Several law firms across the country have filed a securities class action lawsuit on behalf of investors who purchased or acquired the securities of United Natural Foods Inc. (UNFI) between March 10, 2021, and March 7, 2023, inclusive. The lawsuit seeks to recover UNFI shareholders’ investment losses.
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Class actions are lawsuits where one or more investors serve as the representative plaintiffs on behalf of a large group of investors that each purchased the same securities and suffered losses as a result of the same allegedly false statements or alleged misconduct. Plaintiffs in the UNFI lawsuit allege that the company made materially false and misleading statements throughout the class period. Specifically, the company is accused of failing to disclose that:
- Despite its cost saving Value Path initiative, UNFI had not invested in improving its data management and related infrastructure.
- UNFI could not respond adequately to cost changes, such as inflationary pressure.
- UNFI could not appreciate the benefits of procurement and inventory gains achieved during fiscal 2022.
- UNFI’s profitability would be materially adversely affected.
On March 8, 2023, before the market opened, UNFI posted its second quarter 2023 financial results, revealing a $6 million decline in gross profit, despite a 6% increase in net sales. The company said that its profits “were challenged, as we did not repeat the significant level of procurement gains from rapidly accelerating inflation and inventory gains, due to supply chain volatility, that we experienced in the second quarter of last year.”
On this news, the company’s stock price fell $11.49, or 28.1%, to close at $29.47 per share on March 8.
The lawsuit was filed in the U.S. District Court for the Southern District of New York, alleging violations of the Securities Exchange Act of 1934. Law firms filing suit include Bernstein Liebhard LLP, Glancy Prongay & Murray LLP, Holzer & Holzer LLC, and Rosen Law Firm.
Based on recent performances and an admitted “miss” in assessing hyperinflation and the reasons behind it, UNFI has updated its forecast. The wholesaler is raising its sales outlook but lowering its profitability expectations for the back half of FY23.
Providence, R.I.-based UNFI delivers a wide variety of products to customer locations throughout North America, including natural product superstores, independent retailers, conventional supermarket chains, e-commerce retailers and foodservice customers. The largest publicly traded grocery distributor in America, the company is No. 49 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in North America.