November 11, 2010 / 1:21 PM / 7 years ago

UPDATE 2-Flowers Foods says pricing improving, shares rise

* Q3 EPS $0.34 vs est $0.35

* Says pricing has improved in current qtr

* Sees EPS growth 8-13 pct on sales growth 3-6 pct in 2011

* Shares rise 2 pct (Recasts, adds details, analyst comment, updates shares)

By Mihir Dalal

BANGALORE, Nov 11 (Reuters) - Flowers Foods Inc FLO.N posted lower-than-expected quarterly results, but shares of the bread maker rose as it gave an upbeat outlook for next year and said pricing had improved in its current quarter.

This year many food makers have been involved in a price war to boost sales, but have recently been looking to pass on soaring commodity costs to customers to protect margins.

"Four weeks into the fourth quarter, we have seen sales improve compared to last year's quarter due to the pricing actions we have taken," CEO George Deese said.

Janney Capital Market's Mitchell Pinheiro said Flowers Foods, which owns the Nature's Own brand, was beginning to see higher prices for its products, reflecting the industry's move to shield margins.

The pricing initiatives will also allow the company to offset the expected increase in commodity costs in 2011, Pinheiro said.

Flowers Foods, which produces and distributes breads, buns, rolls, and other baked goods to retail and foodservice customers, expects 2011 earnings growth of 8-13 percent on sales growth of 3-6 percent.

The 2011 profit outlook is impressive in light of the recent rise in wheat prices and weak consumer spending environment, KeyBanc's Akshay Jagdale said in a client note.

The company, which competes with Sara Lee SLE.N, George Weston (WN.TO) and Campbell Soup Co (CPB.N), posted lower-than-expected quarterly results and cut its 2010 outlook. [ID:nASA011ZZ]

Shares of Thomasville, Georgia-based Flowers Foods were up 2 percent at on Thursday on the New York Stock Exchange. (Reporting by NR Sethuraman in Bangalore; Editing by Gopakumar Warrier, Jarshad Kakkrakandy)

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