Flowers Foods Cuts 2026 Outlook as Bread Volumes Decline

Flowers Foods has lowered its full-year outlook after weaker demand for fresh packaged bread contributed to a 4% decline in second-quarter sales and a sharper fall in earnings.

The US bakery group reported net sales of USD1.193bn for the 12 weeks ended July 18, down from USD1.243bn in the comparable period. Sales volumes declined 5.8%, more than offsetting a 1.8% positive contribution from pricing and mix. Net income fell 30.3% to USD40.7m, while adjusted EBITDA decreased 19.2% to USD111.3m.

Flowers attributed the performance primarily to continued weakness in fresh packaged bread, with pressure on household budgets, changing purchasing patterns and competition affecting demand. Traditional loaf products were particularly exposed as consumers traded down and increasingly moved towards smaller pack sizes and more differentiated breads.

“Our second quarter results reflect the continued challenges across the fresh packaged bread category,” chairman and CEO Ryals McMullian said.

The changing product mix is now influencing Flowers’ innovation priorities. The company said it remains underrepresented in areas including small and half loaves, sourdough, protein and other products offering functional attributes, and plans to address those gaps through launches during the second half of 2026 and into 2027.

Nature’s Own Perfectly Crafted was one of the stronger performers during the quarter, with sales increasing more than 8%. Flowers identified its Sourdough and Italian Herb products as contributors to growth. The company is also progressing with the broader Nature’s Own relaunch, centred on fewer and simpler ingredients, better-for-you positioning and a nationally available Non-GMO Project Verified offering.

Dave’s Killer Bread faced greater pressure, losing both unit and dollar share during the quarter. Flowers linked the decline to a planned reduction in marketing investment, competition, price sensitivity and changing consumer preferences. During its analyst Q&A, McMullian singled out sourdough as one of the most important shifts affecting the brand, noting that DKB currently offers sourdough only on the US West Coast. The company plans additional innovation in the segment.

Elsewhere in the portfolio, gluten-free brand Canyon Bakehouse gained both unit and dollar share, while Nature’s Own Keto increased dollar share. Simple Mills retail sales rose 13%, supported by cookies and crackers, which increased 39% and 8%, respectively.

Flowers is combining the portfolio changes with further cost reductions. Measures arising from its ongoing business review are expected to produce approximately USD9m in savings during the remainder of 2026 and around USD20m in annualised run-rate savings once fully implemented. The company expects approximately USD6m in one-time costs to achieve those savings.

For the full year, Flowers now expects net sales of USD5.070bn-USD5.142bn, compared with previous guidance of USD5.163bn-USD5.267bn. Adjusted EBITDA guidance has been reduced to USD453m-USD481m from USD465m-USD495m, while adjusted diluted earnings per share are now forecast at USD0.75-USD0.85, against the previous USD0.80-USD0.90 range.

Looking towards 2027, the company also expects greater exposure to commodity ingredient and fuel costs. Flowers said it is expanding its hedging programme and reviewing its price-pack architecture, including opportunities to offer leading bread brands in smaller loaf sizes and adjust snack pack formats to consumer demand.