Flowers Foods (NYSE: FLO) reported a 5.8% decline in total volume for the second quarter of 2026, accelerating from a 3.3% drop in the prior quarter, as the company grappled with persistent weakness in its core fresh packaged bread category. Net sales fell 4.0% year-over-year to $1.193 billion, while adjusted diluted earnings per share came in at $0.21, missing analyst expectations of $0.24.
Adjusted EBITDA decreased 19.2% to $111.3 million, representing a margin of 9.3% of sales—down 180 basis points from the prior-year period. Net income declined by $17.7 million to $40.7 million. Management attributed the quarter’s underperformance to a challenging category backdrop, intensifying inflationary pressures, and shifting consumer behavior. Branded retail volume fell 7.6%, driven by weakness in traditional loaf products, while the company’s Other segment saw a 3.4% volume decline.
The company’s shares fell 4.83% to $7.10 in regular trading and extended losses by 5.25% in after-hours trading to $6.73. Over the past year, the stock has declined 48%, with a market capitalization of approximately $1.5 billion. Despite the downturn, Flowers Foods maintained its dividend, yielding 6.7%, marking 12 consecutive years of payouts.
Flowers Foods also revised its full-year 2026 guidance downward, projecting net sales of $5.070 billion to $5.142 billion, down from prior expectations. Adjusted EBITDA is now forecast at $453 million to $481 million, and adjusted diluted EPS is expected to range from $0.75 to $0.85, compared with $1.09 in fiscal 2025. The company expects to realize approximately $20 million in annualized cost savings by the second half of 2026, with one-time implementation costs of $6 million to $9 million.
Long-term targets remain unchanged, with management targeting 1-2% net sales growth, 4-6% adjusted EBITDA growth, and 7-9% adjusted diluted EPS growth. However, historical performance shows a mixed track record: net sales CAGR of 4.1% since fiscal 2019 exceeded targets, while adjusted diluted EPS CAGR of 2.1% fell short of the 7-9% range.
The company highlighted strategic initiatives, including the relaunch of its flagship Nature’s Own brand with simplified ingredients and new packaging, as well as a marketing campaign featuring John Cena. Despite these efforts, Flowers Foods faces ongoing pressure from store-brand competition, with its branded dollar share in the fresh packaged bread category declining to 73.8% from 77.0% in fiscal 2021.
