CPB Campbell Soup Co

Flowers Foods Inc. said its second-quarter profit fell 1.2% as soft demand and increased promotional activity prompted the company to lower its 2016 guidance.

The maker of Wonder bread, Tastykake and Nature's Own baked goods also launched an operational review called "Project Centennial" to look into enhancing revenue growth, streamlining operations and investing to strengthen its competitive position.

Shares fell 4% to $15.50 in after-hours trading.

Like other established food makers facing threats from younger brands, Flowers has diversified by acquiring companies focused on natural ingredients. General Mills Inc. bought Annie's Inc., while Campbell Soup Co. purchased Bolthouse Farms.

Flowers has found some success with 2015 deals for Dave's Killer Bread, for $275 million, and Alpine Valley Bread Co., for $120 million. The company said Wednesday that said strong demand for those products offset lower sales in its core markets.

Breaking out its 5.2% total sales increase, the company said acquisitions contributed 5.6% as pricing/mix decreased 0.5% and volume rose 0.1%.

Earlier Wednesday, Flowers disclosed that it faces a federal inquiry into its labor practices. It didn't detail the specific labor issues involved. The company was previously sued by delivery drivers in several states who allege they were misclassified as independent contractors.

Flowers expects earnings of 90 cents to 95 cents a share for the year, excluding a second-quarter pension plan settlement loss of 2 cents a share. In May, it projected earnings of $1 to $1.06 a share.

Flowers projects sales of $3.93 billion to $3.986 billion for the year, compared with prior guidance of $3.986 billion to $4.08 billion.

For the quarter ended June 30, Flowers reported a profit of $51.2 million, or 24 cents a share, compared with $51.8 million, or 24 cents a share, a year earlier. Earnings excluding items were 26 cents a share.

Sales rose to $935 million from $888.8 million.

Analysts surveyed by Thomson Reuters had projected a profit of 26 cents a share on $949 million in revenue.

Write to Josh Beckerman at josh.beckerman@wsj.com

(END) Dow Jones Newswires

August 10, 2016 21:45 ET (01:45 GMT)

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