How Flowers Foods Fared in 4Q17

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Part 4
How Flowers Foods Fared in 4Q17 PART 4 OF 6

What’s Flowers Foods’ Sales Growth Strategy?

Growth initiatives

Flowers Foods (FLO) is a leading name in the bakery space. The company is best known for brands like Dave’s Killer Bread, Wonder, Nature’s Own, and Mrs. Freshley’s. The company’s recently reported 4Q17 results benefitted from strong demand for Dave’s Killer Bread. More importantly, the company added that Dave’s Killer Bread along with Wonder and Nature’s Own helped to improve its dollar share for six successive quarters, according to research firm IRI.

What&#8217;s Flowers Foods’ Sales Growth Strategy?

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At the 4Q17 earnings conference call, CEO Allen Shiver said that the company is focusing on enhancing its share in underpenetrated markets, improving the weak-performing snack business, innovation, and acquisitions to boost sales.

To increase market penetration, Shiver stated that the company is now focusing on increasing its presence in the Dinner Roll and Breakfast segments where Dave’s Killer Bread and Nature’s Own brands are performing really well. The company is focusing on individual categories and brands through separate business divisions and will be launching innovative products in the coming days.

To boost the weak-performing snack cake business, the company has now deployed a new leadership solely focused on revitalizing two of its cake brands.

Increases in brand marketing investments

Flowers Foods through its Project Centennial is just aiming to reduce cost and improve productivity across operations. The gross savings are expected to be around $70 million to $80 million by fiscal 2018. Apart from innovations, the company will be reinvesting a part of these savings to promote brands to drive sales.

A tough retail landscape has made it imperative for food stocks to step up their brand marketing investment to retain and capture more market share. Conagra (CAG) is investing in brand marketing, and so is Hain Celestial (HAIN). However, these brand investments are proving to be a drag on margins.

In the next article, let’s have a look at Flowers Foods’ margin performance.


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