UPDATE 2-Lance Q1 misses Street, gives weak FY view; shrs slump

Wed May 5, 2010 11:15am EDT

* Q1 adj EPS $0.04 vs est $0.27

* Q1 revenue $221.6 mln vs est $226.9

* Sees FY adj EPS $1.10-$1.25 vs est $1.46

* Shares slump 24 pct, touch 17-month low (Recasts; adds details, analyst comment, share movement)

By Mihir Dalal

BANGALORE, May 5 (Reuters) - Lance Inc (LNCE.O) posted a first-quarter profit well below market estimates, as competitors' promotional pricing hurt its sales, and the bakery company gave a weak full-year earnings forecast, wiping off nearly a fourth of its market value.

Branded sales at Lance, whose products include Cape Cod and Stella D'oro, fell 1 percent in the quarter. And private-label sales were below recent trends, the company said.

"Our non-branded sales were impacted by more aggressive promotional pricing by branded competitors. Our branded sales suffered from less effective promotions in an increasingly competitive environment," Chief Executive David Singer said.

Singer said higher costs combined with softer-than-planned volume lowered the company's profit margin significantly.

Morgan Keegan analyst Benjamin Brownlow said it is possible that except for its core namesake brand and Cape Cod, the company's products do not have enough brand strength.

"If the current promotional environment continues, it's hard to see how Lance will meet its guidance," Brownlow added.

Singer said Lance would reduce its operating costs and was looking at altering its promotional strategy.

First-quarter net loss was $0.8 million, or 2 cents a share, compared with net income of $6.5 million, or 20 cents a share a year ago.

Excluding items, it earned 4 cents a share.

Analysts on average were expecting 27 cents a share, according to Thomson Reuters I/B/E/S.

Revenue rose 3 percent to $221.6 million.

For 2010, the company expects to earn $1.10 to $1.25 a share, excluding items. Analysts were looking for $1.46.

Shares of the company were down 17 percent at $19.62 Wednesday morning on Nasdaq. They touched a 17-month low of $17.96 earlier in the session. (Reporting by Mihir Dalal in Bangalore; Editing by Vinu Pilakkott, Don Sebastian)