What happened
Shares of Flowers Foods (NYSE: FLO) were falling today after the parent of baked goods brands like Tastykake, Wonder Bread, and Dave's Killer Bread cut its full-year guidance in its first-quarter earnings report.
As of 1:31 p.m. ET, the stock was down 10.5%.
So what
Flowers said that revenue in the first quarter rose 6.9% to $1.534 billion, a record for that quarter but slightly below estimates at $1.55 billion.
However, inflation ate into the company's profits, and gross margin fell 170 basis points to 46.2%. That led to a decline in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 8.7% to $151.1 million.
On the bottom line, adjusted earnings per share fell from $0.44 to $0.38, which matched estimates.
Flowers raised prices to offset inflationary pressures, and the company saw its sales mix return to more normalized levels as consumers dined out more.
As a result, CEO Ryals McMullian said: "We are adjusting our outlook for fiscal 2023 to account for the slow start to the year and lower-than-expected branded retail sales due to softer category demand. In response, we are adapting our business to make it even more resilient in the rapidly evolving consumer environment."
Among the new products the company is releasing are Dave's Killer Bread snack bars as it focuses on expanding its brands beyond the bread category.
Now what
Flowers now expects full-year revenue of $5.086 billion to $5.141 billion, down from a previous range of $5.18 billion to $5.24 billion. On the bottom line, it cut its adjusted earnings per share forecast from $1.20 to $1.30 down to $1.15 to $1.25.
While the company said it is investing in a number of productivity and efficiency initiatives to drive long-term shareholder value, it's not surprising to see this stable consumer staples stock moving lower on the guidance cut.
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