Flowers Foods Inc. is cutting its quarterly dividend to 12.5¢ per share, down from 24.75¢, to strengthen its balance sheet and invest in brands while navigating a soft consumer environment in its largest category.
The dividend reduction will lower the annual payout to 50¢ per share, marking the company's first cut to the dividend since 1993. Flowers said the action would free up meaningful cash flow that the company intends to primarily direct toward debt reduction. Net leverage stood at 3.2 times adjusted EBITDA at quarter-end, and the company aims to reduce it below 3 times on a sustainable basis.
The move comes as Flowers posted slack first-quarter results. Net income dropped 21 percent to $42.1 million, equal to 20¢ per share, from $53 million, or 25¢ per share, in the same period a year ago. On an adjusted basis, net earnings fell 17 percent to $60.9 million, or 29¢ per share, from $73.7 million, or 35¢ per share, a year earlier. First-quarter net sales rose 1.1 percent to $1.57 billion from $1.55 billion in the prior-year 16-week period.
Pressure in bread, strength elsewhere
The traditional loaf segment, which makes up roughly 38 percent of Flowers' branded portfolio, remains soft, Chief Executive A. Ryals McMullian said. Volume declined 3.3 percent in the quarter, but this was offset by a 2.1 percent gain in pricing and mix, plus a 2.3 percent sales lift from the Simple Mills acquisition.
In fresh packaged bread, Flowers' retail sales were down 3 percent in dollars and 6.6 percent in units. Dollar share fell 70 basis points year over year in bread to 16 percent. The weakness stems from elevated consumer costs, intensified trade-down behavior toward lower-priced offerings, and what McMullian called "an intensely promotional" pricing environment.
But other segments are firing. Commercial cake retail sales climbed 6 percent in dollars in the first quarter, and the Wonder snack cakes line, launched last year, saw a 120-basis-point unit share gain. In premium loaf, buns, rolls, breakfast, and snacks, performance is helping offset traditional loaf softness.
Nature's Own relaunch and cost discipline
Flowers is revitalizing Nature's Own, its clean-label bread brand. The brand debuted a refreshed look and simpler recipe with 38 percent fewer ingredients, and the company brought in actor John Cena as the official "Breaducator" to drive the launch. Nature's Own has become the largest Non-GMO Project verified loaf product in the market at national scale, McMullian said.
Cost control is a top priority. The company reduced SG&A as a percentage of sales in the first quarter, driven by enterprise-wide cost actions including effective management of input costs, optimization of marketing expenses and overall expense management. Flowers is also actively offsetting cost pressures through productivity and other cost management initiatives as it monitors the impact of tariffs, diesel fuel, edible oils, and packaging resin.
Outlook unchanged despite headwinds
Flowers upheld its fiscal 2026 guidance, projecting adjusted earnings per share of 80¢ to 90¢ and net sales to come in between down 1.8 percent and up 0.2 percent. Though Simple Mills sales declined 1.2 percent year over year on a comparable basis, retail sales for the business rose 6 percent on growth of 43 percent in cookies and 3 percent in crackers in the quarter.