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Issue Date: Vol. 53, No. 3, March 2013, Posted On: 2/9/2013

Flowers Foods' Profits Surge In Q4; Sales Boosted By Hostess Shutdown

Emily Jed
TAGS: Flowers Foods, Flowers Foods fourth quarter 2012, Hostess, Mrs. Freshley's, vending machine pastries, vending goods, Twinkies, George E. Deese

THOMASVILLE, GA – Packaged baked goods maker Flowers Foods got a big sales boost in the fourth quarter as Hostess Brands' abrupt closure in November left retailers scrambling to fill their shelves with Twinkies alternatives.

Flowers Foods posted a profit of $38.6 million, or 28¢ a share, up 65% from $23 million, or 17¢ a share, a year earlier. Revenue climbed 15% to $749.4 million. Acquisitions contributed 6.4% of those gains, and volume increased 10%.

The maker of Mrs. Freshley's pastries popular in vending has seen sales rise in recent quarters, helped by its 2011 acquisition of Tastykake pastries maker Tasty Baking Co. However, its effort to offset rising ingredient costs by increasing prices and cutting back on promotions has challenged its sales volume and margins.

Despite the recent spike in packaged pastry demand following Twinkie's demise in the fourth quarter, Flowers declined to give guidance until it sees what happens next in Hostess's plan to sell its brands.

"The marketplace remains in flux as the industry awaits the outcome of Hostess' bankruptcy proceedings and the resulting auctions of assets," said Flowers chief executive George E. Deese.

Last month, Hostess selected Flowers as its lead bidder for its bread business, including Wonder Bread and Nature's Pride. The Thomasville, GA, baker's $390 million offer could still be outbid in an auction as part of Hostess's bankruptcy process. | SEE STORY

Flowers also agreed in October to buy certain assets and trademark licenses from Grupo Bimbo that would give it licenses to the Sara Lee and Earthgrains brands in California and Oklahoma City.

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