Flowers looks to accelerate expansion
March 23, 2011
by Josh Sosland
NEW YORK — Flowers Foods, Inc. fresh baked products will be available in 75% of the United States within five years, according to a new management plan detailed March 22 by company executives. Currently, the company’s market penetration is about 50%.
With what the company described as an ambitious plan for growth, Flowers Foods executives have raised the company’s long-term annual sales growth target to 5% to 10% from 5% to 8%.
The forecast was discussed at an analysts meeting hosted by Flowers at the New York Stock Exchange. George E. Deese, chairman and chief executive officer, said Flowers will achieve the expansion by moving into new territories through acquisitions and construction of new baking plants.
“We have created a sound plan to continue building on our strong position in the baking industry,” Mr. Deese said. “We currently have the No. 1 soft variety brand in the country in Nature’s Own, and that’s from serving slightly more than half of the U.S. population. Going forward, we will grow more aggressively by expanding into new territories from our existing bakeries, by merging with independent bakers, by making strategic acquisitions and by building Greenfield bakeries. By 2016, our goal is that at least 75% of the population will have access to our Nature’s Own brand.”
Breaking down the projected annual sales growth, Steve Kinsey, executive vice-president and chief financial officer, said the company expects organic growth in core markets to add 3% to 5% with acquisitions and expansions contributing 2% to 5%. He forecast double-digit earnings growth per share during the five-year period.
From an operations and sales perspective, Flowers is well positioned to reach the more ambitious sales goals, said Allen Shiver, president of Flowers Foods.
Central to his confidence is the company’s strong track record of growth through expanding into new geographies and by introducing new products, leveraging its brands and providing solid customer service, he said.
Mr. Deese acknowledged the competitive landscape in baking is continuing to change but expressed confidence in Flowers’ capacity to navigate through the current situation.