Flowers Foods, Inc. reported results for its fourth quarter and fiscal year ended January 1, 2011 and refined guidance for 2011. In summary, Flowers Foods:
- Delivered net income of 5.5 percent of sales for the quarter and 5.3 percent of sales for the year.
- Achieved its ninth consecutive year of growth in earnings per share from continuing operations.
- Reported diluted earnings per share of $.34 for the quarter, an increase of 3.0 percent, and $1.49 for fiscal 2010, an increase of 5.7 percent (7.2 percent excluding a $.02 gain on acquisition recorded last year).
- Reported fourth quarter sales decrease of 0.6 percent and full year sales decrease of 1.0 percent. Excluding the impact of the deconsolidation of a variable interest entity (VIE), sales for the fourth quarter and fiscal year would have been up 0.1 percent and down 0.5 percent, respectively.
- Confirmed fiscal 2011 sales guidance 3 percent to 6 percent growth and updated earnings per share guidance to 5 percent to 10 percent growth (previous guidance was for earnings per share growth of 8 percent to 13 percent).
George E. Deese, Flowers Foods' chairman and chief executive officer, said in a prepared statement, "Flowers Foods delivered solid earnings growth for the quarter and the year and we again achieved record earnings per share for the year. Even so, we did not meet our plan for sales and earnings. Our sales volume was lower than expected in the fourth quarter as we initiated pricing action and reduced promotions in the face of commodity headwinds. The weak economy and high unemployment continue to pressure the market and impact consumer buying patterns.
"In 2010, we made Flowers Foods an even stronger company by investing in highly efficient production capacity, innovative new products, and new geographic markets—all of which position the company for further growth. Looking forward, we will continue to leverage our long history of taking care of customers' needs, outperforming in the marketplace, proven growth strategies, and financial discipline to create value for shareholders. Our focus has been -- and will remain -- on the long-term."
Fourth quarter sales decreased 0.6 percent to $573.1 million from the $576.8 million reported for last year's fourth quarter. The sales decrease of 0.6 percent was attributable to volume declines of 2.2 percent and 0.7 percent resulting from the deconsolidation of a variable interest entity (VIE). Partially offsetting these declines was an increase in pricing/mix of 2.0 percent and a 0.3 percent contribution from acquisitions. The volume declines were primarily related to declines in the branded retail channel, particularly in the white brand, breakfast bread, and cake categories, which were partially offset by increases in the sandwich round category. These volume declines were partially offset by increases in the store-brand retail channel, primarily in the snack cake category. Although the company initiated significant pricing actions during the quarter, the fresh baked foods category remained very competitive.
During the quarter, the company's direct store delivery (DSD) sales decreased 2.6 percent, reflecting volume declines of 3.9 percent and a 0.8 percent decline resulting from the deconsolidation of a VIE. Positive pricing/mix of 2.1 percent partially offset these decreases. The volume decline was primarily due to decreases in the branded retail channel, particularly in the white bread and breakfast bread categories.
Sales through warehouse delivery increased 7.9 percent, reflecting positive pricing and mix of 4.6 percent, positive volume of 1.9 percent and a 1.4 percent contribution from an acquisition. Decreases in branded retail sales as a result of a shift in snack cake sales to store-branded retail were more than offset by increases in the store-brand retail, foodservice, and contract manufacturing channels.