenue: $1.24 billion vs analyst estimates of $1.27 billion (1.5% year-on-year growth, 2% miss)
- Adjusted EPS: $0.30 vs analyst estimates of $0.29 (in line)
- Adjusted EBITDA: $137.7 million vs analyst estimates of $141.3 million (11.1% margin, 2.6% miss)
- The company dropped its revenue guidance for the full year to $5.27 billion at the midpoint from $5.35 billion, a 1.4% decrease
- Management lowered its full-year Adjusted EPS guidance to $1.05 at the midpoint, a 4.5% decrease
- EBITDA guidance for the full year is $525 million at the midpoint, below analyst estimates of $545.9 million
- Operating Margin: 7.5%, down from 8.7% in the same quarter last year
- Organic Revenue fell 3.6% year on year vs analyst estimates of 2.1% declines (151.5 basis point miss)
- Sales Volumes fell 2.4% year on year (-1.2% in the same quarter last year)
- Market Capitalization: $3.31 billion
StockStory’s Take
Flowers Foods’ second quarter drew a negative market reaction, as revenue missed Wall Street estimates and margins declined year over year. Management pointed to increased competition in the bread aisle, especially from new, lower-priced entrants, as well as sustained softness in traditional loaf products. CEO Ryals McMullian described the current period as a “transition” driven by evolving consumer trends, including heightened attention to health and wellness and shifting attitudes toward processed foods. Management emphasized that, while some premium and value segments performed well, weakness in the core traditional loaf category weighed on overall performance.
Looking forward, the company’s updated full-year guidance reflects expectations for continued challenges in both sales volumes and profitability. Management highlighted the need for patience, with McMullian calling this a “generational shift” in the bakery category that will require time to address through portfolio innovation and targeted marketing. Flowers Foods aims to grow its differentiated and premium brands, such as Dave’s Killer Bread and Canyon Bakehouse, while continuing to invest in value-oriented and health-focused offerings. CFO Steve Kinsey also noted that the company will maintain a balanced approach to capital allocation, focusing on debt reduction and disciplined investment.
Key Insights from Management’s Remarks
Management attributed the quarter’s underperformance to intensified competition in the core bread market, changes in consumer behavior, and a challenging economic environment. The company is responding by accelerating innovation and adjusting its product mix.
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Competitive pressure intensifies: Management highlighted elevated promotional activity and the entry of new, lower-priced bread products, especially impacting Flowers Foods’ traditional loaf segment. The company is introducing its own small loaf lines to address this value-oriented demand.
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Shift in consumer preferences: CEO Ryals McMullian noted a significant, ongoing shift away from traditional loaves toward differentiated, premium, and health-oriented products. Heightened focus on health and wellness and concerns over ultra-processed foods are reshaping the bakery category.
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Premium brands outperform: Differentiated offerings such as Dave’s Killer Bread, Canyon Bakehouse, and keto products delivered growth, benefiting from increased shelf space and consumer interest in organics and specialty diets. Management cited 37% growth in keto products for the quarter.
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Innovation pipeline expanding: The company is accelerating its innovation strategy, with new launches planned for both the premium and value ends of the market. Recent success with the Wonder cake line exceeded management’s expectations, and further expansion is planned.
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Margin management actions: Flowers Foods is optimizing its production footprint, including bakery closures and product mix adjustments, to offset fixed cost pressures from lower volumes. The company is also reallocating away-from-home volumes toward higher-margin business.
Drivers of Future Performance
Flowers Foods expects ongoing headwinds from competitive intensity and changing consumer behavior to shape results through year-end, with innovation and margin management as central priorities.
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Focus on differentiated offerings: Management is prioritizing growth in premium and health-oriented brands, such as Dave’s Killer Bread and Canyon Bakehouse, to offset declines in traditional loaves. The company views these segments as more resilient to changing consumer habits and as drivers of future profitability.
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Portfolio transition and innovation: Flowers Foods is accelerating its product innovation cycle, aiming to bring new differentiated and value products to market more quickly. The company’s pipeline includes expanded small loaf lines and increased investment in Simple Mills, with the goal of capturing evolving demand trends.
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Cost discipline and operational efficiency: Management is taking steps to mitigate margin pressure, including bakery closures, optimizing distribution, and shifting product mix to higher-margin segments. CFO Steve Kinsey emphasized ongoing cost control and a cautious approach to capital allocation until market conditions improve.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will watch for (1) evidence that new product launches—especially in the premium and value segments—translate into improved sales volumes, (2) stabilization in traditional loaf performance as the portfolio strategy takes hold, and (3) further margin improvement from cost-saving initiatives such as bakery rationalization. Progress in retailer shelf resets and continued traction with innovation pipelines will also be key milestones.
Flowers Foods currently trades at $15.81, down from $16.58 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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