George Weston Ltd. is slowing down its multi-year transformation plan after its bakery business continued to disappoint, with falling sales in the company's most recent quarter.
"At Weston Foods, we continued to underperform against our expectations," said Galen Weston, the company's CEO, during a conference call with analysts Tuesday.
Sales at Weston Foods, the company's bakery division, fell to $630 million during the third quarter ended Oct. 6, down $38 million or 5.7 per cent compared with the same period in 2017.
The drop came mostly from lost business from some key customers, the company said, as well as from the division discontinuing some of its offerings -- one part of the company's transformation plan.
However, Weston highlighted the company is seeing sales momentum in what it considers key growth areas, like artisan and pre-fried doughnuts.
"We are one year into an ambitious plan and it has had mixed results," Weston said.
The company has taken action to slow the program, he said, specifically where there is the most impact on customers as customer service has recently fallen short.
George Weston will reduce its product offerings by 800 instead of the previously planned 1,000.
However, the company remains committed to the strategy, executives said, it is just going to take longer than originally expected.
The company's third-quarter profit attributable to common shareholders was $51 million or 40 cents per share on sales of $14.86 billion. That compared with a profit of $420 million or $3.25 per share on $14.64 billion in sales in the same quarter a year ago.
On an adjusted basis, George Weston says it earned $288 million or $2.25 per share for the quarter ended Oct. 6, compared with an adjusted profit of $277 million or $2.14 per share a year ago.
Analysts on average had expected a profit of $2.19 per share for the quarter, according to Thomson Reuters Eikon.
George Weston also raised its quarterly dividend by 2.5 cents to 51.5 cents per common share.