Flowers Foods (FLO) investor relations material

Consumer and Category Trends

• Consumers face inflation and job market pressures, leading to trade-down behavior and increased interest in private label products.

• Bread faces headwinds from health and wellness trends, with influencers and celebrities contributing to negative perceptions.

• The traditional loaf segment is declining 5–6%, while differentiated products like keto, organic, and gluten-free are growing.

• Demographic shifts, such as smaller households, are driving demand for small loaves and more intuitive shelf organization.

• Retailers are testing new shelf sets to better balance product offerings and improve consumer experience.

Competitive Environment and Innovation

• The category remains highly competitive, with new branded products sometimes priced below private label.

• Value offerings and small loaves are being used to address lower-priced competition.

• Innovation is focused on "better for you" snacks, with strong performance from brands like Dave's Killer Bread and Simple Mills.

• Wonder Cake exceeded expectations, revitalizing a struggling category, and more innovation is planned.

• Expansion into convenience stores is a key growth area, leveraging warehouse delivery for new snack products.

Financial Performance and Guidance

• Q2 2025 net sales reached $1.243B (+1.5% YoY), with acquisition-driven growth offsetting volume declines.

• Adjusted EBITDA for Q2 2025 was $137.7M (11.1% of sales), down 4% YoY due to margin pressures.

• Fiscal 2025 guidance: total net sales $5.239–$5.308B, adjusted EBITDA $512–$538M, adjusted EPS $1.00–$1.10.

• Guidance for 2025 was lowered due to weaker first-half performance and ongoing category challenges.

• Input costs for items like palm oil, eggs, and packaging are expected to rise in the second half.