Hello, everyone, and welcome to the prerecorded discussion of Flowers Foods' fourth quarter and full year twenty twenty results. This is JT Rick, SVP of Finance and Investor Relations. As a reminder, we released our fourth quarter results on 02/11/2021. You can find the release and related slide presentation in the Investors section of our website along with a transcript of these recorded remarks from our CEO and CFO. We will host a live q and a session on Friday, February 12 at 08:30AM eastern.
The details are posted in the Investors section of flowersfoods.com. Before we get started, keep in mind that the information presented here may include forward looking statements about the company's performance. Although we believe these statements to be reasonable, they are subject to risks and uncertainties that could cause actual results to differ materially. In addition to what you hear in these remarks, important factors relating to Flowers Foods business are fully detailed in our SEC filings. Providing remarks today are Ryals McMullen, President and CEO and Steve Kinsey, our CFO.
Ryals, I'll turn it over to you.
Thanks, JT, and thanks to everybody for your interest in Flowers. We're going to touch on two main themes today. First, our 2020 performance, areas where we succeeded and also where we have room for further improvement. And second, we'll discuss what we're doing to capitalize on the current environment to position ourselves for long term success. We'll look at this past year through the lens of our four strategic priorities, again, developing our team, focusing on our brands, prioritizing margins and pursuing smart M and A.
Starting with developing our team, despite the pandemic related disruption and uncertainty, we generated sales and adjusted earnings at the highest levels in the company's history. And that performance wouldn't have been possible without the incredible execution of our team, particularly our frontline workers. I've said it before, but it bears repeating that I'm grateful for their perseverance, and I'm humbled by their dedication. They've shown a great courage and a devotion to ensuring that our consumers have the products they need, and we're committed to doing everything in our power to provide a healthy and safe work environment for them. I'm particularly pleased that we were able to award our frontline team with two employee appreciation bonuses during the year in recognition of their dedication.
I think we've got the best team in the industry, and the additions we made in 2020 have only strengthened it. We elected four new board members who bring a wide range of skills and experience that will be invaluable in guiding the company forward. More recently, we added a chief supply chain officer and a chief procurement officer to help drive operational improvements. We also created new structures to help improve performance, including our strategic organizational realignment to drive brand growth and product innovation, which consolidated our two business units into a single function under the leadership of Mark Courtney, who was named Chief Brand Officer. As part of that realignment, David Roche was named President of Cake Operations to drive crucial operational improvements in that business.
And we created a transformation office headed by Heath Varnideaux, who was named Chief Transformation Officer to implement key cross functional initiatives, and I'll come back to the transformation office in a few minutes. Our second strategic priority focusing on brands is at the heart of our growth strategy, and the strength of our leading brands has been essential to our success in 2020. The pandemic has driven extraordinary levels of product trials, and we're doing everything in our power to encourage repeat purchases. We've increased marketing and advertising spend, particularly in digital, with the goal of driving brand growth. The result of that focus is annual sales growth, excluding the fifty third week of approximately 17% for Nature's Own, 31% for Dave's Killer Bread, 28% for Wonder and 36% for Canyon Bakehouse.
Our portfolio strategy prioritizes our branded products and promotes our third strategic priority, margins. The increased prevalence of at home eating caused by the pandemic demonstrates the importance of our portfolio strategy. Despite volume declines in 2020 of 2.9%, our profitability increased markedly with EBITDA margins rising 160 basis points to 11.9% as we're now seeing the true power of focusing on our brands. Further to margin improvement, our portfolio optimization initiative that was launched in 2020 delivered approximately $22,000,000 in cost savings, above our original goal of 10,000,000 to $20,000,000 And the conversion of our Lentzburg bakery to higher margin organic production will further help margins by reducing transport costs and increasing the quality and service levels to the important Mid Atlantic and Northeast markets. Our fourth priority is smart M and A, and we remain proactive in the deal space, but we are maintaining our long established disciplined approach.
M and A has always been and will continue to be an important part of our growth story. Our criteria for M and A candidates are those that can enhance our branded portfolio, extend our geographic presence, are a strong cultural fit and bring enhanced capabilities to our company. We believe our strong balance sheet gives us the flexibility to pursue a wide range of deals, and when the right one comes along, we'll be ready. More important than our accomplishments in 2020 is what we're doing to capitalize on the current environment and to position ourselves for long term success. The three primary areas of focus are driving growth, improving operations and containing costs.
I'll start by discussing our digital initiative, which contains elements of all three. And as I mentioned on our third quarter call, our digital strategy initiative is designed to transform how we operate our business. Our three primary goals with the digital initiative are to, one, enable more agility in our business model, empowering the organization by fundamentally redesigning core business processes and our ways of working. Two, to embed digital capabilities where it matters and transform the way we engage with our consumers, our customers, and our employees. And three, to modify modernize and simplify our application and configuration landscape, our ERP system, to remove existing roadblocks and support new ways of working.
So think of our digital strategy as a key enabler of our overall strategic priorities. Successful implementation of digital will support our brand efforts, bringing us ever closer to the consumer, increase our efficiencies and operations and deliver higher quality real time insights to the team, which will in turn support faster, higher quality business decisions. In addition to the upgrade of our ERP system, we've identified 11 domains where we see material expected benefit from digital. To start, however, we are focused on three primary domains, and they are ecommerce, autonomous planning, and what we call bakery of the future. As we all know, ecommerce and grocery has seen a significant lift this year during the pandemic, and I firmly believe that this trend has staying power.
It's imperative that Flowers win the digital shelf as well as the physical one. Our vision for ecommerce is to become a category leader, meeting consumers where they are, assuring Flowers' brands are top online brands of choice, and supporting retailer retail partners in omnichannel to deliver an excellent consumer experience. Autonomous planning covers everything from predictive ordering for our sales operations to network modeling to integrated business planning to supply and demand forecasting. Our vision for autonomous planning is to predict consumer demand with higher accuracy and integrate that insight from point of sale through the supply chain to ensure the right raw materials are on-site at the right time, the right products are produced at the right bakery every day, and deliveries are optimized to achieve high on shelf availability and customer service. Finally, bakery of the future.
Our vision here is to deliver best in class bakery performance and employee engagement through the application of industry leading digital manufacturing tools, such as real time performance management, automation of repetitive processes, and performance visualization, standardization of processes and procedures across employees, shifts, lines, and bakeries, and sensor based quality checks to improve consistency and reduce time to react to changes. We are in the early stages of implementing this digital strategy, and we plan to begin making investments behind these primary domains this year. As we move ahead in the process over the coming quarters, we plan to update you relative to the timing and amount of the expected benefits of these initiatives, which we expect to materialize over the next few years. Simultaneously, we will continue to focus on improving operations, particularly at our underperforming bakeries, including the Navy Yard. Enhancing performance of these bakeries represents an achievable and material profit improvement to the company as a whole.
Regarding cost containment, our talent additions, particularly our new Chief Supply Chain Officer and Chief Procurement Officer, are expected to drive efficiencies and reduce costs. Those initiatives are especially important given some of the cost inflation we're seeing in freight and commodities. And as I mentioned earlier, our portfolio optimization efforts are anticipated to deliver additional benefits in 2021. We currently expect savings primarily in the first half of the year to be between 30,000,000 and $40,000,000 That all of these changes are coming during a period of strength highlights the fact that we are not resting on our laurels. Our culture emphasizes continuous improvement, and we are determined to position ourselves to succeed in any market environment.
Flowers is in the midst of a transformation, and we have a number of initiatives underway to drive growth and enhance profitability. Because these initiatives are so critical to the company's success, we've established a transformation office to oversee these efforts led by Heath Varnido, our chief transformation officer. Heath is a seasoned Flowers executive with years of operational experience who carries enormous credibility in the organization. It's important to note that Heath was the leader of our portfolio optimization efforts last year that over delivered on results. So the primary goals of the transformation office are fourfold.
One, overall program management, ensuring that our that our initiatives stay on track and on budget and holding the team accountable for results. Two, risk management, proactively identifying key risks to successful outcomes and quickly implementing mitigating measures. Three, value management, ensuring that our implementation plans are firmly connected to strategy and deliver against expected benefits and providing a single objective source of truth to inform executive decision making. And four, perhaps most importantly, change management. Determining the impacts of the transformation and engaging change ambassadors throughout the company, developing top down and bottoms up communication plans, tracking metrics and employee feedback to understand progress, and developing upskilling and training materials to ensure a successful transition.
We've learned from both the successes and the shortcomings of our initial Project Centennial efforts, and I believe the leaders that we have selected for these efforts, combined with the establishment of the transformation office, will go a long way toward maximizing the benefits of these strategic initiatives. Now I'll turn it over to Steve to review the details of the quarter and the year and to talk about our guidance for 2021, and then I'll come back later to discuss the current business environment. Steve?
Thank you, Ryals, and hello, everyone. I'd like to echo your comments and express my sincere thanks to our incredible team whose efforts during this challenging time have been nothing short of outstanding. Now turning to the quarterly results. As a reminder, 2020 was a fifty three week year for Flowers Foods, with the additional week falling in the fourth quarter. Our results continued to be strongly influenced by COVID nineteen.
Total sales rose 11.5% with the additional week contributing 8.2%, an increase compared to our third quarter growth rate of 2.4%. Price mix drove 7.7% of the sales increase, with the main factor being the shift in mix to branded retail items due primarily to consumers eating more meals at home. Volumes reduced overall sales by 4.4%, with particular weakness in store branded and foodservice and other nonretail channels. Looking at sales by channel, directionally results followed the same pattern as in the third quarter. Branded retail sales increased $124,500,000 or 22.6% to 675,600,000.0 Our leading brands continue to drive company performance with particular strength from Nature's Own, Dave's Killer Bread, Wonder, and Canyon Bakehouse.
New products, such as extensions of our Nature's Own perfectly crafted line and DKB buns remained significant contributors. Store branded retail sales decreased 3,700,000.0 or 2.6% to 137,000,000, with weakness across the board as consumers continued their shift to branded products. Our performance is consistent with industry wide trends as store brands share continued its long term decline, falling from 23.1% in 2019 to 20.4% in 2020 and down from 25.8% share in 2015. Foodservice and other nonretail sales decreased $15,500,000 or 6.8% to 210,500,000.0 Lower volumes due to the impact of the COVID-nineteen pandemic drove most of the decline. We saw these declines across all categories of nonretail business except for fast foods.
Excluding the impact of the extra week, branded retail sales increased 13.4%, store branded retail sales decreased 9.8%, and non retail and other sales decreased 13.5%. In the quarter, gross margin as a percentage of sales, excluding depreciation and amortization, increased 200 basis points as the mix shifted to higher margin branded retail products. That benefit was partially offset by $4,100,000 in appreciation bonuses paid to frontline workers. Selling, distribution and administrative expenses decreased three twenty basis points as a percentage of sales in the fourth quarter. Excluding the items affecting comparability detailed in the press release, adjusted SD and A expenses increased 10 basis points due to higher distributor discounts, workforce related costs and higher marketing expenses, offset partially by a $3,900,000 use recovery settlement and a $2,300,000 positive adjustment to non retail accounts receivable reserve.
Higher distributor discounts were driven by a shift in product mix. Workforce related costs increased primarily due to higher employee incentive costs due to our improved financial performance and a $2,000,000 appreciation bonus paid to frontline workers not allocated to cost of goods sold. GAAP diluted EPS for the quarter was $0.26 per share. Excluding the items affecting comparability detailed in the release, adjusted diluted EPS in the quarter was $0.28 per share, up $0.10 compared to the prior year quarter. Turning now to our balance sheet, liquidity and cash flow.
For fiscal twenty twenty, cash flow from operating activities increased $87,500,000 to $454,500,000 compared to the year ago period. Capital expenditures were $97,900,000 and dividends paid were $167,300,000 Our financial position remains strong. At quarter end, net debt to trailing twelve month adjusted EBITDA stood at approximately 1.3 times, down from two times at 2019 year end. At year end, we held approximately $3.00 $7,000,000 in cash and cash equivalents and had approximately $5.00 $1,000,000 of remaining availability on our credit facilities. Now turning to our outlook for 2021.
We are forecasting sales to decline between 2% to 4%. On the bottom line, we expect adjusted EPS to be in the range of $1.7 to $1.17 As a reminder, 2021 shifts back to fifty two weeks, one less week than 2020. The additional week in 2020 contributed 1.8% to full year sales and approximately $02 to EPS. As we moved into quarter one, the operating environment has remained relatively consistent with what we experienced in the fourth quarter. Some of the factors we considered when setting sales guidance included the impact of the pandemic and how long consumer behavior would continue to reflect remote working and learning.
In addition, our earnings guidance took into consideration inflationary commodity cost and expenses related to our growth initiatives, including our strategic digital initiative. In a moment, Ryals will share more color on the factors we are watching in 2021. We expect continued strong free cash flow generation, and our capital allocation priorities and philosophy remain consistent with our focus on maximizing return on invested capital and growing shareholder value. For 2021, we are targeting capital expenditures in the range of 140,000,000 to $150,000,000 This level is somewhat elevated compared to recent years primarily due to targeted investments to support supply chain optimization and our digital transformation. Thank you.
And now I'll turn it back to Ryals.
Thank you, Steve. So we enter '21 in a position of strength. The positive mix shift driven by the pandemic is persisting into the New Year, and our leading brands continue to perform quite well. Steve detailed our guidance for 2021. It's important to emphasize that this is a transition year.
Our assumption is that the impact of the pandemic will wane throughout the year and that we will return to a somewhat more normalized demand environment. And if that assumption proves correct, it's reasonable to believe that results will be lower than in 2020. When we issued our long term financial targets last August, we were clear that while we expected results over time to be in line with those targets, results in any one year may differ. In 2020, our performance significantly exceeded those targets, and therefore, it's reasonable to expect at least some reversion, especially since 2021 will have one fewer week than 2020. In addition, given the strength of our cash flow and earnings in 2020, we have chosen this year to make important investments for the future, particularly in digital, which will impact 2021 results by approximately zero five dollars expect the benefits from those investments to begin accruing in 2022 and beyond.
It's important to highlight that the midpoint of our 'twenty one guidance is in line with our long term targets using 2019 as the base year. Some of the factors that could affect results within that range include the timing of the pandemic related demand reversion, cost inflation, the pace of our long term focused growth investments, including digital, and our success in achieving operational improvements at our lower performing bakeries. Probably the three biggest levers to keep an eye on during the year are: one, mix reversion. While we expect some reversion in mix during the year as things normalize, an accelerated or deeper reversion than we expect could adversely impact margins Number two, commodity inflation and our ability to offset that inflation with cost savings, efficiency improvements and pricing where necessary. And three, we'll also need to keep a close eye on the promotional environment, which through the fourth quarter of last year and even into the first month of this year has remained stable.
However, a significant increase in promotional activity could negatively impact our results as we move through the year. We'll also be carefully watching the effectiveness of our marketing investments to to ensure that they're delivering the desired return and supporting our brand growth efforts. Taking all these factors into account, though, I believe it's gonna be a great year for Flowers. We've connected with millions of new households that have tried our top brands. We've focused our investments in marketing and brand support across both digital and physical domains.
We expect our portfolio optimization savings to continue to deliver in 2021. Our network optimization efforts are ongoing, which will help us further increase efficiencies. And most importantly, our team's morale is high. We're all really excited to get into the year and push ourselves to build on our 2020 accomplishments. Every year presents its own unique challenges, and this year is no different.
But the Flowers team has never been better positioned to meet these challenges head on and deliver performance in line with or above our long term targets. So thank you very much for your time. This concludes our prepared remarks. I'd like to invite you to listen to our live question and answer webcast, which will begin at 08:30 a. M.
Eastern Time on Friday, February 12, and will also be available for replay on the Investors section of flowersfoods.com. Thank you very much.