With Tasty under its belt, new owner boosts 3Q profit

Tastykakes are now for sale across the Southeast and exceeding the expectations of Flowers Foods Inc., the Georgia bread company that bought Philadelphia's Tasty Baking Co. in May.

"Our integration plans are ahead of schedule," and cost reductions are meeting or exceeding estimates, Allen L. Shiver, Flowers' president, told stock analysts Thursday on a conference call discussing the Thomasville, Ga., company's third-quarter results.

The cost savings included the elimination of 32 positions at the former Tasty Baking headquarters at the Philadelphia Navy Yard. In the quarter, Flowers recorded a $700,000 charge for severance at Tasty Baking.

Flowers has quickly added Tastykakes to 2,200 of its delivery routes that are owned and operated by independent distributors, helping to fill out capacity at Tasty's $78 million Navy Yard bakery that proved too much of a financial burden for Tasty.

Shiver said Flowers expected to expand Tastykake distribution to 3,500 routes by the end of next year. "Our independent distributors are excited about having a brand like Tastykake," Shiver said, "and having some very unique items that they can add into their product line."

While spreading the Tastykake brand through the Southeast, Flowers is putting its Nature's Own brand of bread on Tastykake trucks to expand sales in the Mid-Atlantic.

Flowers' overall sales for the quarter ended Oct. 8 climbed 13 percent to $675 million from $598 million. Tasty Baking contributed 8.7 percentage points to that gain, Flowers said. Net income was $22.8 million, up 15 percent from $19.8 million, even as the company struggled with higher costs for ingredients, such as flour, sweeteners, shortening, and cocoa.