Flowers Foods, Inc. (NYSE:FLO) Focused on the Future

Flowers Foods, Inc. (NYSE:FLO) Focused on the Future

Flowers Foods, Inc. (NYSE:FLO), producer of Nature’s Own, Dave’s Killer Bread, Wonder, Tastykake, and other bakery foods, today announced organizational structure changes designed to increase focus on brand growth, product innovation, and improving cake business operations.

The changes, effective July 17, 2020, include the following actions:

  • The consolidation of the company’s Fresh Packaged Bread business unit and Specialty/Snacking business unit into a single function responsible for all brands. Mark Courtney, previously president of the Fresh Packaged Bread BU, has been named chief brand officer and leads this function. In this newly created role, Courtney is responsible for managing all Flowers brands, as well as its revenue management, shopper marketing (in-store and online promotional) and brand partnership programs.
  • The establishment of a stand-alone innovation function under the direction of Debo Mukherjee, chief marketing officer.
  • The appointment of David Roach, most recently president of the Snacking/Specialty BU, to the newly created position of president of Cake Operations, where he will focus exclusively on improving that area of the business.
  • The repositioning of the company’s foodservice business from the Snacking/Specialty BU to the Sales function, which will continue to be led by Keith Wheeler, chief sales officer.

In commenting on the announcement, Ryals McMullian, Flowers Foods’ president and chief executive officer, said, “These changes, alongside a revised portfolio strategy, are designed to unleash the full potential of our brands and innovation efforts and are the result of a thorough organizational review we conducted over the past two quarters as part of our portfolio optimization initiative. We believe that these changes are more consistent with our strategic priority to focus on our brands and that they will bring a more structured approach to innovation. This will enable us to build on the strengths of our brands and bring our customers and consumers more new and exciting products.”

McMullian continued, “Our new structure now unites all brand teams under Mark’s leadership and enables greater collaboration and better resource allocation among our brand portfolio. Debo will guide the development of an innovation capability to bring new and exciting offerings to our consumers that go beyond line extensions. This new innovation function will also partner more closely with our corporate development group to seek out acquisition and investment opportunities that fit within our overall portfolio strategy. Importantly, while we have already addressed some operational inefficiencies within our cake bakeries, we expect that David’s full attention to this area should drive quicker progress and capture significant opportunities to improve the profitability of that business.”

Other Restructuring Actions
McMullian noted that the company has eliminated approximately 250 positions across different departments and job levels to better balance the resources required to support the company’s business. Flowers currently employs approximately 9,700 employees.

“This organizational alignment is the result of a company-wide evaluation of our overhead structure,” he said. “While we regret losing these team members, this move directly supports our strategic priorities to reduce the complexity of our business, improve our margins, and ensure we have the right resources in place to sustain long-term growth. I want to express my sincere appreciation to those affected by these actions for their contributions.”

Preliminary Second Quarter Results 
Flowers today provided preliminary information regarding its performance in the second quarter, which ended July 11, 2020. Net sales are currently expected to increase approximately 4.5% to 5.0% over the prior year second quarter and GAAP earnings per share expected to be in the range of $0.25 to $0.28. Earnings per share, adjusted for matters affecting comparability, are expected to be in the range of $0.30 to $0.33. Please see the schedule of the adjustments made to GAAP earnings per share at the end of this release.

The company has not completed its quarter-end closing process and, accordingly, these preliminary results reflect estimates based on currently available information and may differ materially from actual operating results. The company will disclose its final results for the second quarter after market close on August 6, 2020.

Webcast to Discuss Strategic Priorities and Long-Term Targets
In addition, Flowers will conduct a webcast at 8:00 a.m. (ET) on August 7, 2020, to discuss its second quarter results, strategic priorities, and long-term targets. Information about the webcast will be disclosed and posted on the investor page of the company’s website in the coming days.

About Flowers Foods
Headquartered in Thomasville, Ga., Flowers Foods, Inc. (NYSE: FLO) is one of the largest producers of packaged bakery foods in the United States with 2019 sales of $4.1 billion. Flowers operates bakeries across the country that produce a wide range of bakery products. Among the company’s top brands are Nature’s Own, Dave’s Killer Bread, Wonder, and Tastykake. Learn more at www.flowersfoods.com.

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S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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