UNF1 Q2 Sales Up by Double Digits
United Natural Foods Inc. (UNFI) has posted net income for the second quarter of fiscal 2011 ended Jan. 29 of $18.7 million, or 39 cents per diluted share, an increase of $3.0 million or 19.6 percent, vs. $15.7 million, or 36 cents per diluted share, for the year-ago period. Net sales for the second quarter of fiscal 2011 came to $1.11 billion, a rise of 24.1 percent, or $216.2 million, over the $898.2 million reported last year. Excluding the effect of sales connected to the company's June 2010 Canadian acquisition and October 2010 purchase of some inventory and distribution assets of Whole Foods Market, which generated combined estimated incremental net sales of about $87.6 million, second-quarter fiscal 2011 net sales climbed 14.3 percent, or $128.7 million, to $1.03 billion.
The double-digit increase “reflected the sustained strength of the industry across all of our customer channels," noted Steven Spinner, president and CEO of Providence, R.I.-based UNFI.
Gross margin was 17.8 percent for the second quarter of fiscal 2011, representing a 45 basis-point drop from the gross margin of 18.3 percent posted in the first quarter of fiscal 2011. The wholesaler attributed the lower gross margin vs. the prior sequential quarter mainly to an ongoing shift in customer mix during the second quarter.
Operating expenses as a percentage of net sales fell to 15.0 percent for the second quarter of fiscal 2011, a drop of about 50 basis points compared with the year-ago period. Operating income as a percentage of net sales declined to 2.8 percent for the second quarter of fiscal 2011 from 3.1 percent last year, a decrease of 22 basis points. Operating income as a percentage of net sales during the second quarter of fiscal 2011 was also adversely affected by about $2.5 million in continued startup inefficiencies related to UNFI’s Lancaster, Texas facility, which began operating in September 2010.
Net sales for the first half of fiscal 2011 were $2.17 billion, a 21.6 percent rise over last year, and, at 15.2 percent of net sales, operating expenses were 29 basis points lower than the year-ago period. Additionally, gross margin was 54 basis points lower than last year, at 18.0 percent of net sales for the first six months of fiscal 2011.
"Building off of the success we achieved during fiscal 2010, UNFI has continued to gain market share and incremental business during the first half of fiscal 2011, leveraging our fully integrated specialty offering and our strategic expansion into Canada,” said Spinner. “We are now focused on managing efficiencies related to previously on-boarded new business and our increased sales growth. UNFI Canada continues to perform in line with our expectations, and sales trends across all channels continue to improve, with the independent channel growing at 7.9 percent, excluding acquisitions, in the fiscal 2011 second quarter.”
UNFI carries and distributes more than 60,000 products to more than 23,000 customer locations throughout the United States and Canada. The company serves a wide variety of retail formats, among them conventional supermarket chains, natural product superstores, independent retail operators and the foodservice channel.