Flowers Foods 2025 Q1 Earnings Misses Targets with Net Income Declining by 27.4%

Flowers Foods (FLO) reported its fiscal 2025 Q1 earnings on May 16th, 2025. The company posted adjusted earnings per share of $0.35, missing analyst forecasts of $0.38. Revenue fell 1.4% year over year to $1.55 billion, below the $1.60 billion estimate. The earnings guidance for 2025 was revised downward, with adjusted EPS expected between $1.05 and $1.15, compared to the prior range of $1.18 to $1.28. The company also lowered its net sales forecast to $5.297 billion to $5.395 billion from the previous $5.403 billion to $5.487 billion range, reflecting a challenging consumer environment.

Revenue

Flowers Foods reported a decrease in total revenue by 1.4% to $1.55 billion for the first quarter of fiscal 2025, down from $1.58 billion in the previous year’s Q1. The decline was attributed to pricing/mix and volume reductions, despite the acquisition of Simple Mills, which contributed positively to sales figures.

Earnings/Net Income

EPS for Flowers Foods dropped 28.6% to $0.25 in 2025 Q1 from $0.35 in 2024 Q1. Net income decreased to $53 million, a 27.4% decline from the $73.04 million reported in 2024 Q1. The company's EPS performance was unfavorable, indicating financial pressures from reduced sales and increased costs.

Post-Earnings Price Action Review

The strategy of buying FLO when revenue beats expectations and holding for 30 days yielded negative results, with a return of -10.55%, significantly underperforming the benchmark return of 86.98%. The strategy's Sharpe ratio of -0.13 and a maximum drawdown of -33.14% pointed to high risk, suggesting the need for improved risk management or a strategic reassessment. The results highlight the volatility associated with Flowers Foods' stock following earnings announcements, and underscore the importance of evaluating market conditions and company fundamentals beyond earnings surprises.

CEO Commentary

Ryals McMullian, Chairman and CEO, acknowledged the unsatisfactory performance in Q1 but emphasized the retention of unit share amid category declines. He highlighted the company’s investment in innovation and targeting of faster-growing categories for both immediate performance enhancement and sustainable growth. McMullian pointed to improving consumer health and differentiation in bread segments as crucial for addressing market challenges, expressing confidence in initiatives aimed at enhancing shareholder value and achieving long-term financial targets.

Guidance

Flowers Foods anticipates a challenging environment, revising its EBITDA margin guidance down by 30 to 40 basis points due to category trends and increased tariffs impacting input costs. Despite the current challenges, the company maintains its long-term EBITDA margin target of 12% to 14%, although reaching these targets may take longer due to ongoing economic uncertainties and shifts in consumer behavior.

Additional News

In recent developments, BNP Paribas Financial Markets has acquired 48,686 shares of Flowers Foods, indicating institutional interest despite the company's lowered financial outlook. Additionally, Flowers Foods has announced the completion of its acquisition of Simple Mills, a strategic move aimed at expanding its product portfolio into faster-growing categories. The acquisition is part of the company's broader efforts to leverage market opportunities and enhance product offerings. Amid these corporate activities, Flowers Foods remains focused on aligning its business strategy with consumer trends and improving operational efficiencies.