UNFI Logs Rosy Q1
United Natural Foods Inc. (UNFI) sees continued growth ahead.
The natural/organic product distributor (UNFI) reported a net sales increase of 7.9 percent to a record $2.46 billion for its first quarter of fiscal 2018 ended Oct. 28, compared with $2.28 billion for year-ago period, while earnings per diluted common share were 60 cents, versus 58 cents for the same period last year
“We are pleased with our strong start to the fiscal year which reflects broad-based growth across all of our significant sales channels for the fiscal first quarter,” said Steven L. Spinner, chairman and CEO of Providence, R.I.-based UNFI. “Our dedicated team of associates worked tirelessly to service our customers and support our increasing sales growth. Looking ahead, consumer demand for the products we sell remains robust and we believe UNFI is well positioned for future growth with the strength of our sourcing capabilities and demonstrated leadership within better-for-you distribution.”
Gross margin for UNFI’s Q1, however, was 14.94 percent, a 38-basis-point decrease from last year, which the company attributed mainly to a shift in customer mix in which sales growth with lower-margin customers outpaced growth with other customers.
UNFI’s operating income rose $1.8 million, or 3.3 percent, to $55.1 million for the first quarter of fiscal 2018 compared with $53.3 million for the year-ago period, while net income for the first quarter of fiscal 2018 increased $1.3 million, or 4.4 percent, to $30.5 million, from $29.2 million for the first quarter of fiscal 2017. During the first quarter of fiscal 2018 the company adopted a new accounting standard that will affect its effective tax rate and increase its variability. As a result, UNFI logged $0.9 million of income tax expense, which adversely affected diluted EPS by 2 cents during the first quarter of fiscal 2018.
The company’s EBITDA for the first quarter of fiscal 2018 was $77.5 million, a 4 percent increase from $74.6 million in the year-ago period.
Based on its performance to date and the outlook for the rest of fiscal 2018, ending July 28, 2018, UNFI revised its guidance previously issued in September. The company now expects net sales in the range of about $9.84 billion to $10 billion, an increase of 6.2 percent to 7.8 percent over fiscal 2017 net sales, versus the previous estimate of $9.63 billion to $9.81 billion. UNFI now also expects earnings per diluted share for fiscal 2018 in the range of about $2.72 to $2.80, an increase of about 6.3 percent to 9.4 percent over fiscal 2017 earnings per diluted share of $2.56, compared with the previous estimate of $2.67 to $2.77.
UNFI carries and distributes more than 110,000 products to 43,000-plus customer locations throughout the United States and Canada. The company serves a wide variety of sales channels including conventional supermarket chains, natural product superstores, independent retailers, ecommerce and foodservice.