UNFI 4Q Net Sales Up by Double Digits

For its fourth quarter of fiscal 2013 ended Aug. 3, wholesaler United Natural Foods Inc. (UNFI) posted a net sales increase of 22.2 percent, or $298.7 million, to $1.64 billion, compared with $1.34 billion in the year-ago period. Adjusted for the additional week in the fourth quarter of fiscal 2013, net sales grew 13.4 percent over last year.

Additionally, gross margin rose 53 basis points from the third quarter of fiscal 2013; operating income increased 30.6 percent to $56.1 million, versus $43 million in the year-ago period; net income went up 27.6 percent to $32.1 million, compared with $25.1 million last year; and earnings per diluted share rose 27.5 percent to 65 cents, compared with 51 cents in the same period last fiscal year.

For fiscal year 2013, net sales increased 15.8 percent or $828.3 million, year-over-year to $6.06 billion, compared with $5.24 billion in fiscal 2012. Adjusted for the additional week in fiscal 2013, net sales rose 13.6 percent over fiscal 2012. Further, operating income went up 19.6 percent to $185.5 million, versus $155.2 million last year; net income rose 18.1 percent to $107.9 million, compared with $91.3 million in fiscal 2012; and earnings per diluted share increased 17.2 percent to $2.18, from $1.86 in the year-ago period.

“UNFI crossed the $6 billion annual net sales mark and, most importantly, demonstrated real progress across all of our core strategies, resulting in over 18 percent net income growth compared to the prior year,” noted Steven Spinner, president and CEO of the Providence, R.I.-based wholesaler.

According to the company, gross margin for the fourth quarter of fiscal 2013 increased because of improvements in purchasing and logistics efficiencies, partly offset by a continued shift in the company’s customer mix to lower margin conventional supermarkets.

Gross margin for fiscal year 2013 was 16.9 percent, a 59 basis point decrease from the prior fiscal year. UNFI attributed this decline to higher inbound freight costs throughout fiscal 2013, as well as its focus on maintaining higher service levels despite greater supplier out-of-stocks. The ongoing shift in customer mix toward the supernatural and conventional supermarket channels, and to customers within the conventional supermarket channel who are migrating to limited-service programs, also adversely affected gross margin in fiscal 2013, the company said, adding that this decrease was partly mitigated by technology initiatives in the second half of fiscal 2013 that enabled UNFI to maximize purchase incentives while also more effectively managing inventory levels to keep up with demand.

“Continued expansion of our distribution network, technology improvements and coming together as one company will be important strategies for continuing to deliver long-term growth,” said Spinner. “We also remain extremely committed to our culture of giving and reducing our carbon footprint.”

For fiscal 2014, the company expects net sales in the range of about $6.65 to $6.78 billion, an increase of around 9.7 percent to 11.8 percent over fiscal 2013. Adjusting for the 53rd week in fiscal 2013, sales growth for fiscal 2014 is in the range of about 11.8 percent to 14 percent.

UNFI carries and distributes more than 65,000 products to more than 27,000 customer locations throughout the United States and Canada. The company serves a wide variety of retail formats, including conventional supermarket chains, natural product superstores, independent retail operators and the foodservice channel.