Second quarter sales at Weston Foods, George Weston Ltd.’s bakery division, were down 8.1 per cent, thanks to currency fluctuations, volume and changes in the product mix. At $21 M, operating income was down 12.5 per cent over last year, thanks to sales declines and increased input and distribution costs.
The company is continuing with its plan to reduce the number of SKUs sold through the bakery division, but CEO Galen Weston warned analysts that the process is complex. Success depends on the ability to bring in new orders to replace discontinued items, and new orders haven’t been coming in as rapidly as hoped. The process is about 60 per cent complete at this point and is expected to wind up next year.
On the plus side, second quarter results did show a positive reduction in overhead expenses thanks to the ongoing transformation. Galen Weston said he expects that trend to continue.