Shares of Lancaster Colony (LANC) plunged 17.05% in pre-market trading on Wednesday after the specialty food company reported fiscal third-quarter results that fell short of analyst expectations. The company faced headwinds from a challenging consumer environment and reduced traffic in the foodservice channel.

Lancaster Colony reported Q3 sales of $457.8 million, down 2.9% year-over-year and significantly below the consensus estimate of $483.9 million. Earnings per share came in at $1.49, missing the analyst forecast of $1.59. The company's revenue decline was attributed to the exit from perimeter-of-the-store bakery product lines in March 2024 and a shift of some retail sales into the fiscal fourth quarter due to the later Easter holiday.

CEO David A. Ciesinski commented on the results, stating, "We experienced a more challenging consumer environment in our fiscal third quarter as evidenced by reduced traffic in the foodservice channel and some softening demand in the retail channel." Despite these headwinds, the company achieved record gross profit and operating income for the quarter. The Retail segment's licensing program remained a source of growth, with the introduction of Chick-fil-A sauce in the club channel and continued strong performance of Texas Roadhouse dinner rolls.

In the Foodservice segment, net sales decreased 3.2%, reflecting the industry-wide decline in store traffic and the impact of menu changes as some customers shifted to value offerings. However, higher demand from core national chain restaurant accounts helped support segment sales.

As Lancaster Colony navigates these challenges, investors will be closely watching the company's performance in the coming quarters to see if it can reaccelerate growth and meet market expectations.