UNFI Posts Double-digit Q2 Increase in Net Income

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UNFI Posts Double-digit Q2 Increase in Net Income

United Natural Foods, Inc. yesterday reported that net income for the second quarter of fiscal 2010 ended Jan. 30, 2010 grew $2.1 million, or 15.0 percent, to $15.7 million, or 36 cents per diluted share, from $13.6 million, or 32 cents per diluted share, in the year-ago period. Net sales for the second quarter of fiscal 2010 were $898.2 million, a rise of 6.0 percent, or $50.6 million, from net sales of $847.6 million last year.

“The second quarter of fiscal year 2010 marks another period of solid revenues and profitability for UNFI,” noted company president and CEO Steven Spinner. “Improving sales trends have provided us with a solid level of top-line growth as we continue to work to gain market share and incremental business. UNFI has been awarded approximately $100 million in annual new business during the last six months, which is expected to phase in throughout fiscal 2010. As we begin the second half of fiscal 2010, I look forward to continued revenue growth throughout our company.”

Gross margin was 18.5 percent for the second quarter, a 0.6 percent decrease decline from the 19.1 percent logged in the second quarter of fiscal 2009. UNFI attributed the lower gross margin vs. last year’s comparable period mainly to a combination of lower fuel surcharge revenues, a shift in customer mix, and moderated inflation.

Operating expenses as a percentage of net sales fell 0.6 percent during the second quarter of fiscal 2010 to 15.5 percent of net sales, or $139.0 million, versus 16.1 percent in the year-ago period. Operating expenses were positively affected by lower fuel costs and the continued implementation of expense control programs across all UNFI divisions, according to the company, which racked up $0.7 million in expenses during the quarter in connection with severance for a separation agreement and startup costs related to taking on new customers.

Sales for the first half of 2010 came to $1.78 billion, a 4.2 percent increase over last year. At 15.5 percent of net sales, operating expenses were 78 basis points lower than the year-ago period. Gross margin was 68 basis points lower than the prior year, at 18.6 percent of net sales for the first six months of fiscal 2010.

“UNFI will continue to enhance its national leadership position in the natural, organic and specialty foods channel,” said Spinner. “Our strategy to increase market share, drive operational excellence, operate as one company, and further our sustainability and philanthropic causes will serve as the primary vehicle for success over the long term.”

Providence, R.I.-based UNFI carries and distributes over 60,000 products to more than 17,000 customer locations across the United States. The company serves a wide variety of retail formats, among them conventional supermarket chains, natural product superstores, independent retail operators and the foodservice channel.