Second quarter 2026, 12-week period
Filed Aug 20, 2026Flowers Foods reports second-quarter net-sales decline, lower earnings and reduced fiscal 2026 outlook
Net sales decreased 4.0% as a 5.8% volume decline more than offset 1.8% pricing/mix growth, while net income decreased 30.3%, adjusted EBITDA decreased 19.2%, and the company reduced its fiscal 2026 net-sales, adjusted EBITDA and adjusted diluted EPS outlook.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net salesGAAP | $ 1,192,935 (000’s omitted) | – | (4.0 )% |
| Pricing/mixother | 1.8 % | – | increased 1.8% |
| Volumeother | (5.8 )% | – | declined 5.8% |
| Gross marginGAAP | $ 556,020 (000’s omitted) | – | – |
| Gross margin excluding depreciation and amortizationnon-GAAP | $ 577,930 (000’s omitted) | – | – |
| Materials, supplies, labor and other production costs (exclusive of depreciation and amortization)GAAP | $ 615,005 (000’s omitted) | – | – |
| Materials, supplies, labor and other production costs as a percentage of net salesGAAP | 51.6% of net sales | – | a 40-basis point increase |
| Selling, distribution, and administrative expensesGAAP | $ 473,185 (000’s omitted) | – | – |
| Selling, distribution, and administrative expenses as a percentage of net salesGAAP | 39.7% of net sales | – | a 160-basis point increase |
| Adjusted selling, distribution, and administrative expensesnon-GAAP | $ 466,630 (000’s omitted) | – | – |
| Adjusted selling, distribution, and administrative expenses as a percentage of net salesnon-GAAP | 39.1% of net sales | – | a 140-basis point increase |
| Depreciation and amortization expenseGAAP | $ 38,579 (000’s omitted) | – | flat with last year's second quarter |
| Income from operationsGAAP | $ 68,129 (000’s omitted) | – | – |
| Interest expense, netGAAP | $ 13,787 (000’s omitted) | – | decreased $1.3 million |
| Income tax expenseGAAP | $ 13,598 (000’s omitted) | – | – |
| Net incomeGAAP | $ 40,656 (000’s omitted) | – | decreased 30.3% |
| Net income as a percentage of salesGAAP | 3.4% of sales | – | a 130-basis point decrease |
| Adjusted net incomenon-GAAP | $ 44,100 (000’s omitted) | – | decreased 30.5% |
| Net income per diluted common shareGAAP | $ 0.19 | – | decreased $0.09 |
| Adjusted net income per diluted common sharenon-GAAP | $ 0.21 | – | decreased $0.09 |
| Diluted weighted average shares outstandingGAAP | 212,493 (000’s omitted) | – | – |
| EBITDAnon-GAAP | $ 106,620 (000’s omitted) | – | – |
| Adjusted EBITDAnon-GAAP | $ 111,300 (000’s omitted) | – | decreased 19.2% |
| Adjusted EBITDA marginnon-GAAP | 9.3 % | – | a 180-basis point decrease |
| 28-week net salesGAAP | $ 2,764,512 (000’s omitted) | – | (1.2 )% |
| 28-week income from operationsGAAP | $ 147,941 (000’s omitted) | – | – |
| 28-week net incomeGAAP | $ 82,711 (000’s omitted) | – | – |
| 28-week net income per diluted common shareGAAP | $ 0.39 | – | – |
| 28-week adjusted net incomenon-GAAP | $ 104,978 (000’s omitted) | – | – |
| 28-week adjusted net income per diluted common sharenon-GAAP | $ 0.49 | – | – |
| 28-week adjusted EBITDAnon-GAAP | $ 270,319 (000’s omitted) | – | – |
| 28-week adjusted EBITDA marginnon-GAAP | 9.8 % | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Branded RetailVolume declines partially offset by favorable pricing/mix. Pricing/mix rose 3.8% and volume decreased 7.6%. | $ 794,642 (000’s omitted) | – | (3.8 )% |
| OtherInflationary pressure on consumer spending impacted store branded sales. Pricing/mix decreased 1.0% and volume declined 3.4%. | $ 398,293 (000’s omitted) | – | (4.4 )% |
52-week Fiscal 2026 outlook
- Revenueapproximately $5.070 billion to $5.142 billion, representing a -3.5% to -2.2% change compared to the prior year
- Tax rateapproximately 26%
- NoteAdjusted EBITDA in the range of approximately $453 million to $481 million
- NoteAdjusted diluted EPS of approximately $0.75 to $0.85 per share
- NoteNet income per diluted common share of $0.64 to $0.74
- NoteDepreciation and amortization of approximately $165 million to $170 million
- NoteNet interest expense of approximately $65 million to $70 million
- NoteWeighted average diluted share count for the year of approximately 213.5 million shares
- NoteCapital expenditures of approximately $115 million to $125 million
Capital returns
- Year-to-date dividends paid to shareholders were $81.0 million, a decrease of $23.7 million.
- For the 28-week period ended July 18, 2026, dividends paid were $ 81,024 (000’s omitted), compared with $ 104,772 (000’s omitted).
- For the 28-week period ended July 18, 2026, stock repurchases were $ 3,824 (000’s omitted), compared with $ 5,499 (000’s omitted).
- For the 12-week period ended July 18, 2026, stock repurchases were $ 37 (000’s omitted).
What drove it
- Favorable pricing/mix was more than offset by lower volume.
- The fresh packaged bread category faced macroeconomic pressures, evolving consumer purchasing behavior and sustained competitive activity.
- Net income was affected by a challenging consumer environment, increased marketing expense, and increases in labor and freight costs.
- Moderating ingredient costs and lower interest expense partly offset cost pressures.
- The relaunch of Nature's Own features simpler ingredients, stronger better-for-you positioning and Non-GMO Project Verified offering at national scale.
- Management is accelerating actions to sharpen its value proposition, improve in-store execution, accelerate innovation, win new business opportunities, invest behind brands, and realign the organization and cost structure.
Concerns
- Total volume declined 5.8%, including a 7.6% decline in Branded Retail volume.
- Other sales were affected by inflationary pressure on consumer spending impacting store branded sales.
- Materials, supplies, labor, and other production costs were 51.6% of net sales, a 40-basis point increase, mostly due to lower production volumes, increased labor costs and outside purchases of product.
- SD&A expenses were 39.7% of net sales, a 160-basis point increase, due to higher workforce-related and freight costs and increased marketing spend.
- Nature's Own relaunch remains in its early stages and has not yet meaningfully contributed to results.
- The company updated its full-year outlook to reflect a more cautious view for the balance of 2026.
What to watch
- Whether initiatives to improve in-store execution, innovation and new-business wins arrest volume declines.
- Customer and distribution-partner feedback and sales contribution from the Nature's Own relaunch.
- The trajectory of labor, freight, marketing and ingredient costs relative to the company's cost-structure actions.
- Delivery against revised fiscal 2026 net sales of approximately $5.070 billion to $5.142 billion and adjusted EBITDA of approximately $453 million to $481 million.
- Whether lower debt balances continue to support lower net interest expense.
Balance sheet and cash flow
- Cash and cash equivalents were $52.8 million at quarter end.
- Cash and cash equivalents were $ 52,766 (000’s omitted) at July 18, 2026, compared with $ 12,100 (000’s omitted) at January 3, 2026.
- Long-term debt was $ 1,686,246 (000’s omitted) at July 18, 2026, compared with $ 1,755,132 (000’s omitted) at January 3, 2026.
- Year-to-date net cash provided by operating activities was $241.5 million, a decrease of $24.9 million.
- For the 28-week period ended July 18, 2026, net cash provided by operating activities was $ 241,545 (000’s omitted), compared with $ 266,463 (000’s omitted).
- For the 12-week period ended July 18, 2026, net cash provided by operating activities was $ 133,688 (000’s omitted), compared with $ 130,829 (000’s omitted).
- Year-to-date capital expenditures were $44.5 million, a decrease of $11.9 million.
- For the 28-week period ended July 18, 2026, purchase of property, plant and equipment was $ 44,476 (000’s omitted), compared with $ 56,366 (000’s omitted).
- For the 28-week period ended July 18, 2026, net change in debt borrowings was $ (70,000 ) (000’s omitted), compared with $ 734,880 (000’s omitted).
Analysis
Flowers Foods reported a weaker second quarter as net sales decreased 4.0% to $1.193 billion. Pricing/mix increased 1.8%, but this did not offset a 5.8% volume decline. Branded Retail sales declined 3.8% to $794.6 million, with a 7.6% volume decline, while Other sales declined 4.4% to $398.3 million amid inflationary pressure on consumer spending affecting store branded sales. The filing characterizes the fresh packaged bread environment as pressured by macroeconomic conditions, changing consumer purchasing behavior and sustained competition.
Profitability declined more sharply than sales. Net income decreased 30.3% to $40.7 million and diluted EPS decreased $0.09 to $0.19. Adjusted net income decreased 30.5% to $44.1 million, adjusted diluted EPS decreased $0.09 to $0.21, and adjusted EBITDA decreased 19.2% to $111.3 million. Adjusted EBITDA margin was 9.3%, down 180 basis points from 11.1%. Production costs increased to 51.6% of net sales and SD&A increased to 39.7%, reflecting lower production volume, labor, outside product purchases, workforce-related costs, freight and marketing spending. Moderating ingredient costs and lower interest expense only partly offset these pressures.
Cash flow remained positive, although year-to-date cash flow from operating activities decreased $24.9 million to $241.5 million. The company reduced long-term debt to $ 1,686,246 (000’s omitted) from $ 1,755,132 (000’s omitted) at January 3, 2026, while cash and cash equivalents increased to $ 52,766 (000’s omitted). Year-to-date dividends paid were $81.0 million and year-to-date stock repurchases were $ 3,824 (000’s omitted). Capital expenditures decreased $11.9 million to $44.5 million year to date.
Management reduced fiscal 2026 net-sales guidance to approximately $5.070 billion to $5.142 billion, adjusted EBITDA guidance to approximately $453 million to $481 million, and adjusted diluted EPS guidance to approximately $0.75 to $0.85 per share. The revised outlook follows first-half performance and management's more cautious view of the category environment. The principal operational watchpoints are volume stabilization, execution of the value proposition and in-store initiatives, the early contribution from the Nature's Own relaunch, and the ability of organizational and cost-structure actions to contain labor, freight and marketing pressure. The filing does not provide prior-quarter comparative operating metrics, so sequential changes from the first quarter cannot be assessed from this release.
Management, verbatim
Our second quarter results reflect the continued challenges across the fresh packaged bread category, where macroeconomic pressures, evolving consumer purchasing behavior, and sustained competitive activity created a more difficult operating environment than we anticipated.
Ryals McMullian, chairman and CEO of Flowers Foods
The relaunch of Nature's Own is an important example of that strategy in action. Early feedback from customers and distribution partners has been excellent, particularly around the brand’s simpler ingredients, stronger better-for-you positioning, and Non-GMO Project Verified offering at national scale.
Ryals McMullian, chairman and CEO of Flowers Foods
Given our first-half performance and the current category environment, we are updating our full-year outlook to reflect a more cautious view for the balance of 2026.
Ryals McMullian, chairman and CEO of Flowers Foods
Not in the filing
stated, not guessed- Prior-quarter comparative figures for second-quarter net sales, segment revenue, gross margin, operating income, net income, EPS, adjusted EBITDA and margins
- Free cash flow
- Quarterly free cash flow comparison
- Fiscal 2026 gross margin guidance
- Fiscal 2026 operating-expense guidance
- GAAP operating-income guidance
- Effective tax rate for the reported second quarter
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.